Doing business in the United Kingdom: the most important strengths and weaknesses


medium risk for businesses

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financial risk

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financial risk

It has been four years since the United Kingdom left the European Union. This has - so far - not achieved what many British people had hoped. No longer following Brussels' lead was supposed to be good for the economy. But there is not much to show for the departure yet. 60% of British people would prefer to return to the EU. According to the IMF, the United Kingdom's economy will grow the least of all the G-20 countries in the coming years.

Since leaving the EU, there is no longer free movement of people and goods. Now trade is conducted as prior to joining the EU: with import tariffs and customs controls. If you want to work in the UK, you (usually) need a visa.

The outcome of Brexit has been disappointing so far. But you can also look at it differently. Critics predicted that the British economy would collapse. That certainly did not happen. The British economy is reasonably in line with the economy of continental Europe. According to the Office for National Statistics (ONS), growth in the UK economy was +0.4% in 2023. That's not much, but it is higher than, for example, Germany, which fell into a recession.

Brexit has mainly led to a lot of uncertainty among companies and investors. This is reflected in both private consumption and business investments. These fell sharply in 2023. It is mainly foreign trade that keeps the British economy afloat and that in itself is remarkable after the departure from the EU (which resulted in barriers to trade with Europe).

If you believe the optimists, things can only get better from now on. The better companies become accustomed to the new situation, the more efficiently they will be able to deal with it and the more they can benefit from its advantages. For example, British companies are less affected by regulations than those within the EU. Independence also offers opportunities for new trade deals. Consider agreements with the US, Australia and New Zealand. The UK also joined the Asian alliance CPTPP, which immediately resulted in greatly improved relations with India.

After Germany, the United Kingdom has the largest economy in Europe. One of its main pillars is the service sector. Financial services, business services, healthcare, education, information technology and tourism are just some of the sectors that make up this broad category. The City of London is an important hub for international banks, insurers and other financial institutions.

In contrast to the service sector, Britain's industrial sector is shrinking. Major industries include pharmaceuticals, automotive, aerospace, information technology and digital media, energy and telecommunications.

Even more than in the EU, the British suffer from persistent inflation. This hits households hard in their wallets. Wages have indeed increased, but that increase is lower than inflation. Companies are also struggling with price increases. As a result, purchasing costs are higher. Often only part of this can be passed on to the customer. This affects companies' profit margins.

The United Kingdom has a highly educated labour force. 80% of British people aged 25 to 64 have a secondary school education or higher. The share of British people with a higher vocational or university diploma has increased from 40% in 2000 to 55% in 2023. The employment rate in the United Kingdom is 75.6% (2023). This is higher than the EU average of 73.2%. The labour participation rate among men (81.2%) is higher than among women (70.0%).

The IMF expects British unemployment to rise to 4.7% by 2024. A favourable side effect of this is that the overheated labour market can cool down slightly.

A new policy also states that job seekers who have not found a job after 18 months must participate in compulsory employment to increase their skills and employability. Anyone who refuses to do this for six months will lose their benefits.

  • Large trade balance surplus
  • Healthy banking sector
  • Great diversity of sectors and export products
  • Friendly business environment
  • Strong focus on innovation
  • High debt of British government
  • Brexit makes trade with the EU more difficult
  • Low productivity growth
  • Declining disposable income in the long term
British exports amounted to £475 billion in 2023. This is 17.8% of UK GDP. British imports amounted to £635 billion in 2023. This is 23.7% of UK GDP.

Main countries for imports and exports are:

(% of total, 2022)

Export Position Import
United-States 12,1%
13,4% China
the Netherlands 8,3%
11,9% United-States
Germany 7,8%
8,6% Germany
China 6,7%
6,5% Norway
Switzerland 6,6%
4,2% France
  1. Means of transport
  2. Oil and oil-related (chemical) products
  3. Pharmaceutical products
  4. Machines and electrical appliances
  5. Gold
  1. Means of transport
  2. Oil and oil-related (chemical) products
  3. Gas
  4. Gold
  5. Machines and electrical appliances

If you want to do business with a Brit, take your time. Contract negotiations never move quickly. They want to get used to you and your company before they start working with you. If you move too fast and push too much, they shrink back. Give them space and don't push. No matter how good you think your own product is, hold back. The more you say about yourself, your services or products, the more the British distance themselves.

You could call the desired interaction with British business partners 'excessively polite'. Don't hesitate to say 'thank you', 'I'm sorry' and 'please' frequently. Small talk about the weather or football is always good to break the ice. Be sure to go to the pub after work. But don't start talking about very political topics or personal matters. Keep things more neutral. If a joke is made, laugh politely but not too exuberantly.

Personal contact plays an important role when doing business with the British, but keep an appropriate distance. Private affairs and business remain separate, especially in the workplace. The British businessman is very punctual and expects the same from his guest. Any delay must be reported immediately. In addition, British people also attach great importance to manners. Have you had an appointment with someone? Don't forget to thank that person afterwards for their time, even if it was just for a short introduction.

Don't be too direct. That is considered rude and disrespectful. Keep criticism to yourself. They may be a bit less formal and reserved once a contract has been concluded, but even then they are unlikely to speak entirely frankly.

It helps if you speak English well. If your language is unclear, they are unlikely to point it out. They are too polite to say they don't understand you. They often won't say what they're thinking outright. The British are very good at ambiguity. It may be the case that you understand what your business partner is saying perfectly well, but that he or she means something different than you think. Someone who thinks something is 'not bad' may just be fine with it, but may also be extremely enthusiastic. If they say 'Oh, that's interesting' they may well find something ridiculous.

If you want to do business in the United Kingdom, the country offers plenty of opportunities, although you must take numerous considerations into account when making decisions. What conditions do you apply to the agreements you make? You need thorough insight into markets, customers and local economic developments. And that is exactly where trade credit insurer Allianz Trade can help you.

With over 100 years of international expertise, we help you (further) develop your business abroad. We specifically focus on companies that do business internationally, including in thre UK. We owe our unique knowledge of the local market to our extensive database of financial data and the expertise of our analysts. With our offices and colleagues in the UK we will provide you with the necessary expertise to securely develop your business in the UK.