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United Kingdom
In-depth PESTLE insights
PESTLE Country Analysis Report: United Kingdom ML00002-031/Published 12/2016

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OVERVIEW
Catalyst
This profile analyzes the political, economic, social, technological, legal and environmental (PESTLE) structure in the UK.
Each of the PESTLE factors is explored on four parameters: current strengths, current challenges, future prospects, and
future risks.
Summary
Key findings
The UK has a strong democratic system, but success of the Brexit vote poses new challenges
The UK adheres to a democratic, parliamentary system of governance known as the Westminster system. This system
ensures adequate distribution of power between the executive branch led by the prime minister, the bicameral legislature
and the judiciary. As the World Bank's governance indicators illustrate, the UK is one of the most successful nations in
terms of the application of the rule of law, control of corruption, government effectiveness, and regulatory quality.
Furthermore, according to the World Bank’s governance indicators, the country had a high percentile rank of 93.75 in
terms of government effectiveness during 2015.
In the referendum held in June 2016, the country voted to leave the EU. Following this, Prime Minister David Cameron
resigned, taking responsibility of the debacle of his campaign in which he stood against Britain leaving the Euro. In July
2016, Theresa May, former home secretary, took over as the new prime minister. She has indicated the adoption of
centrist economic policies and then made a number of initial appointments. As the government’s chief opponent the
Labour Party is involved in containing its internal pressures, there seems to be no imminent political threat as of now to
the ruling party now. However, post-Brexit, her ability to draw an independent path for the country in Europe and to
deliver on its promises with the remaining 27 member states will her biggest change.
The UK economy is developed, but high household indebtedness remains a concern
The UK is one of the largest economies in the EU and is one of the strongest in terms of social welfare and standard of
living. Among the EU nations, the UK has one of the highest levels of GDP per capita in terms of purchasing power
parity. According to the World Bank's Doing Business indicators for 2017, the UK is the seventh best country in the world
in terms of doing business. Further, the country ranks 20th in “Getting credit”—this indicates that any company wishing to
enter the UK faces fewer hurdles in terms of meeting working capital and long-term capital requirements.
However, housing prices are cooling in the wake of referendum, which resulted in Brexit post June 2016. There is a
general fear in the market that has resulted in the commercial real estate transactions to fall drastically post June 2016.
This decline has been more drastic far as the overseas transactions are concerned. The domestic investors have also
receded from the housing market, with uncertainty being triggered post Brexit referendum. This has led to the correction
in house prices since Brexit.
The persistent rise in house prices of late, pre-Brexit, has raised expectations among the households of a continuous rise
in the future, which is a cause for concern. This is because it induces households to take on more debt (household debt
to income ratio is already elevated) to invest more in a second or third home, as payoff is not a problem in a bullish real
estate market. This further increases demand for houses, which are in short supply. The increased demand leads to
expectations of further appreciation of house prices and starts a self-reinforcing demand cycle, causing prices to
skyrocket. Elevated debt burden would not be financially distressful for UK households as long as interest rate remains
low (of late BOE has been hinting a rise in interest rate) and house prices continued to soar pre-Brexit, but post the
referendum prices have cooled down, showcasing the volatile nature of the market. Since a significant chunk of the
household assets comprises real estate, any disruptive correction in the real estate market will bring substantial financial
distress for them by wiping out a large chunk of household wealth.
The country has a strong education and health sector, but income inequality is still apparent
The UK has high-quality educational infrastructure and has historically attracted students from all parts of the globe. The
nation’s tradition of education dates back hundreds of years and is constantly evolving. Qualifications obtained from UK
institutions are recognized and respected worldwide. The UK has around 170 universities and higher education institutes,
including three universities in the world's top 10, according to The Times Higher Education World University Rankings
2016–17. The ranking was based on teaching, research, knowledge transfer and international outlook.
The UK’s healthcare system is one of the most successful social ventures in the world. This is due to the presence of
advanced healthcare infrastructure and private sector involvement. The UK’s public expenditure on health has
traditionally been very high, and has helped to maintain quality and efficiency. All residents of the UK, the European
Economic Area, and countries that have bilateral healthcare agreements with the UK are eligible for NHS care. The
system is one of the best in the world.
Rising inequality is a concern. According to the OECD, as of 2013, UK’s Gini coefficient (a measure of inequality in
income) was 0.351 compared to the OECD-34 average of 0.315. The Gini coefficient score of zero corresponds to
complete equality while a score of one corresponds to complete inequality. While in the OECD countries the richest 10%
of the country earn an average income that is around 9.6 times than that of the poorest 10%, in the UK the average
income of the richest 10% is 10.5 times that of the poorest 10%. The UK ranks among the top countries in terms of rising
inequality.
Increase in R&D expenditure is a positive, however, increasing cyber-attacks are a challenge
The UK is renowned for the quality of its R&D and its strengths in science and innovation. The country has also
traditionally been keen to encourage R&D in both the public and private sectors. According to MarketLine, total
expenditure on R&D increased by 3.10% to £27.84 billion in 2013, compared to 2012. Further, BERD (business
enterprise expenditure in R&D), which accounted for 46.5% of the UK R&D expenditure in 2013, also witnessed an
increase from 46.2% compared with 2012, according to Eurostat.
According to the research published in June 2015 by CEBR (Centre of Economics and Business Research) along with
computer security group Vera code, it has been revealed that the cyber-attacks by professional hackers cost the UK
£34.0 billion every year. The threat of cyber-attacks is also impeding innovation by companies as increased spending on
IT security is reducing the capital available for innovation, which can be deployed for future growth. In November 2016,
Chancellor Philip Hammond raised his voice on the persisting cyber-attacks, with special emphasis on “foreign players”
who are developing technologies, which targets UK’s electric and airport grids. The government plans to spend £1.9
billion in beefing up the cyber-security space of the country. The same month saw Tesco’s (leading retail chain) banking
arm drawn into an awkward situation, where it encountered a cyber-fraud resulting in the money being drawn out from its
20,000 current accounts.

