Euromoney Country Risk

EUROMONEY COUNTRY RISK

Read the latest analysis on sovereign, geo-political and structural risk

 
Get up to date country risk ratings in 186 countries

Member login



Lost your password?

Euromoney Country Risk

Euromoney Country Risk
List of countries.

United Kingdom United Kingdom

Overview Change score Analyses Experts
 
Sponsored section
United Kingdom

Table of Content


EconomicPoliticalStructural

Euromoney Country Risk editor’s view

The United Kingdom is a constitutional monarchy. The head of state in the UK, along with the independent states of the commonwealth realm, is Queen Elizabeth II.  The country’s parliamentary system, based on the Westminster model, has been emulated around the world.  The current head of the government is Prime Minister David Cameron.  The country maintains one of the five permanent seats on the UN Security Council.  The UK is also an active member of the EU but chose not to adopt the Euro. 

As one of three command centers of the global economy, the UK’s main exports include manufactured goods, fuels, and chemicals.  The service industry is the largest contributor to the country’s GDP.  Classified by the World Bank as a high-income country, the UK is also a member of the Organization for Co-operation and Economic Development (OCED).

United Kingdom – Quick View
ECR score80.22 (Mar 2011)
ECR rank17 (Mar 2011)
Economic
GDP, 2010USD 2,261.5 billion
GNI per capita, 2009USD 2.31 trillion
FDI inflow , 2009USD 71.53 billion
Inflation, 20103.7%
Central Bank Assets, 2010USD 381,301.62 million
Unemployment rate, Q4 20107.9%
Government deficit, 2010USD 174.67 billion
Political
Government typeConstitutional Monarchy
Economic freedom score, 201116th
Freedom of information score19th
Corruption Perception Index, 201020th
Structural
Birth rate, 200963.6 (per ‘000)
Population balance0-4 years – 6.3%
Population balance25-59 years – 47.4%
Population balanceAbove 60 years – 20.6%
Life expectancy yearsMale – 77.7 years
Life expectancy yearsFemale – 81.9 years
Mortality rate, 2008Male - 700 (per ‘000 00)
Mortality rate, 2008Female – 499 (per ‘000 00)
Literacy rate99%
Internet Access82.5%

[Top] Economic Overview

GDP at market prices

GDP at market price in 2010 was registered at GBP 1,463 billion, increasing 4.9% over 2009.


United Kingdom GDP at market price

(Source: hm-treasury.gov.uk)

Growth of real GDP

In 2010, real GDP registered a growth rate of 1.2%.

United Kingdom Real GDP Growth Rate

(Source: hm-treasury.gov.uk)

Gross national income (GNI)

United Kingdom GNI, PPP

(Source: World Bank)

Income tax rate in the UK

Income Tax rates and taxable bands (GBP)

Rate

2010-11

2009-10

2008-09

Starting rate for savings: 10%

0-2,440

0-2,440

0-2,320

Basic rate: 20%

0-37,400

0-37,400

0-34,800

Higher rate: 40%

37,401-150,000

Over 37,400

Over 34,800

Additional rate: 50%

Over 150,000

Not applicable

Not applicable

 

(Source: HM Revenues and Customs)

Corporate taxation

Corporate taxation has remained unaffected for the last few years.  However, in 2010-2011 some marginal changes were made.

 

Rates for financial years starting on 1 April

Rate

2010

2009

2008

Small Profits Rate*

21%*

21%*

21%*

Small Profits Rate can be claimed by qualifying companies with profits at a rate not exceeding (GBP)

300,000

300,000

300,000

Marginal Relief Lower Limit (GBP)

300,000

300,000

300,000

Marginal Relief Upper Limit (GBP)

1,500,000

1,500,000

1,500,000

Standard fraction

7/400

7/400

7/400

Main rate of Corporation Tax

28%*

28%*

28%*

Special rate for unit trusts and open-ended investment companies

20%

20%

20%

 *For companies with ring fence profits (income and gains from oil extraction activities or oil rights in the UK and UK Continental Shelf) these rates differ. The small profits rate of tax on those profits is 19% and the ring fence fraction is 11/400 for financial years starting 1 April 2008, 2009 and 2010. The main rate is 30% for financial years starting on 1 April 2009, 2010 and 2011.

