The UK offers a strong business climate although the Brexit has significantly changed the country's political and operational landscape and increased regulatory and tax uncertainty.

On 31 January 2020, the EU and the UK reached a Withdrawal Agreement from the European Union. Northern Ireland remains in practice integrated into the European single market thanks to an additional protocol to the treaty, but its application remains controversial. Since May 1, 2021, the relations between the two blocs are regulated by several trade and cooperation agreements which do not impose tariffs but do establish certain customs controls that have contributed to shortages and a crisis in supply chains.

Related to the above, the Scottish National Party (SNP) is pushing for a new vote on Scottish independence, although another independence referendum is unlikely to be held soon.

The security environment is business-friendly, although occasional Islamist terrorist incidents may occur in the coming years.

Political

The UK is a democratic parliamentary monarchy. Parliament comprises the Crown, the House of Commons (lower house) and the less influential upper chamber (the House of Lords). The monarch as head of state has little direct political influence. The establishment of the Scottish Parliament, Welsh National Assembly and the Northern Ireland Assembly in 1999 transferred some authority from the central government in London, but parliament has retained authority over economic and foreign policy in Scotland and Wales. The government also devolved some authority to the Northern Ireland Assembly in 1999.

The Conservative Party, led by Boris Johnson, obtained a majority in a snap election in December 2019, which allowed him to unlock the Brexit negotiation with the EU. The UK's decision to leave the EU led to a downgrade of the country's credit rating to AA+, stable. The government remains focused on mitigating the economic and social repercussions of the COVID-19 virus pandemic, and the problems associated with the global supply crisis. The Scottish National Party maintains the pressure for Scottish independence after its 2019 election victory with the support of the Green Party.

The IMF estimates that the UK will grow by 5.3% in 2021. Despite the vaccination campaign in the UK only 68% of the population has been reached by 11/11/2021. The incidence of infections remains high despite a gradual improvement of indicators and the government has announced that new restrictions it may be necessary in winter.

The UK is considered a Full Democracy in the 2020 Democracy Index, developed by The Economist Intelligence Unit (EIU), where the country ranks 14 out of 167 countries scored. The country ranks 15 at the 2019 Human Development Index developed by the United Nations Development Programme.

The UK has a fully developed, stable and prosperous market economy and presents a strong business environment, though the country’s vote in June 2016 to leave the EU (Brexit) significantly changed the political and operational landscapes, creating uncertainty over the UK’s trading relationships with the UE members, its policy priorities, and its economic outlook.

These uncertainties include the controversies over the implementation of the agreement with the UE or the supply problems and the lack of workers in certain sectors that the United Kingdom is facing in 2021. The companies should consider this context and prepare for changes in the way they operate in the United Kingdom.

On January 31, 2020 the United Kingdom left the European Union when the Withdrawal Agreement entered into force and became a third country vis-à-vis the EU, initiating a transition period that lasted until December 31, 2020. On 27 December 2020 the EU and the UK approved a trade and cooperation agreement redefining their future relations which was provisionally applicable from the 1^st January 2021. In Boris Johnson's words, the UK's exit from the EU makes it a competitor.

Controversies over the implementation of the deal or the challenge of some aspects or the treaty are likely in the foreseeable future. The post-Brexit agreement provides for tariff-free trade in goods between the UK and the EU but creates new customs requirements for exports and imports that have produced limited delays in the first few months, especially in traffic from the UK to the EU and recently aggravated by the global supply crisis. The agreement includes a Protocol on Northern Ireland that seeks to reduce or eliminate bureaucratic and legal obstacles between the two Irelands; something that has bothered both the unionist and pro-independence sectors and has increased the risk of social conflicts.

The UK enjoys a complete public transportation system. Driving in the country is on the left side of the road and cars have the steering wheel on the right side. People unfamiliar with that driving system face an increased risk of traffic accident. Not all taxis accept payment by card although they do agree to stop next to an ATM for the passenger to withdraw cash.

Overall, the UK ranks 8 out of 190 countries scored at the 2020 Doing Business Index by the World Bank and 11 out of 198 at the 2020 Corruption Perception Index by the Transparency International Organization.

Security

The security environment is generally benign, the authorities are effective at managing threats and the police and intelligence services have strong capabilities. Islamist extremist terrorism returned to prominence in 2017 with a series of attacks using improvised explosive devices (IEDs), vehicles as weapons, and knives. Although the frequency of such attacks was drastically reduced in 2018 and later, further attacks in the coming years should not be dismissed. In addition, there is evidence that far-right extremists are increasing their activities.

Levels of violent crime are higher than in most other European states, but generally consist of gang-related violence in low-income urban areas and such incidents are unlikely to affect businesses or their personnel. Alcohol-related violent crime also poses a persistent threat in entertainment districts. Organized criminal groups are active in drug- and human trafficking.

UK authorities estimate that serious and organized crime costs the country around GBP37 billion a year. Drug smuggling is considered to account for the largest proportion of the cost, followed by fraud.

Inter-state war risks are likely to remain low in the UK because of the country’s friendly relations with all its neighbours and many other states around the world. The UK is a NATO member and has recently established a new military alliance called AUKUS with the US and Australia.

Overall, The UK ranks 42 out of 163 within the 2020 Global Peace Index by the Institute for Economics and Peace.

The UK is currently among the most cyber-attacked countries in the world. According to Kaspersky cyber threat map, it is ranked as the 17th most attacked country.  Cybercrime is a growing threat in the UK, including malware, ransomware attacks, and the targeting of networked systems. Although the police force functions effectively and is well-resourced overall, it has had its budget cut severely over the last years, gradually affecting its ability to provide frontline services.

Prime Minister Boris Johnson has pledged to reverse this trend with increased public spending.

Health

The UK ranks 2 out of 195 within the 2019 Global Health Security Index, a project of the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHU), developed with The Economist Intelligence Unit (EIU). 

Natural

The UK is regularly hit with violent storms strong enough to cause coastal damage and require evacuations. Floods, fog, rain and snow, which are particularly common in the winter months, can have a significant impact on air, sea and land transport.

If you plan to visit the UK, stay informed by Preparing for Emergencies.