Business legislation encourages commercial activity; however, traditional liberties are coming under
threat
The legislation in the UK prioritizes the interests of investors. This is evident from the fact that domestic and foreign
players have shown a continuous commitment to investing in the country. The majority of non-European multinational
corporations seeking a presence in Europe tend to establish their Europe operations in the UK.
In May 2016, the Immigration Act 2016 came into full effect. The focus of the law is on lining the punitive measures on
illegal migration. The people seeking refuge in the UK will now find themselves in a very precarious situation. Even the
landlords who are renting their premises to illegal immigrants can face criminal charges. According to the act, employers
who are hiring illegal immigrants will come under the scanner facing criminal sanctions. The bank accounts and driver’s
license of those migrants who do not have the permission to stay in the country would be seized.
The UK has a strong global influence in environmental issues, but high air pollution is a cause for
concern
With its position as an industrialized global power and a member of the G8, the UK has a leadership role to play in the
global effort towards sustainable development and the protection of the environment. The UK, with its close ties to a
number of countries and its influence in the Commonwealth, has the ability to obtain commitments from a number of
developing countries that are unwilling to sacrifice economic growth for environmental gain.
The level of air pollution in London is among the highest in the UK, and the country as a whole is among the most
polluted. Regions such as Manchester, Glasgow and Birmingham also have dangerous levels of NO2.
PESTLE highlights
Political landscape
 The UK is one of the most prosperous and influential nations in the world and has a large role to play on
the international stage. It is one of the five permanent members of the UN Security Council, one of the
founding members of the North Atlantic Treaty Organization, and a member of the G8. Though a
member of the EU, it has a conservative approach to the issue of European integration.
 After the referendum held in June 2016, David Cameron had to step down as the Prime minister,
following the defeat of his stand which was against leaving the EU. Furthermore, the incumbent
government would have to tread cautiously with regard to the UK’s relationship with the EU, especially to
guarantee a smooth secession from the block.
Economic landscape
 The government has embarked on fiscal consolidation over the past few years to bring down the deficit.
As of 2015, budget deficit stood at 4.24%, down from 5.59% of GDP in 2014. The quick recovery of the
UK economy has helped in raising tax receipts, and the deficit is expected to come down to 3.29% of
GDP in 2016, according to the IMF.
 The UK has maintained persistent current account deficits since the 1990s. According to the IMF, the
current account deficit as of 2015 stood at 5.36% of GDP.

Social landscape
 The government faces a number of challenges when it comes to maintaining the level of public services
on offer. Given the fact that the budget deficit is a clear point of concern for the authorities, maintaining
expenditure levels on social welfare projects will prove a challenge.
 The UK’s total healthcare expenditure was or 7.84% of GDP in 2014, according to MarketLine.
Physicians per 1,000 population (head count) was 2.8 in 2013, which was lesser than the OECD
average of 3.2. Nurses per 1,000 population (head count) was 8.2 in 2013, which was also lower than
the OECD average of 8.8.
Technological landscape
 According to MarketLine, mobile penetration stood at 131.25 per 100 people in 2015 with total
subscribers at 85.09 million. Internet users as of 2014 stood at 59.31 million, with a penetration rate of
92% in the same year.
 Chancellor Philip Hammond has also indicated that British electricity and grid systems are prone to
attacks from foreign players.
Legal landscape
 According to the 2016 Index of Economic Freedom, the UK ranked 10th in the world and fourth in
Europe. The country scores high in business freedom, labor freedom, trade freedom, investment
freedom and financial freedom. The government has made continuous efforts to ensure that the overall
environment is conducive to business.
 However, the UK government needs to continue with deregulatory reforms in order to attract investment.
Environmental landscape
 According to MarketLine, the UK renewable energy market had total revenues of $17.8 billion in 2015,
representing a compound annual growth rate (CAGR) of 27.8% during 2011–15. In comparison, the
French and German markets grew with CAGRs of 9.1% and 11.5%, respectively, over the same period,
to reach respective values of $13.5 billion and $49.6 billion in 2015.
 As a result of the UK’s attempts to meet its target, CO2 emissions in the country came down from 585.50
million metric tons in 2006 to around 486.31 million metric tons in 2013.

Key fundamentals
Table 1: The UK – key fundamentals
2014 2015 2016f 2017f 2018f 2019f 2020f

GDP, constant 2010 prices ($ trillion) 2.61 2.67 2.71 2.72 2.78 2.84 2.90
GDP growth rate (%) 2.85 2.40 1.40 0.70 1.91 2.10 2.14
GDP, constant 2005 prices, per capita ($) 41,438 42,129 42,826 43,480 44,165 44,892 45,658
Inflation (%) 1.52 0.00 0.81 2.54 2.33 2.18 2.10
Exports, total as a percentage of GDP 30.04 28.42 28.40 28.24 28.03 27.82 27.51
Imports, total as a percentage of GDP 31.39 31.73 31.36 30.85 30.32 29.80 29.21
Mid-year population (millions) 64.60 65.10 65.57 66.03 66.49 66.93 67.36
Unemployment rate (%) 6.20 5.40 4.90 4.80 4.70 4.88 4.88
Mobile penetration per 100 people 130.13 131.25 132.24 133.11 133.87 134.55 135.14
Source: Country Statistics, MarketLine MARKETLINE

TABLE OF CONTENTS
Overview .................................................................................................................................................................... 2
Catalyst ........................................................................................................................................................................... 2
Summary ......................................................................................................................................................................... 2
Key findings ................................................................................................................................................................. 2
PESTLE highlights ......................................................................................................................................................... 4
Key fundamentals ........................................................................................................................................................ 6
Key Facts and Geographic Location ............................................................................................................................14
Key facts ........................................................................................................................................................................ 14
Geographical location ................................................................................................................................................... 15
PESTLE Analysis .........................................................................................................................................................16
Summary ....................................................................................................................................................................... 16
Political analysis ............................................................................................................................................................ 17

Overview .................................................................................................................................................................... 17
Current strengths ...................................................................................................................................................... 17
Current challenges ..................................................................................................................................................... 18
Future prospects........................................................................................................................................................ 18
Future risks ................................................................................................................................................................ 19
Economic analysis ......................................................................................................................................................... 21