(Source: HM Revenues and Customs)

Inflation rate

In the UK, as of 2003, the Consumer Prices Index (CPI) is the official inflation Indicator. Prior to  the CPI, Retail Prices Index (RPI) indicated the inflation level in the country. The CPI for the month of December 2010 was marked at 3.7%.

United Kingdom Inflation Rate

(Source:National Statistics)

Foreign direct investment inflow

In 2009, direct investment of the UK in other countries was GBP 21.2 billion, decreasing 78.65% over 2008. Furthermore, foreign direct investment in the UK amounted to GBP 45.7 billion by the end of 2009, decreasing 6.54% from 2008.

(Source: National Statistics)

United Kingdom Foreign Direct Investment

(Source: National Statistics)

Banking Sector Assets

Total bank assets for the Bank of England were recorded at GBP 246,669 million for 2010, increasing 47% as compared to GBP 167,311 million in 2009. The bulk of the movement in assets was in loans and advances, as a result of the increased lending to the Bank of England Asset Purchase Facility Fund Ltd (BEAPFF).

(Source: Bank of England)

United Kingdom Banking Sector Assets

(Source: Bank of England)

Stock market capitalisation

Domestic equity market capitalization for the London stock exchange was registered at USD 2,407 billion in June 2010, which is a 9.6% change from from the previous year's USD 2,198 billion.

United Kingdom Domestic Market Capitalisation

 

(Source: World Exchange)

[Top] Financial Indicators & Government Financial

Consumer price index (CPI)

The consumer price index recorded a 1.04% hike in December 2010.

 

Consumer Prices Index, 2010

(2005=100)

Jan

112.4

Feb

112.9

Mar

113.5

Apr

114.2

May

114.4

Jun

114.6

Jul

114.3

Aug

114.9

Sep

114.9

Oct

115.2

Nov

115.6

Dec

116.8

(Source: National Statistics)

Wholesale price index

The overall output price index increased by 4.1% in December 2010, compared to 3.8% in September 2010.

Output prices (All manufactured products)

Month (2010)

Percentage change

Apr

5.9

May

5.5

Jun

5.1

Jul

5.0

Aug

4.2

Sep

3.8

Oct

4.0

Nov

4.1

Dec

4.1

(Source: National Statistics)

The overall input index increased to 12.9% in December, compared with a rise of 9.2% in November. The rise in the input index between November and December reflected the rise in the price of imports.

Input prices (Materials and fuels purchased)

Month (2010)

Percentage change

Apr

12.8

May

11.7

Jun

10.6

Jul

10.8

Aug

8.3

Sep

8.8

Oct

8.4

Nov

9.2

Dec

12.9

(Source: National Statistics) 

Interest rate on savings deposits

The interest rate on savings in UK ranges from 2.5% to 3%.

(Source: Money Facts)

Interest rate on time deposits

Depending on the bank and the time period, the interest rates will range from 3% to 4%

(Source: Money Facts)

Money supply (currency in circulation)

There are mainly two measures of money supply in UK: M0 and M4

M4 is the money outside the banks, or the money in circulation in the public, including the private retail and wholesale banks and deposit certificates.

United Kingdom Money Stock

(Source: National Statistics)

Government expenditure

The govvernment spending increased by about 7-8% from 2008 to 2009, and is estimated to rise by a further 6.27% for the 2010. Health and pensions are the two major spending categories, which, when combined, account for more than a third of the government's expenditure.

United Kingdom Government Expenditure

(Source: UK Public Spending)

The 2010 budget in the UK stressed a long lasting economic recovery rooted in both the private and the public sector. In order to overcome the public spending deficit, the government plans to reduce the current spending to about GBP 30 billion a year by 2014-2015. Furthermore, the government also plans to deliver GBP 6.2 billion to deal with the budget deficit of waste and the inefficiency across public sector.

(Source: Direct.Gov)

United Kingdom Distribution of Government Expenditure 2009

 

(Source: UK Public Spending)

Official exchange rate

Official Exchange Rate

 

Euro/GBP

USD/GBP

2010

1.1664

1.5460

2009

1.1233

1.5651

2008

1.2588

1.8528

2007

1.4619

2.0018

2006

1.4670

1.8429

 (Source: National Statistics)

Government finances

Total revenue

The government expects to collect a revenue of GBP 548 billion in 2010-11.  A major part of which will be sourced from Iincome tax and national insurance.

