The UK is considered by many, to be Europe’s leading business centre, while the City of London has long been the European Union’s financial centre.
There are good reasons for this. Within the EU, the UK has the least restricted business environment, the least restricted regulated marketplace and workforce, the largest international transport system, best communications, most widely spoken language, lowest top rate of personal taxation, one of the lowest rates of corporation tax and the most cosmopolitan and culturally diverse capital.
While the UK is an attractive, low-cost centre for European business it is also a knowledge centre offering world-class skills, research and development in cutting-edge technologies, telecoms, e-business, software and semiconductor development, biotechnology, industrial design, life and physical sciences.
This is the place for international business/academic partnership, expertise and innovation.
The UK is a leading trading power and financial centre, and deploys an essentially capitalistic economy.
It is one of the quartets of trillion dollar economies of Western Europe.
Over the past two decades the government has greatly reduced public ownership and contained the growth of social security programmes. Agriculture is intensive, highly mechanised, and efficient by European standards, producing about 60% of food needs with only 2% of the labour force. The UK has large coal, natural gas and oil reserves, primary energy production accounts for 10% of GDP, one of the highest shares of any industrial nation. Services, particularly banking, insurance, and business services, account by far for the largest proportion of GDP while industry continues to decline in importance.
After emerging from recession in 1992, Britain’s economy enjoyed the longest period of expansion on record during which time growth outpaced most of Western Europe. In 2008, however, the global financial crisis hit the economy particularly hard, due to the importance of its financial sector. Sharply declining home prices, high consumer debt, and the global economic slowdown compounded Britain’s economic problems, pushing the economy into recession in the latter half of 2008 and prompting the then BROWN (Labour) government to implement a number of measures to stimulate the economy and stabilize the financial markets; these include nationalizing parts of the banking system, temporarily cutting taxes, suspending public sector borrowing rules, and moving forward public spending on capital projects.
Facing burgeoning public deficits and debt levels, in 2010 the CAMERON-led coalition government (between Conservatives and Liberal Democrats) initiated a five-year austerity program, which aims to lower London’s budget deficit from over 10% of GDP in 2010 to nearly 1% by 2015. In November 2011, Chancellor of the Exchequer George OSBORNE announced additional austerity measures through 2017 because of slower-than-expected economic growth and the impact of the euro-zone debt crisis.
The CAMERON government raised the value added tax from 17.5% to 20% in 2011. It has pledged to reduce the corporation tax rate to 23% by 2015. The Bank of England (BoE) implemented an asset purchase program of up to £325 billion (approximately $525 billion) as of February 2011. During times of economic crisis, the BoE coordinates interest rate moves with the European Central Bank.
Whilst Britain opted to remain out of the European Economic Union, and the outcome of the Eurozone crisis is unclear, there has been a knock on effect in Britain with projected economic growth at 0.5% for 2012; the forecast for inflation is projected at 2.6% which is slightly less than in 2011.
Recent developments have seen The IMF suggest that the Bank of England should inject more stimulus into the ailing British economy and consider cutting interests rates and expand its £325bn quantitative easing scheme whilst the OECD has taken a different view of the UK fiscal and monetary policy suggesting further loosening was unnecessary as the UK is past the worst of the economic slowdown.
A wide range of incentives are available to companies, joint ventures, partnerships and other commercial entities investing in the UK. Like most countries, the UK imposes detailed regulatory requirements on banks (these are administered by the Bank of England) and insurance companies (administered by the Department of Trade and Industry).
There is no legislation restricting foreign investors in the UK. Foreign investment in manufacturing and internationally traded services is encouraged. Foreign companies and individuals may in general establish or acquire businesses in the UK and buy securities, land or mortgages without a special license. However, in certain strategic sectors such as defence, foreign investments may be regarded as against the UK’s national interest.
The UK’s Parliament is one of the oldest in the world, having its origins in the mid-13th Century. Its principles of free elections, freedom of speech and open and equal treatment before the law continue to be fervently upheld.
Parliament consists of three parts, the House of Commons, House of Lords and the Crown and is responsible for making laws, examining the work of Government, controlling finance, protecting the individual, examining European proposals, and debating.
At the end of the 20th Century, legislation was passed by the UK Parliament to create devolved Parliaments/Assemblies in Scotland, Wales and Northern Ireland.
As a Member State of the European Union, the UK in bound by the various types of European community (EC) legislation and wider policies that are based on a series of treaties since the 1950s. Almost all UK government departments are involved in EU-wide activities. The UK has 78 members of the European Parliament and there are elections every five years, the next election is due in 2014.
The UK also has an active civil society with thousands of non-government organisations (NGOs) that represent the multitude of cultural, ethnic, religious, environmental, and other interests of individual citizens.
For the last 150 years, Britain has had a predominantly two-party system. Since 1945, either the Conservative Party or the Labour Party has held power. The Liberal Democrats were formed in 1988 when the Liberal Party merged with the Social Democratic Party, which was founded in 1981.
