Structure of the UK economy

After studying this section you should be able to

• describe briefly the two sectors of the UK’s mixed economy
• name the main types of organisation in both sectors

The private and public sectors

Businesses in the UK are normally grouped into private sector and public sector organisations. Private sector firms are set up by individuals, entrepreneurs who seek to make profit from their business activities. Although many private sector firms are controlled by entrepreneur(s), they may be owned by different people (or organisations), for example, companies owned by shareholders, either as private or institutional (organisation-based) investors. This may lead to a conflict between ownership and control.

As well as making profit, entrepreneurs may have other objectives, e.g.:

• job satisfaction
• employment
• power and prestige.

The public sector consists of those organisations owned and/or financed by central and local government. This sector provides goods and services to the community through public corporations, local government and other statutory agencies (e.g. the National Health Service). The profit motive is not so prominent: the emphasis in the public sector is on providing for the community by the community, using funding supplied through taxes and government borrowing.

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