The economy is the complete picture of how money is moving around in the UK. This infographic uses arrows to show the movement of money. Click on the pictures and arrows to explore how the economy works.
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A business is any organisation created to make money by selling products or services. All businesses employ people and pay them wages – they can have anywhere between one and several thousand workers. Businesses must be registered with the government, and pay taxes.
Governments collect taxes, and spend them on wages, benefits, goods and services (although not everyone agrees on the best way to spend the money!). The government also makes rules that govern other parts of the economy, such as the minimum hourly wage, or what banks are allowed to do.
Most people aged 16-64 earn money through working, and spend it on things they need and want. People can spend their money however they like (as long as it's legal). They must pay a certain amount of tax, and in return they receive government services such as benefits.
This type of business makes products. Some, such as farms, mines or oil rigs, gather raw materials. Others are factories that process materials into usable items, such as food, cars or computers. Producers typically sell their products to other businesses rather than to the public.
These are businesses that do something for you, rather than provide a product you can touch. Examples include cleaners and plumbers, personal care such as hairdressing, entertainment (for example museums, cinemas or football clubs), transportation, utilities such as electricity or internet access, and money-related services like accounting.
Shops, also called retailers, are businesses that buy up products from producers, and sell them on to people. Examples include supermarkets, car showrooms, and online bookshops. Some small businesses, such as bakeries, may make the things they sell, but they rely on producers for their materials.
Banks and similar businesses like building societies and credit card companies are a special type of business that lend money to people, businesses and government, and receive payment in the form of interest (as well as getting the loaned amount back). Banks also take deposits, and pay interest to savers.
Her Majesty's Revenue & Customs is the department in charge of collecting tax from people and businesses, making sure everyone pays the right amount, and investigating people trying to avoid paying tax. It passes the money it collects on to the Treasury to share out.
The Treasury is the government department in charge of deciding how the money is spent, and dividing it up between the other departments. The head of the Treasury is the Chancellor of the Exchequer. Every year, in March, he or she announces the spending plans for the year ahead.
The Department for Work and Pensions is the government department in charge of paying benefits. It has the biggest budget of any government department, because paying benefits is such an important part of the government's work. It also sets the rules about who should get benefits.
All government departments receive a chunk of money from the Treasury to pay their staff, and spend on products and services. Of the other government departments, the ones that spent the most last year were Health (£117 billion), Education (£67 billion) and Defence (£37 billion).
The average cost of owning a cat is more than £1,000 per year! However, cats themselves do not take part in the economy. (As far as we know!)
People under the age of 16 spend money in shops, so they pay VAT (Value Added Tax, which is included in the price of purchases). Children don't pay any other taxes or receive benefits, and they’re not allowed full-time jobs. You must be 18 to borrow money from a bank.
Private sector workers are people who work for a business that isn't owned or operated by the government. Businesses set their own pay. The top-paid people in business earn much more than they could in the public sector, but there are millions of low-paid jobs in shops and restaurants too.
People who work for themselves, rather than for a business or the government, are called self-employed. They get money as payments from other people. Taxi drivers, writers and tradespeople are often self-employed. They can choose the hours they work, and often set their own pay.
Adults who don't work include retired people, those who can't find jobs, and people who don't work because they're too sick or because they look after someone full-time. They can claim benefits, but may find it hard to get bank loans if they have no other source of income.
Public sector workers are people who work for the government, such as nurses or police officers. Every public sector job comes with a set salary. Public sector workers are paid out of tax money, so anybody can look up how much they earn.
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