Overview .................................................................................................................................................................... 21
Social analysis ............................................................................................................................................................... 29

Overview .................................................................................................................................................................... 29
Future risks ................................................................................................................................................................ 31
Technology analysis ...................................................................................................................................................... 33

Overview .................................................................................................................................................................... 33
Future risks ................................................................................................................................................................ 35

Legal analysis ................................................................................................................................................................ 36
Overview .................................................................................................................................................................... 36
Future risks ................................................................................................................................................................ 38
Environmental analysis ................................................................................................................................................. 40

Overview .................................................................................................................................................................... 40
Carbon budget ........................................................................................................................................................... 41
Impetus provided by Infrastructure bill ..................................................................................................................... 41
Effective implementation of COP21 agreement ........................................................................................................ 42
Future risks ................................................................................................................................................................ 42
Political Landscape ....................................................................................................................................................43
Summary ....................................................................................................................................................................... 43
Evolution ....................................................................................................................................................................... 43
Pre-1950s ................................................................................................................................................................... 43
1950–90 ..................................................................................................................................................................... 43
1991–2016 ................................................................................................................................................................. 44
Structure and policies .................................................................................................................................................... 46

Key political figures.................................................................................................................................................... 46
Structure of government ........................................................................................................................................... 46
Center/federal ........................................................................................................................................................... 46
State/provincial ......................................................................................................................................................... 46
Key political parties ................................................................................................................................................... 47
Composition of legislature......................................................................................................................................... 48
Key policies ................................................................................................................................................................ 48
Performance .................................................................................................................................................................. 49
Governance indicators ............................................................................................................................................... 49
Outlook .......................................................................................................................................................................... 50
Economic Landscape ..................................................................................................................................................51
Summary ....................................................................................................................................................................... 51
Evolution ....................................................................................................................................................................... 51

Financial authorities and regulators .......................................................................................................................... 52
Stock markets and derivatives ................................................................................................................................... 52
Insurance ................................................................................................................................................................... 53
Performance .................................................................................................................................................................. 54
GDP and growth rate ................................................................................................................................................. 54
Fiscal situation ........................................................................................................................................................... 59
Current account ......................................................................................................................................................... 59
Exports and imports .................................................................................................................................................. 59
International investment position ............................................................................................................................. 60
Monetary situation .................................................................................................................................................... 60
Employment .............................................................................................................................................................. 61
Outlook .......................................................................................................................................................................... 61
Social Landscape ........................................................................................................................................................62
Summary ....................................................................................................................................................................... 62
Evolution ....................................................................................................................................................................... 62

Demographic composition ........................................................................................................................................ 62
Education ................................................................................................................................................................... 64
Healthcare ................................................................................................................................................................. 65
Performance .................................................................................................................................................................. 65
Healthcare ................................................................................................................................................................. 65
Education ................................................................................................................................................................... 66
Outlook .......................................................................................................................................................................... 67
Technological Landscape ...........................................................................................................................................68
Summary ....................................................................................................................................................................... 68
Evolution ....................................................................................................................................................................... 68

Intellectual property .................................................................................................................................................. 68
Performance .................................................................................................................................................................. 69
Opportunity sectors ................................................................................................................................................... 69
Outlook .......................................................................................................................................................................... 70
Legal Landscape .........................................................................................................................................................71
Summary ....................................................................................................................................................................... 71
Evolution ....................................................................................................................................................................... 71

Structure of the judicial system ................................................................................................................................. 71

Tax regulations .......................................................................................................................................................... 71
Performance .................................................................................................................................................................. 72
Effectiveness of the legal system............................................................................................................................... 72
Outlook .......................................................................................................................................................................... 72
Environmental Landscape ..........................................................................................................................................73
Summary ....................................................................................................................................................................... 73
Evolution ....................................................................................................................................................................... 73

Environmental regulations ........................................................................................................................................ 73
Performance .................................................................................................................................................................. 73
Environmental impact ............................................................................................................................................... 73
The renewable energy market in the UK ................................................................................................................... 74
Outlook .......................................................................................................................................................................... 75
Appendix ...................................................................................................................................................................76
ISO codes of selected countries ..................................................................................................................................... 76
Ask the analyst .............................................................................................................................................................. 77
Disclaimer ...................................................................................................................................................................... 77

LIST OF FIGURES
Figure 1: Map of the UK 15
Figure 2: Multi-factor productivity growth 22
Figure 3: Labor productivity growth 23
Figure 4: Relative levels of GDP per hour worked 23
Figure 5: Capital to assets ratio 25
Figure 6: UK Basel III leverage ratio weighted average 25
Figure 7: General government deficit 26
Figure 8: Household debt and price to disposable income 27
Figure 9: Commercial real estate transactions 28
Figure 10: Old age dependency ratio 31
Figure 11: Gini coefficient of household disposable income, 2013 and S90/S10 ratio 32
Figure 12: Government funding of business R&D, 2013 35
Figure 13: Product market regulations, 2013 38
Figure 14: FDI restrictiveness Index 2015 39
Figure 15: The UK – political events timeline 45
Figure 16: Key political figures 46
Figure 17: Composition of legislature 48
Figure 18: Historical GDP growth, 2005–2015 52
Figure 19: GDP and GDP growth rate, 2010–20 54
Figure 20: Sector-specific contribution to GDP, 2015 55
Figure 21: Agricultural output, 2010–15 56
Figure 22: Industrial output, 2010–15 57
Figure 23: Services sector output, 2010–15 58
Figure 24: The UK's external trade position, 2011–15 59
Figure 25: Consumer price index and consumer price index-based inflation, 2010–20 60
Figure 26: Unemployment in the UK, 2010–20 61
Figure 27: Mid-year population by age (as % of Population), 2015 63
Figure 28: Major religions in the UK, 2011 64
Figure 29: Total healthcare expenditure, 2008–14 66
Figure 30: Education expenditure, 2008–14 67

Figure 31: Internet users, 2010–14 69
Figure 32: Carbon dioxide emissions (million metric tonnes) and growth (%), 2006–13 74

