Regional differences in the country’s economy are essential despite its small territory. Historically England proper is divided into the following economic regions: the South Industrial and Agricultural region, Central England or the Midlands, Lancashire, Yorkshire and North England. Wales, Scotland and Northern Ireland are also regarded as independent economic regions of the United Kingdom. Hence, the whole country consists of eight economic regions.

One of the main problems to emerge in Britain during the twentieth century has been the imbalance of economic activity between individual regions. This has been the result of the decline of the traditional industrial structure, based largely on the coalfields and its replacement by a new structure more closely related to accessibility and the transport network. Attempts have been made to slow down, or even reverse this process but they have failed and Britain has witnessed the emergence of what has been called the ‘Two Nations’ — one characterized by comparative economic activity (especially of the so-called ‘new industries’), population growth and a strong industrial base, the other which includes most of the coalfields, marked by declining industries, decaying towns and cities, and high rates of emigration. The outlying national regions of the United Kingdom, such as Wales, Scotland and especially Northern Ireland are most depressive. The traditional disparities which existed between these regions and England proper have accelerated in recent years.

The combination of an inefficient manufacturing industry, the policy of ‘privatization’ has produced unemployment on a scale not seen in the United Kingdom since the great depression of the 1930s. Furthermore, these high levels of unemployment are a true reflection of the decline which has occurred in the old industries of the country. Especially hard hit are the outlying national regions such as Northern Ireland, Scotland and Wales. Besides these regions, North England, Lancashire and Yorkshire are also experiencing difficulties. South England and the Midlands are comparatively doing well.

There is an obvious relationship between unemployment and the dependence of an area on manufacturing industry. For it has been manufacturing industry which has borne the brunt of the recession, and employment in this sector of the economy has actually declined. In many cases production has declined to such an extent that the very existence of some of the country’s major industries is now threatened. These included several of the industries upon which the United Kingdom had traditionally depended for prosperity — such as iron and steel, shipbuilding, textiles.

Emphasis has been put recently on the development of high technology industries — in an attempt to overcome the problems of the country. However, growth did not fully offset the losses suffered by the old traditional industries. In fact the industries to show large-scale growth have been those based upon oil. Among true manufacturing industries, substantial growth has been limited to those in the area of high technology. Hence, those regions where there is a greater concentration of high technology industries, such as South England, the Midlands can be regarded to be in a more favourable position. Nevertheless, this remedy is not without its problems.