United Kingdom

United Kingdom

Population 67.4 million
GDP 47,329 US$
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Business Climate
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major macro economic indicators

  2020 2021 2022 (e) 2023 (f)
GDP growth (%) - 9.8 7.5 4.0 -0.6
Inflation (yearly average, %) 0.9 2.6 9.1 7.1
Budget balance (% GDP) -15.0 -5.7 -7.0 -5.4
Current account balance (% GDP) -2.5 -2.0 -5.9 -5.3
Public debt (% GDP) 102.6 105.6 102.0 108.0

(e): Estimate (f): Forecast *Fiscal year from April to March


  • Production of hydrocarbons covers three-quarters of energy needs
  • Cutting-edge sectors (aeronautics, pharmaceuticals, automotive)
  • Financial services
  • Competitive and attractive tax regime


  • High public and household debt (115% of gross disposable income)
  • Low productivity and training deficit not conducive to innovation
  • Regional disparities between the Southeast (especially London) and the rest of the country, particularly in terms of transport and energy infrastructure

Risk Assessment

Recession is here as the cost of living crisis, timid trade, and high prices dampen growth

As with many other countries in Europe and across the world, the economic consequences of the war in Ukraine affected the United Kingdom in 2022 and will continue to do so in 2023. With gas being an important part of the country’s energy composition, high energy prices has been particularly prominent. Supply chain constraints, high energy and commodity prices caused much of the rising inflation in 2022, but as some of these eased somewhat in the last months of the year, they were succeeded by second round effects that lead to a broad-based inflation. These inflationary pressures include higher core inflation (6.3 % in November 2022), pent-up price hikes for businesses (producer input inflation rose more than double that of consumer price inflation during most of 2022) as well as anticipated higher pay rises. Inflation is anticipated to gradually fall over the year in 2023 as the global factors weaken, however due to domestic pressures inflation will remain well above the Bank of England’s (BoE) 2 percent target. The falling rate of inflation will mean a slowdown in interest hikes by the Bank of England (BoE) after eight hikes in 2022 alone, concluding with a 50 basis point uptick to 3.50% in December 2022. Interest rate hikes are expected to peak in the first half of 2023 above 4% (around 4.25-4.50%) and remain at this level until the end of the year. Pay rises were, and are, not expected to be at the same level as inflation, which in 2023 will result in households’ real disposable income falling, meaning that private consumption will be supressed in 2023. This is in spite of the energy support measures (GBP 2,500 energy cap until March 2023 and GBP 3,000 until March 2024), cost-of-living measures for most vulnerable, the rise in pension payments (+10.1% in April 2023) and increased minimum wage (+9.7%). While savings ratios are still slightly above the pre-pandemic levels, the savings that households accumulated during lockdowns are gradually being drawn on due to higher costs of living, which collectively means that households will lower their consumption in 2023. Capital investments by businesses are expected to fall in 2023, especially in the construction sector, due to economic uncertainty and a difficult investment environment with labour constraints, high production costs and high interest rates with the latter both raising financial costs and limiting demand. At the same time, the Capital Allowances “super-deduction” will end in March 2023 and the corporation tax will rise from 19% to 25% (for companies making more than £250,000) in April 2023. Exports, which remained 5% below pre-pandemic levels in Q3 2022, will continue to be affected by the consequences of exiting the EU (border checks), especially as its main partners - the EU (around 40% of exports) and the US (14%) - will also experience a difficult year in 2023. Yet, net exports contribution is likely to be positive, as imports will see a fall due to lower domestic demand. After the end of support measures, insolvencies have been on an upwards trend since mid-2021 with the level in 2022 being 26% higher than 2019 and 57% over 2021 levels. With a decreased demand along with high operational and financial costs, insolvencies are anticipated to rise even higher. All the more so as the Energy Bill Relief Scheme (fixed maximum price) will be replaced by a less generous support scheme, Energy Bills Discount Scheme (subsidy per MWh), from April 2023, making businesses more vulnerable to a very volatile energy market.