LIST OF TABLES
Table 1: The UK – key fundamentals 6
Table 2: The UK – key facts 14
Table 3: Analysis of the UK’s political landscape 17
Table 4: Analysis of the UK’s economy 21
Table 5: Analysis of the UK’s social system 29
Table 6: Analysis of the UK’s technology landscape 33
Table 7: Analysis of the UK’s legal landscape 36
Table 8: Analysis of the UK’s environmental landscape 40
Table 9: Comparative performance on receipt of patents, 2012–15 68

Key Facts and Geographic Location
KEY FACTS AND GEOGRAPHIC LOCATION

Key facts
Table 2: The UK – key facts
Country and capital

Full name The United Kingdom of Great Britain and Northern Ireland
Capital city London
Government
Government type Constitutional monarchy and Commonwealth realm
Head of state Queen Elizabeth II
Head of government Prime Minister Theresa May
Population (2016 est.) 64.43 million
Currency British pound (GBP)
GDP per capita, PPP (2015 est.) $41,200
Internet domain .uk
Demographic details
Life expectancy (2014 est.) Total population: 80.7 years
Men: 78.5 years
Women: 83 years
Ethnic composition (2011 est.) White (87.2%), black/African/Caribbean/black British (3%),

Asian/Asian British: Indian (2.3%), Asian/Asian British: Pakistani
(1.9%), mixed (2%), other (3.7%)
Major religions (2011 est.) Christian (59.5%), Muslim (4.4%), Hindu (1.3%), other (2%), none
(25.7%), unspecified (7.2%)
Country area 243,610 sq. km
Language English
Exports Manufactured goods, fuels, chemicals; food, beverages, tobacco
Imports Manufactured goods, machinery, fuels; foodstuffs
Source: CIA – The World Factbook MARKETLINE

Key Facts and Geographic Location
Geographical location
The country is located in Western Europe, between the North Atlantic Ocean and the North Sea, northwest of France.
Figure 1: Map of the UK

PESTLE Analysis
PESTLE ANALYSIS
Summary
The UK, being an influential member of the European Union (EU) and one of the largest economies in the world, remains
a significant economic and political force. Its membership of the United Nations Security Council, the EU, the North
Atlantic Treaty Organization (NATO), and the G8, along with strong links with its former colonies through the
Commonwealth and robust cultural and security ties with the US, place it in a unique position within the global
community. The success of the Brexit vote in the referendum held in June 2016 has put the country in an isolated
position for a short while. The task for the new Prime Minister Theresa May will be to oversee a smooth secession of the
UK from the EU.
parity. According to the World Bank's Doing Business indicators for 2017, the UK is the 7th best country in the world to
do business.
The educational infrastructure in the UK is of a very high standard and is attractive to foreign students. The UK’s
healthcare system is one of the most successful social ventures in the world, predominantly due to the presence of
advanced healthcare infrastructure and the participation of the private sector. Public expenditure on health has
traditionally been very high, helping to preserve the quality of services.
Despite the quality of educational and research institutions in the UK, there is a shortage of R&D personnel. The legal
system in the UK is transparent and efficient and is conducive to business. In terms of environment, the UK still needs to
improve its air quality by curbing pollution.

PESTLE Analysis
Political analysis
Overview
The UK’s political landscape is deeply entrenched in the ethos of democracy. The country’s stable governance system
ensures that there is remarkable consistency in its policies. Following the world wars, the UK emerged as a major global
force, largely on the back of its rapid economic development. However, it continues to face terror threats from groups
such as Al-Qaeda. With the Scottish National Party's (SNP’s) landslide victory in the 2015 elections, there is a high
possibility of increased devolution of powers.
In June 2016, David Cameron stepped down as the prime minister post the debacle of his stance to stay with the EU.
The country’s masses voted to leave the EU in the referendum in June 2016. Following the resignation of Mr. Cameron,
Theresa May, former home secretary, took over as the prime minister of the country in July 2016.
Table 3: Analysis of the UK’s political landscape
Current strengths Current challenges

▪ Strong democratic setup and effective governance ▪ Weakening relations with EU
▪ Strong position in global politics ▪ Abolition of Human Rights Act
▪ Political Stability
Future prospects Future risks
▪ Stronger ties with China ▪ Terrorism
▪ SNP’s surge in popularity
▪ Brexit and its implications
Source: MarketLine MARKETLINE
Current strengths
Strong democratic setup and effective governance
The UK adheres to a democratic, parliamentary form of governance known as the Westminster system that calls for
distribution of power between the executive branch led by the prime minister, the bicameral legislature and the judiciary,
with a system of checks and balances. As the World Bank's governance indicators illustrate, the UK is one of the most
successful nations in terms of the application of the rule of law, control of corruption, government effectiveness, and
regulatory quality. Furthermore, according to the governance indicators for 2015, the country had a high percentile rank
of 93.75 in government effectiveness.
Strong position in global politics
After the two world wars, the UK rebuilt itself into a prosperous and modern nation. It is a major power in global politics
by virtue of its permanent membership of the UN Security Council, its membership in G8 and NATO, and the legacy of
the British Empire. The UK also has considerable influence in multinational organizations such as the International
Monetary Fund (IMF) and the World Bank. Successive decades of solid economic growth, initially built on the industrial
sector and now largely driven by the services industry, have ensured its firm establishment as a global business hub and

