The Contribution of the Service Sector to the Growth of the UK Economy

Abstract

From 1971 to 1986 United Kingdom employment in production and construction industries, mainly manufacturing, fell by over 3 million from 9 839 000 to 6 645 000 — a fall of almost one-third. In the same period employment in the service sector increased by nearly three million from 11 754 000 to 14 441 000. Many have suggested that the shift these figures show of around 3 million workers from the production of goods to the provision of services is economically disturbing. There is a view that manufacturing makes a more fundamental and basic contribution to the economy than the various service industries. This view, which is widely held, has been challenged repeatedly by Margaret Hall. Her work has been concerned especially with retail distribution and it has been her firm belief that this makes a tangible and significant contribution to the economy. In 1967 she put the interesting question to the Oxford University Political Economy Club, ‘Do Goods and Services Differ?’ and she went on to publish her formulation of it (Hall, 1968). Margaret Hall’s question has long antecedents in the history of Political Economy. In this chapter we shall first examine critically the theoretical supposition that a shift in an economy from the manufacture of goods to the provision of services is, in some sense, a move away from the production of economic fundamentals towards the output of peripherals. After that we shall examine in detail the shift that has actually occurred in the United Kingdom and its particular impact.