Stable fiscal policy in response to rising debt financing costs

A revised Autumn Statement in November, that mainly focused on tax rises and spending cuts, was a reversal from the “mini-budget” that was revealed only two months prior. Although lower than in 2022, the public deficit will continue to be above the pre-pandemic levels. The Statement included several energy and cost of living support measures for households (+ GBP 25 billion, 1.1% of GDP) as well as some support measures for public spending (+ GBP 7.8 billion, 0.4% of GDP), such as further funding for NHS, social care and education. Two months later, the government announced the Energy Bills Discount Scheme (+ GBP 5.5 billion, 0.2% of GDP). These expenses will be only partially countered by higher taxes, mainly related to corporates, such as windfall taxes on extraction companies and electricity producers and other business taxes (+ GBP 7.1 billion, 0.3% of GDP). Therefore, public debt will continue to rise. Financing costs remain at elevated levels due to political turmoil, inflation and BoE’s policies. Rising inflation has further affected the budget, as inflation-indexed bonds, which make up around 25% of debt, were almost 60% of debt interest payments in November 2022. In August 2022, the BoE announced its intent to start selling of some of their holdings of Government Bonds (Gilts). It was initially announced that it intended to reduce its total gilt holdings by GBP 80 billion from September 2022 to September 2023, however this was delayed by two months due to the passing of the Queen Elizabeth II as well as the financial turmoil following the “mini-budget”. The BoE intends to sell GBP 3.25 billion worth of Gilts in each of the short, medium and long maturity sectors (GBP 9.75 billion) every quarter, with the remainder of the balance sheet reduction being achieved by not reinvesting maturing bonds.
It is expected that the current account deficit will narrow slightly compared to 2022, however this was an extraordinary year as high energy costs had a substantial effect in increasing imports. Due to energy costs easing in 2023 as well as lower domestic demand, imports are expected to fall, thereby narrowing the balance of goods deficit. Meanwhile, it remains the case that the country has a positive balance of services, partly due to its place in the global financial and insurance industry, which will partially cover some of the balance of goods deficit. As a central place in the international financial system, the country comfortably finances its current account deficit through foreign portfolio investments.


Political stability going forward after a tumultuous 2022

Rishi Sunak, the former Chancellor of the Exchequer in Boris Johnson’s Government, became Prime Minister on 24 October 2022 four days after the resignation of Liz Truss, to whom he had lost the bid to become conservative leader, and thereby Prime Minister, only three months prior. Liz Truss’ premiership was short-lived, 44 days in office, as the “mini-budget” presented by her Government was scrutinised both domestically and abroad, resulting in the GBP depreciating instantaneously, 10-Year Gilts yield rising rapidly and the BoE being forced to intervene on the bond market by temporarily buying UK Gilts. After Rishi Sunak was confirmed as Prime Minister, financial markets did stabilise. The Autumn Statement reaffirmed the new fiscal course; a focus on fighting inflation and sustainable public finances. The new Statement included some support measures and compensation increases for lower income households, however as real disposable income will fall along with the Government’s hard stance on striking, exemplified by the proposed ‘Strikes Bill’, further strikes and some political tensions are expected. The tumultuous streak of scandals from the Boris Johnson period and the financial turmoil during Liz Truss’ tenure has resulted in a weakened Conservative party which averaged around 25% of votes in polls compared to Labour, who averaged almost 50%, in December 2022. Therefore, the Prime Minister is unlikely to call an early general election – due to be held no later than January 2025 – in 2023, however further episodes of political instability cannot be ruled out. Rishi Sunak’s policy stance on the future trading relationship with the EU is less prominent, and it is anticipated that he will be less confrontational than both Liz Truss and Boris Johnson. This means that the current political strain between the UK and EU over the “Northern Ireland Protocol”, the trade mechanism that enables Northern Ireland to remain within the single market, might be easier to resolve for the new Government. An announced trade data sharing mechanism between the two parties on 9 January 2023 is an indication of this, however it should be highlighted that Rishi Sunak was and still is an adamant Brexit supporter.


Last updated: March 2023


Cheques are still used for domestic and international commercial payments, although bills of exchange and letters of credit are preferred for international transactions. Bank transfers – particularly SWIFT transfers − are also often used and are viewed as a fast and reliable method of payment. Direct Debits and Standing orders are also recognised as practical solutions for making regular or anticipated payments and are particularly widely used in domestic transactions. It is acceptable to issue invoices both before and after the supply of goods or services.

Debt collection

Amicable phase

The debt collection process usually begins with the debtor being sent a demand for payment, followed by a series of further written correspondence, telephone calls and (if the value of the debt permits), personal visits and debtor meetings. The collection process has been designed as a progression of stages, beginning with an amicable (pre-legal) collection phase and escalating up to litigation, should the debtor fail to meet his obligations.


Legal proceedings

The County Court only has civil jurisdiction. Judges handle claims for debt collection, personal injury, breach of contract concerning goods or property, land recovery and family issues (such as divorce and adoption). Cases valued at less than GBP 25,000 (or under GBP 50,000 for personal injury cases) must have their first hearing in the county court.

The High Court is based in London, but also has provincial districts known as “District Registries” all over England and Wales. It has three divisions: the Queen’s Bench Division, the Chancery Division, and the Family Division.