PESTLE Analysis
economic power.
Political stability
The Conservative Party garnered a majority in May 2015 general elections, which gives the country political stability. The
party won 331 of the total 650 seats, resulting in a re-election of Prime Minister David Cameron. No position was offered
to the coalition partners this time, which gave Cameron the freedom to implement the Conservative agenda. The verdict
translates to greater autonomy for the Conservatives to push forward with welfare reforms, which would not have been
possible in a coalition set up. As of December 2016, the party had 330 seats in the parliament, with Theresa May being
the new leader of the party after the resignation of the ex-prime minister David Cameron.
Current challenges
Weakening relations with EU
Tensions between the Euro and the British policymakers has widened in the wake of ongoing Eurozone crisis. The UK
has not been able to mend its relationship with its EU counterparts, which has limited its possibility of securing desired
political concessions from the Eurozone. Besides, the current government’s stance on its anti-immigration rhetoric also
does not augur well for the country’s relations with Eurozone. Post the referendum of June 2016, when Britain voted in
favor of leaving the EU, signals the end of a strong relationship between the two blocks ended after 43 years.
The increasing souring relationship between the two blocks was further intensified when, in August 2016, the German
counterparts have stated that though the country will not get a “special” place due its significance. Moreover, it would not
be securing the privileges that other ex-EU members like Switzerland and Norway. They have also stated that the
process of removal of British MEP’s from the European parliament should be over by 2019.
Abolition of Human Rights Act
The abolition of HRA (Human Rights Act) features on top of the list for the new government. For long, the conservatives
have opposed this act as they think it is not in line with the British idea of justice. The government wants it to substitute it
with “British bill of rights”. Their idea is that the rulings of the court of Strasbourg should be advisory and not binding. This
indirectly means withdrawing from the convention that the Britain signed in 1998, which could alter the world’s view of
British approach towards international code of law. In August 2016, Liz Truss, who has recently been appointed as the
Lord Chancellor of the UK, affirmed that the government under Theresa May is committed to the pledge that it made in
its manifesto.
Future prospects
Stronger ties with China
The visit by Chinese Premier Li Keqiang to the UK in June 2014 ushered in a period of better Sino-UK ties. The visit by
the Chinese premier on the heels of a similar visit by the former British Prime Minister Mr. David Cameron to China in
December 2013 became suggestive of the ties getting stronger. The emergence of new, low cost centers of production
and the rapid economic growth of certain developing countries (especially China) has made it important for the UK to
cooperate with them for mutual benefit or risk heavy economic losses.
Relations between the two nations had cooled since Mr. Cameron visited the Dalai Lama in 2012, irking the Chinese
government. This resulted in reduction of Chinese investments in the UK for a couple of years after that. Nevertheless,
relations have improved considerably and the Chinese Premier’s visit to the UK resulted in investment deals worth £14
billion in the fields of infrastructure, financial services and clean energy. The warming of ties is a big boost to the
economic environment of the UK, as with the improved ties, the UK could experience an increase in capital inflows.
PESTLE Analysis
Chinese President Xi Jinping’s visit to the UK in October 2015 was a great success, bearing testimony to improving
relations between the two countries. In November 2016, in a meeting with a Chinese delegation, incumbent Prime
Minister Theresa May and Philip Hammond, the chancellor, called this the golden period of the Sino-UK relations, while
striving to attract investments from China worth billions of pounds in Northern England.
Future risks
Terrorism
The involvement of the UK in the war on terror in Afghanistan and Iraq seems to have had some negative consequences
with the threat of terrorism now facing the country. The July 7, 2005 bombings in London brought the capital to a
standstill, and the public threats issued by extremist groups such as Al-Qaeda are a clear indication of the constant
dangers that they pose. Foiled terrorist attacks have also put the government and the public on edge.
In March 2010, the UK's intelligence and security service said that terror threats linked to Pakistan remained the primary
area of concern. Additionally, according to a security committee, about 15% of the security services' work is now focused
on East Africa and Somalia in particular, as there are an increasing number of extremists visiting the area for terrorist
training. The committee said the UK faced a range of covert threats to its security, and identified Al-Qaeda as presenting
the most significant risk. In a report titled “CONTEST The United Kingdom’s Strategy for Countering Terrorism” published
by the Secretary of State for the Home Department in July 2016, the government highlighted threats to the UK’s interests
from the Daesh (ISIS’s Arabic name) branches from Libya and Egypt. In February 2015, counter terrorism and security
act was given the royal assent. This makes provisioning for blocking the re-entry of a citizen who is suspected for
assisting terror groups. It also directs the internet connection providers to maintain a record of data, which will aid the
officials in investigation.
In June 2015, 30 British tourists were gunned down by an ISIS inspired terrorist named Seifeddine Rezgui in the famous
resort of Port El Kantaoui in Tunisia, with the total number of killings coming at 38, with around the same number of
people being injured. In November 2016, the government requested the Tunisian government to keep the inquests into
the matter a secret. The government wants to keep the check, as it does not want further atrocities to be committed
against British nationals in case the information about the enquiry gets public. The first week of December 2016, marked
as the counter-terrorism week, asserted that the threat to the country from international terrorism is severe, indicating
that a attack is highly likely.
The SNP’s surge in popularity
The SNP won a majority in the parliamentary elections in May 2015, winning 56 of the 59 available seats in Scotland.
This came after Scottish referendum on independence was rejected unanimously in September 2014, which was touted
as a grave blow to the party by many analysts. Nevertheless, its strong showing in the recent elections indicates that it is
still a strong player in Scotland. This directly means there would be a growing demand of autonomy in economic and
political spheres for Scotland. SNP will surely pose a challenge to the central authorities under the newly formed
government.
In the referendum held in June 2016, majority of the Scottish voted in favor of staying the EU. Their vote was on the
contrary to the popular mandate of England, which voted to leave the union. This divide has prompted the leaders like
Alex Salmond, predecessor to the current leader Ms. Sturgeon, and many others to demand a referendum for Scottish
independence. Currently it is in Scottish interest to stay with the UK, but no one can deny that post-Brexit, the relation
between the two unions have widened.

