major macro economic indicators
|2018||2019||2020 (e)||2021 (f)|
|GDP growth (%)||1.4||1.3||-9.8||6.4|
|Inflation (yearly average, %)||2.5||1.8||0.9||2.4|
|Budget balance (% GDP)µ||-2.2||-2.3||-14.3||-9.4|
|Current account balance (% GDP)||-3.7||-3.1||-3.5||-2.7|
|Public debt (% GDP)||84.7||84.1||97.7||100.1|
(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 (120% of disposable income)
- Low productivity and training deficit not conducive to innovation
- Regional disparities between the South-East (especially London) and the rest of the country, particularly in terms of transport and energy infrastructure
A rebound made possible by vaccination and driven by consumption
Among the countries most affected in health and economic terms in 2020 and at the beginning of 2021 - a new confinement of the population having been decreed from January to March - the United Kingdom was also among the first countries in the world to launch its vaccination campaign, as early as December 2020 (71% of the population had received at least one dose by August 2021, and 60% were fully vaccinated). As a result, the British economy rebounded significantly from the second quarter of 2021, following the decontamination of the population and the reopening of businesses. The continuation of this recovery in the second half of the year will depend on the consequences of the fourth wave of the pandemic, which in June 2021 led the government to tighten border restrictions and postpone the lifting of the last measures by four weeks. The rebound in activity has been almost exclusively driven by the recovery in household consumption, whose purchasing power was relatively unaffected during the crisis, thanks to the short-time working scheme and the allowance for the self-employed. At the same time, business investment, which benefits from massive government support - in particular via the "super" depreciation allowance, but also through state-guaranteed loans (GPB 75 billion), the postponement of tax deadlines (income tax for the self-employed, VAT) or the abolition of corporation tax for the most affected sectors - has picked up more moderately, affected by health uncertainty and the start of repayment of deadlines and loans, after a 12-month grace period. In addition, exporting companies now also face administrative procedures and border controls with the European Union (EU), due to the exit from the common market and customs union on 1 January 2021. Following this, trade with the EU initially collapsed, but quickly rebounded, without however returning to its previous level. For its part, in addition to the support measures, the government is supporting the recovery with public spending on infrastructure, thanks to the creation of a fund worth an estimated GBP 27 billion (1.2% of GDP). After falling by 28% in 2020, due to the support measures and the impossibility for creditors to initiate proceedings, making the procedure de facto voluntary, the number of insolvencies remained very low in the first half of 2021 (-38% compared with H1 2019). They should gradually rebound between now and 2022, as the measures are gradually withdrawn and business activity returns to normal.
Significant public deficit, largely financed by the Bank of England
The public deficit has increased considerably, due to successive emergency measures taken by the government between 2020 and 2021, totalling GBP 400 billion (12.5% of GDP). In addition to these measures, health spending remains high and investment spending is also high. Public debt will therefore continue to rise. In this context, the Bank of England (BoE) continues to finance this spending by buying government bonds on the financial markets. After increasing the target for the asset purchase programme from GBP 745bn to GBP 895bn in November 2020, the BoE announced a slowdown in the monthly pace of its purchases six months later, without changing the final target.
The current account will remain in large deficit in 2021. The structural deficit in the goods balance (5.7% of GDP in 2020) exceeds the structural surplus in the services balance (5.1% of GDP), thanks to financial and insurance services (two thirds of the surplus). At the same time, the income balance is structurally in deficit (1.8% of GDP), due to the repatriation of income from substantial foreign investments in the country. As a key player in the global financial system, the UK easily finances its current account deficit through foreign investments, mainly portfolio investments.
Conservative party strengthened by local elections
The Prime Minister, Boris Johnson, in power since his election as leader of the Conservative party in July 2019, had succeeded in his bid to dissolve Parliament, as he strengthened his majority in the December 2019 elections, with 365 seats out of 650 (50 more than in the 2017 election). This large majority allowed him to finally act on the UK's exit from the EU in January 2020. On 1 January 2021, the UK left the EU's single market and customs union after negotiating a trade agreement which came into force in May 2021, after four months of provisional application pending ratification by the EU. As this event had a barely perceptible effect on the economy, due to its relative importance compared to the unprecedented shock of the pandemic and the successive postponements of customs controls at the British border (which should finally be put in place in January 2022), Boris Johnson's popularity is essentially linked to his health management. The success of the vaccination campaign had boosted his popularity to 48% in May 2021, up from 34% six months earlier, and enabled the Conservative party to emerge stronger from the local elections, taking control of 63 of the 143 local assemblies at stake, 11 more than before the election. However, his popularity fell sharply over the next two months, again in connection with the deteriorating health situation.
Last updated: August 2021
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.
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.
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.
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.
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.