The Court of Appeal has two divisions – the Civil Division and the Criminal Division.

The Supreme Court is composed of a president, a deputy president, and twelve professional justices.


Fast-track proceedings (Summary Judgments)

In order to apply for a summary judgment, the claimant must obtain an Application Notice Form from the court. This should be supported by a Statement in which the claimant sets out why he believes that summary judgment should be given − either because the defendant has no real prospect of successfully defending the claim, or because there is no reason why the case should be decided by a full trial.

A copy of this statement is served on the opponent seven days before the summary judgment hearing. The opponent also has the opportunity of presenting a statement, but this must be sent no later than three days before the hearing. The claimant cannot apply for summary judgment until the debtor has either returned an acknowledgment of service form, or has filed a defence. If the court agrees with the claimant, it will return a favourable judgment. The application will be dismissed if the court does not agree with the claimant.


Ordinary proceedings

There are now identical procedures and jurisdictions for the County Court and the High Court. A number of litigation “tracks” have been created, each with their own procedural timetables. Claims are allocated to a track by a procedural judge, according to their monetary value. There are transaction processes that need to be followed before initiating a court action. These processes have been designed to encourage the parties concerned to settle disputes without the need for court proceedings, thus minimising costs and court time.

Proceedings formally commence when the claimant (formerly “the plaintiff”) files a Claim Form with the County Court or the High Court. Full details of the complaint are set out in the Particulars of Claim, which is usually a separate document which supports the Claim Form. The Claim Form must be served on the defendant by the court, or by the claimant. The defendant can then respond to the claim form within 14 days of service. A time extension of 28 days is agreed for the debtor to file a defence and/or a counter-claim. Once these formal documents have been exchanged, the court orders both parties to complete an “Allocation Questionnaire”.


Freezing order (formerly Mareva Injunction)

A freezing order (or freezing injunction) is a special interim order which prevents the defendant from disposing of assets or removing them from the country. One of the conditions attached to the granting of such an order is often that the applicant will pay full costs to the person against whom it was made, if it turns out to be inappropriate. A typical commercial dispute can take 18-24 months to reach a judgment, starting from the time legal action is first initiated.

Enforcement of a Legal Decision

A number of enforcement mechanisms are available. These include the Warrant of Execution (which allows a County Court Bailiff to request payment from the debtor) and the Writ of Fieri Facias for debts exceeding GBP 600, under which a High Court Enforcement Officer can make a levy on goods to the equivalent value of the judgment debt (for subsequent sale at auction and offsetting against the amount due).

As a member of the European Union, the UK has adopted several enforcement mechanisms for decisions rendered in other EU countries. These include EU payment orders which are directly enforceable in domestic courts and the European Enforcement Order, for undisputed claims. Judgments issued in non-EU countries are recognised and enforced if the issuing country has an agreement with the UK. If no such agreement is in place, an exequatur procedure is provided by English Private International Law.

Insolvency Proceedings


Administration is intended as a rescue mechanism which enables companies (wherever possible) to continue with their business operations. The procedure is initiated either by applying to the court for an administration order, or by filing papers with the court documenting the out-of-court appointment of an administrator.


Company Voluntary Arrangement (CVA)

The CVA is an informal but binding agreement, between a company and its unsecured creditors, in which the company’s debts are renegotiated. It can be used to avoid or support other insolvency procedures, such as administration or liquidation. It provides for a restructuring plan which imposes the support of dissenting creditors.


Creditor’s Scheme of Arrangement

The Creditor’s Scheme of Arrangement is a court-approved compromise or arrangement, between a corporate debtor and all classes of its creditors, for the reorganisation or rescheduling of its debts. It is not an insolvency procedure and does not include a moratorium on creditor action. It can, however, be implemented in conjunction with formal insolvency proceedings, (administration or liquidation). It can also be implemented on a standalone basis by the debtor company itself.



There are three types of receivers. The first of these is a receiver appointed with statutory powers. The second type of receiver is one who is appointed under the terms of a fixed charge or a security trust deed. The third category is an administrator (who is appointed under the terms of a floating charge over all, or a substantial share, of the debtor company’s property.



A company can enter voluntary or compulsory liquidation. Voluntary liquidations can be either a “members’ voluntary liquidation” or a “creditors’ voluntary liquidation”. Both of these proceedings are initiated by the company itself, by passing a resolution during a meeting of members. The company then ceases trading and a liquidator collects the company’s assets and distributes the benefits to the creditors so as to satisfy, as far as possible, the company’s liabilities.

Number of Corporate Insolvencies - United Kingdom
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