United Kingdom Sources of Government Revenue

(Source: Direct.Gov)

Fiscal deficit

In 2010, the fiscal budget deficit of the country amounted to GBP 113 billion.

(Source: Direct.Gov)

Tax revenue

The economic crisis in the last two years resulted in the dipping revenues.  However, the situation is expected to improve this year and in the next half decade as the government revenues are expected to rise by about CAGR of 5%.

(Source: Guardian UK)

United Kingdom Tax Revenue

(Source: Guardian UK)

Balance of payments

Since 1984, a current account deficit has prevailed in UK. However, in the last two years there has been a reduction in the current account deficit.

UK Balance Of Payments (GBP billion)

 

2009

2008

2007

2006

2005

Trade in goods

−82,365

−93,116

−89,754

−76,312

−68,589

Trade in services

52,678

−68,589

46,798

34,775

25,742

Total Trade

−29,687

−37,760

−42,956

−41,537

−42,847

Total income

20,552

28,035

20,020

8,481

21,855

Current transfers

−14,719

−14,051

−13,546

−11,878

−11,849

Current balance

−23,854

−23,776

−36,482

−44,934

−32,841

Capital balance

3,284

3,241

2,566

975

1,503

Net Financial Account

30,316

25,811

24,790

41,974

29,024

Net errors and omissions

−9,746

−5,276

9,126

1,985

2,314

(Source: National Statistics)

UK Balance Of Payments (GBP billion), 2010

 

Q3

Q2

Q1

Trade in goods

−25,932

−22,872

−22,606

Trade in Services

11,741

11,617

13,104

Total Trade

−14,191

−11,255

−9,502

Total income

8,196

10,080

4,283

Current transfers

−4,312

−3,576

−5,811

Current balance

−10,307

−4,751

−11,030

Capital balance

575

816

1,041

Net Financial Account

9,322

−5,833

9,322

Net errors and omissions

410

9,768

9,187

(Source: National Statistics)

[Top] Labour Force and Employment Overview

Labour force

More than three quarters of the total population aged between 16 and 64 are economically active. The employment rate is nearly 70%.

(Source: National Statistics)

Labour Force Data, 2010 (Billion)

Time-Period

Q4

Q3

Q2

Q1

 

All aged 16 to 64

40,079

40,035

39,990

39,938

 

Total economically Active

30,740

30,962

30,523

30,437

 

Total in   employment

28,323

28,448

28,107

27,962

 

 

Unemployed

2,417

2,514

2,415

2,475

 

Economically    inactive

9,339

9,073

9,467

9,502

 

Employment rate (%)

70.7

71.1

70.3

70.0

 

ILO unemployment    rate (%)

7.9

8.1

7.9

8.1

 

 

(Source: National Statistics)

 

Labour force participation rate

The labour force participation rate for the year 2008 was 62.2% of the total population above 15 years of age. The female participation rate for the same year was 55% and male participation rate stood at 70%

(Source: World Bank)

Unemployment rate

Unemployment has been steadily increasing over the last five years. In 2008-09 the rate experienced a sharp jump because of the economic crisis.

(Source: National Statistics)

 

Labour Unemployment rate in UK (%)

2008 - 2009

7.6

2007 - 2008

5.7

2006 - 2007

5.3

2005 - 2006

5.4

2004 - 2005

4.9

(Source: National Statistics)

 

Employment in agriculture

In 2009, about 1.4% of the total employed people work in the agriculture sector.

(Source: World Bank)

Employment in industries

Industries employ about 21.39% of the total employed people.

(Source: World Bank)

Employment in services

Service, the largest employer in the country, employs 76.9% of total.

(Source: World Bank)

Level of unionisation

Trade Union Congress, one of country’s leading trade unions, has 58 affiliated unions, representing 6.2 million working people from different industries.