PESTLE Analysis
Brexit and its implications
In the referendum held in June 2016, the country voted to leave the EU. Following this, Prime Minister David Cameron
resigned, taking responsibility of the debacle of his campaign in which he stood against Britain leaving the Euro. In July
2016, Theresa May took over as the new prime minister. She has indicated the adoption of centrist economic policies
and then made a number of initial appointments. The government’s chief opponent, the Labour Party, is involved in
containing its internal pressures, hence, there seems to be no imminent political threat as of now to the ruling party now.
However, externally, post-Brexit, her ability to draw an independent path for the country in Europe and to deliver on its
promises with the remaining 27 member states will her biggest change.
The referendum has already boosted the hopes of the Euro sceptics across the continent. Post-Brexit, most of the
Visegrad states (the Czech Republic, Hungary, Slovakia and Poland) are bracing themselves to prevent referendum in
their own turf. Now, their priority is raising voices against the centralization of EU, beef-up the continent’s borders to
prevent further immigration, while ensuring the rights of the citizens in the UK. Voices are far stronger and louder in the
Czech Republic and Hungary. Growing concerns are that Czechs might call for their own referendum. The Hungarian
president, Viktor Orban, who has always voiced his opinion against immigration, blamed that Brexit happened due to the
frustration of common people against immigration. The Slovakia and Polish governments are worried about the security
of their nationals in the UK post-Brexit due to the rise in the anti-immigration wave in the UK. The border dispute between
Northern Ireland and Republic of Ireland might also just aggravate. Gibraltar, a tiny peninsula, near the Spanish border
whose economy has been booming on the back of strong financial sector, too, voted for the country to be in the EU.
Border disputes with Spain might rise here too in the wake of Brexit, resulting in the latter to shut down its border.
Germany’s political concerns are also amplified as the presence of a strong ally like Britain in the EU helped in silencing
the peripheral and weaker countries’ like the Visegrad states. With Britain out of picture, Germans have to approach their
demands cautiously to guarantee a stable future of the Union.
In October 2016, at the Conservative Party’s conference, Prime Minister Theresa May indicated to trigger the Article 50
of the Lisbon Treaty by March 2017, which starts the proceedings of the UK to leave the EU while setting a two-year
formal deadline for the country to negotiate a deal with the EU. However, in November 2016, a High Court ruling has
challenged her stand stating that she cannot invoke the Article 50 without the formal assent of the parliament. This has
complicated the country’s proceedings to leave the bloc.

PESTLE Analysis
Economic analysis
Overview
The country boasts of high per capita GDP and a favorable investment climate, but the government is challenged by
lower productivity and fall in export market share. However, the fiscal deficit is narrowing, which is positive news for the
economy. In the short term, Brexit and high indebtedness are the risks facing the economy.
Table 4: Analysis of the UK’s economy

▪ Highly developed economy and favorable investment climate ▪ Brexit
▪ Excellent environment for doing business

▪ Rising productivity ▪ High household indebtedness
▪ Macro-prudential measures to strengthen the financial system
▪ Narrowing fiscal deficit
▪ National Productivity Investment Fund
Current strengths
Highly developed economy and favorable investment climate
parity. According to the World Bank's Doing Business indicators for 2017, the UK is the 7th best country in the world to
do business. Further, the country ranks 20th in “Getting credit”—this indicates that any company wishing to enter the UK
faces fewer hurdles in terms of meeting working capital and long-term capital requirements.
Excellent environment for doing business
The UK is an open and competitive economy, and international businesses view the political and economic institutions
favorably. The country has a robust science base and boasts of strong high tech manufacturing capabilities in
aerospace, defense and automobiles. The UK’s strength lies in knowledge economy sectors such as banking, software
and pharmaceuticals. According to the World Economic Forum’s Global Competitiveness Report 2016–17, the country
ranks 7th among 138 countries. The UK, considered the doorway to the rest of the EU, has a favorable business
environment in terms of the availability of skilled professionals, a central time zone perfectly positioned between the east
and the west, a flexible regulatory environment to start a business, and a leading global financial center in London.
Current challenges
Brexit
The victory of the Brexit vote in the referendum held in June 2016 came as a shock for the economy. The sharp
depreciation in the pound value is threatening to eat away the purchasing power of the households, while pushing
PESTLE Analysis
inflation up. As a result, the OBR’s (Office of Budget Responsibility) forecast for GDP growth of 2017 is lowered to 1.4%
from 2.1% earlier. High inflation will translate into weakening consumer demand and investment. The OBR has now
revised its average annual real GDP growth of 2.1% in the period 2018–20 to 1.9%.
Brexit vote has also jeopardized the government’s target of reaching a budget surplus of by the end of the term of the
current government. The net borrowing of the public sector is now in the projected to be £30 billion in 2020–21. The
budget deficit numbers when expressed in terms of GDP have also been revised from a previous forecast of 2.9% to
3.5% in the same period. In addition, by the end of 2020–21 the budget deficit is expected to be 0.7% of GDP in place of
the surplus as projected earlier. The event has also turned the fiscal projections of the government upside down with
debt to GDP ratio at 90.2% in 2017–18 from an earlier forecast of 81.3%.
Future prospects
Rising productivity
The productivity growth of the Britain post 2012 has proved to be very helpful to the sagging mood of the economy. The
productivity growth was resilient for the period 2012–15, bucking the trend seen in the years prior to it. The wages have
been growing both at the nominal and real terms, and on the confirmation that Bank of England (BOE) will not be raising
rates this year, has been a booster for the economy. The recent growth in productivity is a great sign for future growth,
since lagging productivity has been a chronic problem of the British economy post-recession.
Figure 2: Multi-factor productivity growth
1
Growth (%)
-1
-2
-3
AUT BEL CAN DNK FIN FRA DEU ITA KOR NLD SWE GBR USA
2012 2015
Source: OECD MARKETLINE

PESTLE Analysis
Figure 3: Labor productivity growth
6.50
6.00
5.50
5.00
4.50
4.00
3.50
3.00
Anuual growth rate
2.50
2.00
1.50
1.00
0.50
0.00
-0.50
-1.00
-1.50
-2.00
-2.50
-3.00
-3.50
CZE
DNK
DEU
KOR
LUX
MEX
POL
SWE
BEL
FRA
JPN
NLD
PRT
IRL
NOR
CHE
RUS
AUT
CAN
EST
FIN
GRC
ITA
HUN
NZL
SVK
ESP
USA
OECD
CHL
EU28
AUS
ISL
TUR
GBR
ISR
SVN
2012 2014
Figure 4: Relative levels of GDP per hour worked
120.00
118.00
116.00
114.00
112.00
Index 2010=100
110.00
108.00
106.00
104.00
102.00
100.00
98.00
96.00
94.00
DEU
KOR
BEL
IRL
LUX
MEX
PRT
LTU
FRA
JPN
LVA
RUS
CAN
CZE
DNK
NLD
ESP
SWE
CHE
NOR
AUS
GRC
HUN
CHL
EU28
ITA
GBR
USA
EST
ISR
FIN
AUT
SVK
SVN
2012 2015
Macro-prudential measures to strengthen the financial system
In the wake of the financial crisis and several cases of fraud, the government has taken steps to strengthen the financial
system. A new financial regulation and supervision framework gives the Bank of England authority to monitor the day-to-
day supervision of financial services firms (through the Prudential Regulation Authority). Subsequently, it also gets the

