What is the circular economy? Meaning and examples for UK businesses
The circular economy is a way of running the economy so that materials and products stay in use for as long as possible. Things are designed to be reused, repaired and recycled, so very little becomes waste. It is the opposite of the usual pattern of take, make and throw away.
The circular economy: key facts
| The idea | Keep materials in use and design out waste |
|---|---|
| The three principles | Eliminate waste and pollution, circulate products and materials, regenerate nature |
| How circular the world is | 6.9% of the materials entering the global economy come from recycled sources, according to the Circularity Gap Report 2025 |
| In Scotland | The Circular Economy (Scotland) Act became law in 2024 |
| In England | A government taskforce was set up in 2024 to write a circular economy strategy |
Circular economy meaning: linear and circular compared
| Linear economy | Circular economy | |
|---|---|---|
| Pattern | Take, make, throw away | Make, use, return, make again |
| Materials | New raw materials each time | Recycled and reused materials first |
| Design | For the lowest cost to make | To last, to repair and to take apart |
| End of use | Landfill or burning | Reuse, repair, remanufacture, recycle |
| Waste | A cost to remove | A material with a value |
The Ellen MacArthur Foundation sets out three principles: eliminate waste and pollution, circulate products and materials at their highest value, and regenerate nature.
Circular economy examples
- Scrap metal. Steel, aluminium and copper are melted and made into new metal again and again, with no loss of quality.
- Box to box. A used cardboard box is pulped and made into a new one within weeks.
- Reuse before recycling. A drinks maker with unused glass bottles sells them to another producer, so they are filled and used, not crushed.
- Rebuilt equipment. Makers of office machines take back old models, rebuild them and sell them again.
- Buy back schemes. Retailers buy used furniture from customers and resell it.
- Pallets and crates. Transit packaging that goes round many times in place of single use packaging.
How can a business take part?
- Find out what you throw away. List each material, how much there is and what it costs you.
- Prevent it first. Order less, pack less and repair more.
- Sell or pass on what others can use. Surplus stock, pallets and offcuts all have buyers.
- Separate what remains. Clean, single materials are worth far more than mixed waste.
- Buy recycled. Demand for recycled materials is what keeps them in use.
The quickest step is to sell material you already have. See what is wanted by buyers, check the current prices for recyclable materials, or read about selling commercial waste.
Frequently asked questions
What is the circular economy in simple terms?
It is an economy where products and materials are kept in use by reusing, repairing and recycling them, so that very little is thrown away.
What are the three principles of the circular economy?
Eliminate waste and pollution, circulate products and materials at their highest value, and regenerate nature. They were set out by the Ellen MacArthur Foundation.
What is an example of the circular economy?
Scrap metal is a clear example. Steel and aluminium are collected, melted and made into new metal again and again without losing quality.
What is the difference between recycling and the circular economy?
Recycling is one part of it. The circular economy starts earlier, with designing products to last and be repaired, and reusing them before they are recycled.
Why does the circular economy matter to a business?
It cuts the cost of buying materials and removing waste, it can turn waste into income, and it helps meet rules on recycling and packaging.