The British economy is sound and the country is poised for future growth. As a member of the European Union, the kingdom is able to export goods and services to the 14 other major economies of Western Europe without paying significant tariffs or duties. EU membership and the country's low tax burden have made it attractive to foreign companies. The United Kingdom continues to lead the EU in direct foreign investment with US$274 billion, or 22.95 percent, of the EU total (the number-two country is France with US$174 billion, or 14.57 percent). The availability of inexpensive labor and the well-developed infrastructure of the kingdom will also sustain the investment of new capital and new companies.
Since English is the primary language of the Internet, software development, telecommunications, and pharmaceuticals, the United Kingdom will draw high-tech industries well into the next century. The linguistic and cultural ties between the United States and the United Kingdom mean that tourism will continue to be a strong component of the economy. The kingdom's energy sector will further propel the economy since world energy prices will remain high for the foreseeable future.
There are, however, a number of issues that continue to create doubt about the British economy. Questions over the United Kingdom's relationship to the EU have created uncertainty in the economy. The government has indicated that it would develop criteria that might ultimately lead to the United Kingdom joining the European Monetary Union and adopting the euro as the country's currency. However, there is deep public sentiment against adopting the euro. During the 1990s, the EU implemented a ban on British beef because of mad cow disease. Although the rest of the EU ended the ban in 1996, France continues to enforce restrictions on British imports. These actions have created a backlash among the public against the EU and increased economic cooperation with EU members such as France. In addition, the euro has declined in value by 20 percent when compared with the British pound. These factors continue to constrain the ability of the government to adopt the euro.
One of the main political problems facing the United Kingdom is the status of Northern Ireland. For centuries, there has been an ongoing conflict in Ireland between the Protestants and the Catholics. When Ireland became independent in 1921, the 6 northern, mostly Protestant, counties remained part of the United Kingdom and became known as Northern Ireland. Since then, the pro-Catholic Irish Republican Army (IRA) has waged a terrorist campaign to reunite the 2 areas of Ireland. After years of difficult negotiations, in 1999 the "Good Friday Agreement" brought together both Catholics and Protestants in a regional assembly led by an elected executive committee. Problems arising over the implementations of the Agreement have delayed the ability of the executive committee to become the government of the region. Continued uncertainty over the future of Northern Ireland has significantly constrained the region's economy, as few firms are willing to invest in the area. Unemployment in Northern Ireland is the highest in the United Kingdom at approximately 10 percent.
The final major problem confronting the United Kingdom is the aging of the workforce. As the elderly population of the country continues to expand, the need for younger workers will become acute. The aging population will place strains on the country's already overburdened social security system. The most pressing problem for the social security is the National Health System (NHS).