The UK Business Environment

A proven investment location

• In 2011, the cumulative stock of foreign investment in the UK was more than US$1.2 trillion, the second highest level of FDI stock globally. (Source: UNCTAD, 2012)

• The UK attracted 1,406 foreign direct investment projects in 2011/12, the highest in Europe, creating over 52,741 jobs. Read UKTI’s annual report for more information.

• The UK is the second largest single destination globally for US investment and in 2011 accounted for 26 per cent of all US investment stock in the European Union.

• The UK has attracted more US investment than the combined totals of Germany, France, Spain, Italy and Ireland (Source: US Department of Commerce, 2012).

Economic growth

Over the last ten years, GDP growth in the UK has regularly outpaced or matched growth in the European Union. As with other major countries globally, the UK economy contracted in 2009 before returning to growth in 2010.

The Government department in the UK with responsibility for the economy is HM Treasury.

Exchange rates

The UK Government has policies that encourage a stable and competitive pound, consistent with the objective of price stability. For detailed information on the latest exchange rates please visit the UK Trade Info website.

Interest rates

The official Bank Rate in the UK which is set independently by the Bank of England is 0.5% as of March 2013. The rate is subject to review on a monthly basis. For further information about the bank rate and the role of the Bank of England please visit the Bank of England website.

Inflation

The Bank of England has full operational independence in setting interest rates to meet the Government’s inflation target of two per cent for the annual increase in the Consumer Price Index CPI. The CPI is based on the internationally comparable “Harmonised Index of Consumer Prices”. In January 2013, the CPI stood at 2.7 per cent. For further information, please visit the Bank of England website.

The UK as an export base

The UK is one of the leading trading nations in the world. It is the second largest exporter and fourth largest importer of commercial services, and the eleventh largest exporter and sixth largest importer of merchandise in the world. (Source: World Trade Organization, 2012).

Leading destinations for UK products and services include the US - 16.2 per cent of all exports, Germany (8.9 per cent) and France (6.5 per cent). Exports of goods and services to the European Union as a whole accounted for 47.5 per cent of all UK exports (Source: ONS, The Pink Book, 2012).

UKTI helps UK based companies to internationalise their products and services overseas.

Corporate tax rates

The UK’s business-focused tax environment will become even more attractive over the next two years. The current corporation tax rate of 24 per cent is being reduced to 21 per cent by 2014 and then to 20% by 2015. Innovative companies will be able to benefit further from an additional reduction in corporation tax through the upcoming ‘Patent Box’ initiative and through recent enhancements to the UK’s generous R&D tax credit scheme.

Employer social security

UK companies pay “National Insurance Contributions” (NIC) on the earnings of each individual employee earning over a threshold weekly salary. Employers pay less social security contributions in the UK than in most other European countries

Indirect Taxation

Value added tax (VAT) is due on goods and services supplied in the UK and on the importation and acquisition of goods and some services. A company has to charge VAT when their taxable turnover is above, or expected to be above, the registration threshold.

Setting up a business in the UK

Your business can be registered and ready to trade in 24 hours speed up your access into the UK. Find out how you can locate your business in the UK.

Enterprise Zones

Enterprise Zones are a powerful expression of the Government's pro-growth agenda. The core offer for businesses in a Zone is around simplified planning and business rates discounts, with Zones having the potential to develop innovative solutions to support local business needs.

Enterprise Zones in England

Enterprise Zones in Wales

Enterprise Zones in Scotland

For summary information about the Enterprise Zones in England, Wales and Scotland please download our information factsheet (.pdf).

Our investment location services are independent, highly professional and free of charge. For specific help setting up in the UK or for help mapping your business ambitions to the UK please contact the UKTI Investment Services Team through our online enquiry form here.