PESTLE Analysis
responsibility for macro-prudential supervision of the financial system (through the Financial Policy Committee). The
Financial Policy Committee (FPC) is in charge of identifying, monitoring and implementing measures to remove or
reduce systemic risks from the financial system.
As of November 2016, many recommendations made by the FPC were implemented. These include the following:
contingency planning in a survival threat situation; managing and mitigating balance sheet risks from euro-area stress;
ensuring capital resources of at least 7% of risk-weighted assets; increasing capital in a way that does not impact
lending; ensuring credible plans to move to higher future capital requirements; assessing susceptibility to sharp rise in
long-term interest rates; assessing the feasibility of calculating capital ratios by means of Basel III standardized
approach; and requiring mortgage lenders to consider any future FPC recommendation on interest rate stress tests. The
implementation of other recommendations such as developing proposals for regular stress testing of the UK banking
system and improving resiliency to cyber-attacks is underway. These macro-prudential measures undertaken by the
authorities are improving the resiliency of the UK’s financial system. The stress test conducted by FPC for the years
2014, 2015 and 2016 showed that the banks are well capitalized to sustain any stressful scenario.
The core tier 1 capital has improved. Rising tier 1 capital will increase the banking system’s ability to take a hit on their
balance sheets if more assets go bad; therefore, probability of bankruptcy decreases for the respective banks. The
leverage ratio (calculated by dividing Tier 1 capital by total exposure, expressed as a percentage) has also witnessed a
rise during 2010–15. Hence, a gradual rise in leverage ratio indicates lower risks as more capital is available to cover
losses if assets go bad. The banks have been able to increase their capital and leverage ratio by issuing new capital and
shedding non-core assets. On the funding side, UK banks have significantly cut down on short term wholesale funding.
Funding risks have reduced as a gradual shift towards core funding sources–customer deposits, longer-term wholesale
borrowing, and bank capital—is being observed. This means the maturity period of the funds is increasing, thus reducing
risks from short-term fluctuations in the financial markets.
Nevertheless, the implementation of these measures has significantly brought down the perceived risks of the UK
financial system. Another barometer that shows increased financial stability in the UK’s financial system is the risk
premium on the interbank market, which has compressed substantially since the global financial crisis as the western
central banks since then flooded the banks with liquidity with their unconventional monetary policies. This has helped
substantially in improving the liquidity in the financial system and reducing the funding problems for the banking sector.
Cumulatively these factors point toward a more resilient financial system in the UK.

PESTLE Analysis
Figure 5: Bank capital to assets ratio
14.00
12.00
10.00
8.00
ratio
6.00
4.00
2.00
0.00
2010 2011 2012 2013 2014 2015
Source: Bank of England MARKETLINE
Figure 6: UK Basel III leverage ratio weighted average
13.00
11.00
ratio
9.00
7.00
2010 2011 2012 2013 2014 2015
Narrowing fiscal deficit
The government has embarked on fiscal consolidation over the past few years to bring down the deficit. As of 2015,
general government deficit stood at 4.33%, down from 9.56% of GDP in 2010, when it widened due to government-
funded bailouts during the financial crisis. The quick recovery of the UK economy has helped the country in raising tax

PESTLE Analysis
receipts. Income tax and VAT receipts have both witnessed a jump since 2014.
Figure 7: General government deficit
2.00
0.00
-2.00
Percentage
-4.00
-6.00
-8.00
-10.00
GBR ESP FRA ITA DEU
2010 2015
National Productivity Investment Fund
In November 2016, the government allocated £23 billion taking a pro-business and pro-innovation approach in the
Autumn statement delivered by the new chancellor of the exchequer, Philip Hammond. The focus of the fund is to tackle
the shortcomings in the infrastructure and innovation sector of the country, two chronic ailments of the British economy.
This should bolster business confidence. The government has adopted a long-term approach for five years to support
economic recovery and smoothing the process of Brexit transition. Venture capital and tax breaks for rural businesses
will lead a recovery in rural consumption. Housing infrastructure fund worth £2.3 billion has been allocated to help the
recovery of the cooling housing market in the wake of Brexit. An investment of £1.1 billion has been also undertaken for
neutralizing the regional imbalances in the quality of the transport networks.
Future risks
High household indebtedness
Housing market activity in the UK remains frothy as house prices continued to rise before the Brexit. Inflation in house
prices has been seen across the UK, with properties in London experiencing significantly above average price rise. The
surge in house prices is due to increased demand as economic uncertainty on the back of strong recovery reduced and
easy credit (low interest rate) conditions. Moreover, a wide gap between demand and supply has exacerbated the
inflationary scenario. As a result, over the past year, house prices have climbed more rapidly than average earnings. The
market was significantly overvalued, as judged from a rise in price-to- average earnings ratio (a measure of affordability).
Consequently, affordability has come down.
However, housing prices are cooling in the wake of the referendum which resulted in Brexit post June 2016. There is a
general fear in the market that has resulted in the commercial real estate transactions to fall drastically post June 2016.
According to the ONS, house prices in the country peaked in June 2016 to 9.3% from the same period previous year.
PESTLE Analysis
Post-Brexit a leading residential real estate agent, Countrywide, has already alerted that its profit margins will fall below
the earlier expectations. The company has also made a projection that the transaction volumes in the real estate will be
6% lower in 2016 than that of the previous year. This decline has been more drastic far as the overseas transactions are
concerned. The domestic investors have also receded from the housing market, with uncertainty being triggered post
Brexit referendum. This has led to the correction in house prices since Brexit.
The persistent rise in house prices of late, pre-Brexit, has raised expectations among the households of a continuous rise
in the future, which is a cause for concern. This is because it induces households to take on more debt (household debt
to income ratio is already elevated) to invest more in a second or third home, as payoff is not a problem in bullish real
estate market. This further increases demand for houses, which are in short supply. The increased demand leads to
expectations of further appreciation of house prices and starts a self-reinforcing demand cycle, causing prices to
skyrocket. Elevated debt burden would not be financially distressful for UK households as long as interest rate remains
low (of late BOE has been hinting a rise in interest rate) and house prices continue to soar pre-Brexit, but post the
referendum prices have cooled down, showcasing the volatile nature of the market. However, since a significant chunk of
the household assets comprises real estate, any disruptive correction in the real estate market will bring substantial
financial distress for them by wiping out a large chunk of household wealth.
Figure 8: Household debt and price to disposable income
133.50 4.55
4.50
House price to income ratio