Other parties include two nationalist parties, Plaid Cymru, The Party of Wales and the Scottish National Party. Northern Ireland has a number of parties. They include the Ulster Unionists, the Democratic Unionists, founded by a group that broke away from the Ulster Unionists, the Social Democratic and Labour Party and Sinn Fein.
The party that wins most seats at a General Election, or which has the support of a majority of members in the House of Commons (by coalition), usually becomes the Government. The largest minority party becomes the official Opposition, with its own leader and shadow cabinet.
Leaders of the Government and Opposition sit opposite one another on the front benches in the debating chamber of the House of Commons. Their supporters, called the backbenchers, sit behind them. There are similar seating arrangements for the parties in the House of Lords but those peers who do not wish to be associated with any political party choose to sit on the crossbenches.
The UK has an unwritten constitution. Law consists of statutes, common law and case law.
The legal system is characterised by common law tradition with early Roman and modern continental influences. There is no judicial review of Acts of Parliament and the UK accepts compulsory ICJ jurisdiction, with reservations. British courts and legislation are increasingly subject to review by European Union courts.
All businesses operating in the UK are subject to the laws of the country in which they operate. The UK has long had a policy of minimising bureaucracy and deregulating marketplaces in order to generate competition improve customer services and allow companies with good business models to develop and expand.
There are nevertheless strict laws governing employment, industrial emissions, pollution monitoring and control, and waste disposal. A number of industry sectors require membership of self-regulatory authorities, such as the Financial Services Authority (FSA) which monitors and enforces standards within the finance and insurance industries. Financial transparency is a requirement of limited companies which must submit independently audited annual reports to the Registry in Britain called Companies House. To protect shareholder interests, there are stringent annual reporting guidelines for publicly limited companies (PLCs).
Further detailed information is offered by UK Trade & Investment, the Department for Trade and Industry (DTI), the Department for Education and Skills (DfES), Government Direct for Business in Northern Ireland, the Scottish Executive, the National Assembly of Wales, and the Confederation of British Industry (CBI). The 12 regional development agencies also provide guidance about regional laws, regulations and standards.
|Facts and Figures|
|Official Name||United Kingdom of Great Britain and
|Capital Cities||England, London
Northern Ireland, Belfast
|Population||63,047,162 (July 2012 est.)|
|Working Population||31.76 million (2011 est.)|
|Official Language||English, Welsh (approximately 26% of
the population of Wales), Scottish Gaelic
(approximately 1% of the population of Scotland)
|Currency||Pound Sterling (GBP)|
|Exchange Rate||GBP US$ 1.6|
|GDP||US$ 2.25 trillion (2011 est.)|
|GDP per Head||US$35,900 (2011 est.)|
|GDP Growth||1.1% (2011 est.)|
|Inflation||3% (2012 est.)|
|Exports||27% of GDP|
|Top Import Sources||Germany
|Top Export Markets||Ireland
Roman Catholic, 9m
|Area Size||244,8202 kilometres|
The British, in particular the English, are renowned for their politeness and courtesy. This is a key element of British culture and is a fundamental aspect of British communication style. When doing business in the UK you generally find that direct questions often receive evasive responses and conversations may be ambiguous and full of subtleties. Consequently, it is important to pay attention to tone of voice and facial expression, as this may be an indication of what is really meant.
The term, Stiff Upper Lip‚ is often used to describe the traditionally British portrayal of reserve and restraint when faced with difficult situations. In British culture open displays of emotion, positive or negative are rare and should be avoided. During meetings, this means your British colleagues will approach business with an air of formality and detachment.
Humour, a vital element in all aspects of British life and culture is the renowned British sense of humour. The importance of humour in all situations, including business contexts, cannot be overestimated.
Humour is frequently used as a defence mechanism, often in the form of self-depreciation or irony. It can be highly implicit and in this sense is related to the British indirect communication style.
The United Kingdom is renowned for its colourful history and strong sense of tradition that has been shaped by colonial empire, both civil and European wars and a constitutional monarchy, supported by a long-established system of government and economic stability.
- The average working week is 9.00am to 5.30pm. However, many executives work longer hours.
British business protocol and tradition demands punctuality when attending meetings. It is also best practice to arrange appointments several days in advance.
- UK businesses now deploy, Flat Hierarchical Structures‚ where the only divide is between managers and other ranks.
- It is now common for British businesses to employ younger than anticipated members who are deal makers.
- British businessmen generally favour the establishment of pool working relationships with their subordinates.
- Business entertaining can be conducted during any meal and generally whoever initiates is expected to pay.
- It is customary to always shake hands. When being introduced or when meeting someone, as well as when leaving.
- Business cards are welcomed in business culture and are generally exchanged at the end of business meetings.
- During initial meetings British business people will be generally cool, calm and give little away as to their intentions. It is not uncommon for the quietest member of a meeting to carry the most influence.
- Once business relations have been established the British will not hesitate to speak their minds, or disagree, and generally British businessmen like to establish long lasting business relationships.