(Source: TUC.org)

Minimum wage

The minimum wage rates in the country as of October 2009 are:

  • GBP 5.80 per hour for workers aged 22 and older
  • GBP 4.83 per hour for workers aged 18-21 inclusive
  • GBP 3.57 per hour for all workers under the age of 18, who are no longer of a compulsory school age

(Source: HMRC)

[Top] Political Stability

 

Political stability

 

The UK operates under a constitutional monarchy. The country does not have a written constitution, thus the law is based on common law and traditional rights.

 

The head of the state is Queen Elizabeth II, while the Prime Minister, David Cameron, heads the Government.

 

Political parties active in the country are:

 

  • Labour
  •  Liberal Democrats
  • UK Independence Party
  • British National Party
  • Green Party
  • Scotland- Scottish National Party
  • Wales- Plaid Cymru (Party of Wales)
  • Northern Ireland-Ulster Unionist Party, Social Democratic and Labour Party, Democratic Unionist Party, Sinn Fein, Alliance Party, Progressive Unionist Party

 

The Labour Party has been in power since 1997 under Tony Blair and then briefly for Gordon Brown. The ruling government headed by David Cameron, is a formal coalition with Liberal Democrats and conservatives. The Liberal Democrat leader, Nick Clegg, became the Deputy Prime Minister as a part of the coalition deal after the 2010 elections.

 

(Source: State. Gov)

 

Regulatory environment in UK

 

The executive power rests with the monarch, but in a real sense is exercised by the cabinet ministers, who are selected out of the House of Commons and the House of Lords.

 

Parliament makes and passes laws for the entire nation;

 

  • The devolped legislatures in Scotland, Northern Ireland, and Wales have varying degrees of legislative authority over all matters except foreign policy, energy policy, immigration and border control, and monetary policy
  • The Parliament acts as the legislate for all fields in England.
  • The maximum parliamentary term, up until 2010, was 5 years and the Prime Minister had the authority to ask the monarch to dissolve parliament anytime. However the new government has proposed that to vote out a government between elections, a vote of no confidence with the support of 55% of members of parliament would be required.

 

Business and economic freedom

 

United Kingdom scores 74.5 on the economic freedom index making it the 16th freest economy in 2011. The UK is ranked 7th out of the 43 European countries and its overall score is much higher than the world average.

 

(Source: Heritage.org)

 

Corruption perception

 

The United Kingdom is ranked 20th on the Corruption Perceptions Index (CPI) 2010, which measures the perceived level of public-sector corruption in 180 countries and territories around the world.

 

(Source: Transparency.Org)

 

Freedom of information

 

The British media are free to comment or report on all aspects of British life and Politics. British politics or political parties exercise no control on media. The Daily Telegraph, Financial Times and The Guardian are the key newspapers in the country, while BBC is the key TV broadcaster.

 

The country ranks 19th on the Press Freedom Index 2010, much behind its European counterparts Finland, Netherland, Norway, Sweden, Switzerland, Austria, Estonia, Denmark , Lithuania, Belgium, Luxembourg and Germany.

 

(Source: rsf.org)

[Top] Demographic Overview

Estimated population in the country was 61.8 million people by mid 2009, increasing 0.6% over the previous year. England is heavily populated accounting for about 85% of the total UK population, while Wales, Scotland and Northern Ireland account for only 5%, 8% and 3% of the population.

The population is expected to reach 62.65 million and 64.8 million people by the mid of 2011 and 2016 respectively. However, the regional distribution of population is projected to remain the same.

United Kingdom Population

(Source: National Statistics)

The total male population of the country in 2009 was 30.4 million, while the female population was 31.4 million, accounting for about 50.8% of the total population.

(Source: National Statistics)

United Kingdom Population by Gender

Birth rate

In 2009, the birth rate (per 1,000 women of childbearing age) wasregistered at 63.6. Furthermore, there were 706,248 live births in 2009, compared to 708,711 in 2008.

(Source: guardian.co.uk)

United Kingdom Population

(Source: National Statistics Office)

The average age of the population in 2009 was 39.5 years, marginally up from 37.3 years in 1999. Additonally, the Life expectancy in 2007-09 was determined at 77.7 years for males and 81.9 years for females.

(Source: National Statistics)

The country’s mortality rates for 2008 was the lowest ever recorded at 700 deaths for males and 499 deaths for females (per 100,000 people).

