The UK economy has undergone structural, financial and political changes over the last thirty years. Different ideologies and policies have served to shape the relationship between government and the economy in different directions. Some elements, such as state intervention, have remained a point of debate. Other factors, such as globalization, have only recently developed. UK government policy as a whole was influenced quite heavily by the major economic events that occurred during this period, and the legacy left by the Conservative and Labor governments is still visible today. Using a variety of sources and my own knowledge, I will evaluate critical elements of the relationship between government and the economy over the past 30 years, and their relative importance. The context of this report concerns the theory of political economy. This is the idea of ​​rationality and growth of the “free market” (a market in which there is no economic intervention and regulation by the state, except to enforce private contracts and ownership of property). First, it is essential to outline the characteristics of the relationship between government and the economy. Clearly, a government influences how an economy works through its policies. The government uses two branches of policy, fiscal and monetary. Fiscal policy involves government spending while monetary policy involves manipulating interest rates. Both policy instruments are designed to achieve growth. A government's attempts to influence economic activity in the national economy are defined as macroeconomic measures. Macroeconomics can be described as “the study of the national economy” (Morrison 2002, p.60). Even the government itself is run like a typical company in a free market... middle of paper... sound will never succeed. Monopolies were the creator of privatization, but deregulation was the creator of nationalization. This has resulted in the need to draw a fine line between government roles in the economy. Globalization has seen individual businesses within an economy increase their status and influence, in turn crowding out government power in their respective economies. Different parties have brought their respective philosophies to power in the UK. Enterprise, freedom of choice and increased competition in individual markets were the driving force behind most actions taken by the government during this period. In my opinion, it is fair to say that the UK economy and government have undergone structural, political and geographical changes, which have resulted in Britain maintaining a stranglehold in the battle between developed and developing economies..