Globalisation also means much more free trade, which is beneficial to the UK. UK exports as a percentage of GDP have more than doubled in the post war period. In 1950, exports were 14% of GDP but by 1998 this was 31.2%. Average annual growth of exports over the period of 1950-1998 was 4.4%, almost double the annual growth in GDP. The removal of barriers to trade such as tariffs and quotas and also opens up borders meaning it's much easier to trade goods and services.
The EU (European Union) for example has almost become one country as it has one parliament and now a single currency. This is beneficial to not only the members of the EU but also around the world as this means a more stable currency and now a lot of the exchanging costs are eliminated. It will be easier for the UK businesses to set up in the EU and in other countries.
UK's competitiveness has been affected by overseas competition, not only from South East Asia but also everywhere else. Most evident is the motor industry in the UK. In the 60s and 70s, the UK motorcycle industry was destroyed due to Japanese competition. The British motor manufacturing industry became increasingly uncompetitve in the 70s but then revived in the late 80s and 90s, due to Japanese investment in UK motor manufacturing. The British coal industry has almost disappeared due to competition from imported coal and North Sea gas.
Textiles have moved to developing countries. Therefore, UK now tries to maintain their international competitiveness through their financial services. Although there has been an increase in labour productivity, it has not improved UK's international competitiveness because other countries too have seen a rising productivity. UK lags behind Germany, France and USA in output per worker. There is low investment in UK and that also affects their competitiveness, as it is an expensive country. In low-tech manufacturing, UK faces competition from LDCs. The UK government has tried hard to encourage more investment into the economy so they can gain not only from the multiplier effect but also from taxed charged on these companies.
The UK government is affected in by globalisation in terms of in adjusting their policies. For the increasing unemployment, it means that more people will have to live on welfare benefits. The government has to charge higher income tax in order to raise more revenue for welfare benefits. This in turn affects consumers as they have less disposable income. Yet, since there is increasing free trade in the exchange of goods and services, visible and invisible exports have increased UK's capital in-flow. The government benefits from this.
Yet what seems to happen now is that short-term capital flows move with alarming speed from one high return location to another. These sudden ruses either in or out of one market causes serious problems for the domestic banking system and the exchange rate, property prices and other asset values. The UK government must take care in trying to put pressure and control on this, by encouraging investors to stay and prevent such fast capital inflows and outflows from affecting the economy.
Globalisation is inevitable and affects everyone. Supporters have said that it has promoted information exchange and led to a greater understanding of other cultures. But protests against WTO's conference in Seattle last year prove that there is still opposition. Yet, one must realise that even the developed countries, the so-called 'super-powers' also suffer from the effects of globalisation, as seen in this illustration of the UK. Yet if the right policies are implemented and the country has a stable and civilised government, then they will reap more benefits that losses.