 

Death Rate

2008

Male

Female

60-79 years

43%

30%

80 and above

42%

38%

(Source: National Statistics)

Infant mortality rates have also dropped significantly. The infant mortality rate in England and Wales (deaths under one year of age) was 4.5 deaths per 1,000 live births in 2008, as compared to 12 deaths per 1,000 live births in 1980 reflecting a decrease of 62.5%.

(Source: National Statistics Office)

The UK ranked 26th on the Human Development Index (HDI) 2010 conducted by the United Nations. The HDI provides a composite measure of three dimensions of human development: living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and gross enrolment in education) and having a basic standard of living (measured by purchasing power parity, PPP, income). 

(Source: UNDP)

The households below average income (HBAI) survey in 2009 revelaed that 13.4 million people (22% of the total population) in the UK are income poor. 

Of those 13.4 million people:

  • About 53% of households have one child
  • A third (32%) are households without children
  • And nearly 15% of households are pensioners

(Source: CPAG)

0.43 million people emigrated from the UK in 2008, a increasing by nearly 25% from the previous year. The rise in the emigration was due to an increased number of non-British citizens leaving the country, about 0.26 million non-British people left the country.

Approximately 590,000 people were expected to have arrived to live in the UK in 2008, demonstrating an immigartion increase of 3% from the previous year. However, the net immigration in the UK fell in 2008, as a result of increased emigration in 2008, as compared with 2007.

(Source: National Statistics)

[Top] Soft Infrastructure

Education/literacy rate

The literacy rate in the UK is registered at 99%, with 12 years of education compulsory for every citizen.

(Source: State. Gov)

Education resources

The education system in UK has consistently improved over the past 3 decades. There has been an increasing number of children enrolled for early education, partly because of the increase in the number of schools available.

(Source: National Statistics)

The education sector impacts the UK economy significantly. In 2007/08 the higher education sector spent GBP 19.5 billion on goods and services produced in the UK. The total output generated by the UK universities in 2007/2008 was GBP 59 billion, which accounted for 42% of the total output generated by all industries. Furthermore, universities in the UK employed nearly 49% of the total working populace in the year 2007/2008.

(Source:universitiesuk.ac.uk)

 

ACADEMIC STAFF AT UK HIGHER EDUCATION INSTITUTIONS 2007/08

 

Full-time

Part-time

Total

Total academic staff

113,685

56,310

169,995

Female

37%

54%

43%

Wholly institutionally financed

72%

88%

77%

Financed by NHS/General medical or dental practice or Department of Health

3%

2%

2%

Research only

28%

35%

30%

Disabled

2%

3%

2%

Of non-UK nationality

26%

17%

23%

(Source:universitiesuk.ac.uk)

[Top] Hard Infrastructure

Mass public transit

The various means of public transit in UK include buses, trains, metros and taxis.

Passenger transport (2005-2007) Billion passenger kilometres

Year

Road

Rail

Air

All Modes

2007

749.00

59.00

9.50

817

2006

746.00

55.00

9.90

811

2005

733.00

52.00

9.90

794

 

(Source: DFT.Gov)

Ports

There are about 384 ports in and around the UK, including: Dover, Felixstowe, Immingham, Liverpool, London, Southampton, Teesport in England; Forth Ports, Hound Point in Scotland; and Milford Haven in Wales.

(Source: World Port Source)

Airports

There are about 505 airports in the UK; The busiest airports are Heathrow, Gatwick, Manchester, Stansted, Birmingham, Glasgow, Edinburgh, Luton, Belfast International and Bristol

(Source: World Airport)

Telecommunications networks

  • Number of fixed residential broadband connections in the UK - 16.8 million by the end of 2009
  • 15% adults in UK use mobile broadband (2010)
  • 89% of adults owned mobile phones (2010)
  • 22.9 million fixed landlines (2009)

(Source: Media.Ofcom)

Internet access

As of June 2010, the country had 51,442,100 internet users, as compared to 15,400,000 in 2000. Thus, the internet penetration rate has increased from 26.2% in 2000, to 82.5% in 2010.

(Source: internetworldstats)

Euromoney country risk banner
 
All material subject to strictly enforced copyright laws.
© 2017 Euromoney Institutional Investor PLC.