133.00
Household debt to GDP
4.45
132.50
4.40
132.00 4.35
4.30
131.50
4.25
131.00
4.20
130.50 4.15
Q22015 Q32015 Q42015 Q12016 Q22016
Household debt to income House price to disposable income

PESTLE Analysis
Figure 9: Commercial real estate transactions
18
16
14
12
£ billion
10
8
6
4
2
0
q4 2015 q1 2016 q2 2016 q3 2016
Total United Kingdom By overseas investors By domestic investors

PESTLE Analysis
Social analysis
Overview
Residents of the UK enjoy a standard of living comparable with those in other developed countries. Decades of solid
economic growth have helped in the development of robust social infrastructure. The UK’s education and healthcare
delivery systems rank among the best in the world. The government is focused on alleviating income inequality and plans
to eradicate child poverty by 2020.
Table 5: Analysis of the UK’s social system

▪ Strong education system ▪ Child poverty
▪ Healthcare services ▪ Controversial immigration act

▪ Policies to support pensioners and encourage savings ▪ Challenges of an aging population
▪ Rising inequality
Current strengths
Strong education system
The UK has high-quality educational infrastructure and has historically attracted students from all parts of the globe. The
nation’s tradition of education dates back hundreds of years and is constantly evolving. Qualifications obtained from UK
institutions are recognized and respected worldwide. The UK has around 170 universities and higher education institutes,
including three universities in the world's top 10, according to The Times Higher Education World University Rankings
2016–17. The ranking was based on teaching, research, knowledge transfer and international outlook.
Healthcare services
The UK’s healthcare system is one of the most successful social ventures in the world. This is due to the presence of
advanced healthcare infrastructure and private sector involvement. The UK’s public expenditure on health has
traditionally been very high, which has helped the country to maintain quality and efficiency. All residents of the UK, the
European Economic Area, and countries that have bilateral healthcare agreements with the UK are eligible for NHS care.
The system has established itself as one of the best in the world.
Current challenges
Child poverty
The government has set a target of eliminating child poverty by 2020. As per the government definition, “Children are
said to be living in relative income poverty if their household's income is less than 60% of the median national income”.
According to The Institute for Fiscal Studies (IFS) forecasts, child poverty will increase to 3.4 million by 2020 from 2.4

PESTLE Analysis
million in the past decade. This is in contrast to the improvement seen in reducing child poverty in the previous decade.
According to a UNICEF report titled “Child Well-being in Rich Countries: A comparative overview”, the UK was ranked
16th among the OECD countries and was clubbed in the group that includes Hungary and Portugal. In June 2016, the
data from the Department of Work and Pensions indicated that the number of children living below the poverty line
jumped by 200,000 in the year 2014–15 from the previous year, with around 3.9 million children living in poverty. Around
two-thirds of children in poverty are a part of the household where only one adult is in work. The government has to do a
lot more to tackle poverty, especially poverty among children, to achieve its goal by 2020.
Controversial immigration act
Immigration has always been a contentious issue in the UK. Since coming to power in 2010, the government has
proposed reforms to immigration regulations to reduce overall immigration flows to the country. In May 2014, the bill
turned into a law after getting Royal Assent. However, the negative impact of the controversial reforms, especially with
regard to international students coming to pursue higher education in the UK, is intensely debated. The proposals include
removal of free national health insurance (NHS) for international students, requirement for banks to verify the immigration
status of new clients and changes that make it easier for the Home Office to remove people from the UK. The law also
includes a provision to strip terrorism suspects of their citizenship, elimination of the right of appeal for extension
applications made in the UK and the indefinite retention of biometric data.
The new law has faced criticism from student groups, universities and policymakers alike. The UK’s highly reputed
education sector fears that the new immigration laws will further reduce international student enrolment in UK
universities, when they are already experiencing the lowest enrolment seen in the last 30 years. Critics believe this will
lead to students moving to other countries for higher education where regulatory rules are more lenient. In addition,
international students considerably add to the UK’s research base, especially in science, technology, engineering and
mathematics (STEM). According to the UK Council for International Student Affairs (UKCISA), international students
account for 50% of those pursuing full-time research degrees and over 40% of UK postgraduate students. Additional
declines in enrolment due to the new regulations may affect the competitiveness of UK’s universities over the longer
term.
property owners who are renting their premises to illegal immigrants can face criminal charges. According to the act,
employers who are hiring illegal immigrants will come under the scanner facing criminal sanctions. The bank accounts
and driver’s license of those migrants, who have not gotten permission to stay in the country, could be seized.
Future prospects
Policies to support pensioners and encourage savings
In September 2016, the government stated its intent on hauling the retirement reforms of long-awaited pension
dashboard. A pilot version of the online dashboard is slated to begin in March 2017, before the public is given full access
in 2019. This will allow the public see their savings from the workplace state pension at one platform for the first time.
The economic secretary to the treasury, Simon Kirby, stated that around 11 pension providers have agreed to support
the trial, which is supervised by the Association of British Insurers.

PESTLE Analysis
Future risks
Relatively high dependency ratio
According to the OECD, the dependency ratio (over-65 population as a share of the working-age [15 to 64] population)
will rise sharply from 30.8% in 2015 to 46.4% by 2050, a rise of 15.8 percentage points. The economic support ratio fell
after the global financial crisis, as more people were unemployed; this resulted in lesser revenue from worker taxes.
The problem of aging population will plague the UK in the coming years, as people continue to retire in increasing
numbers. With the country's older population increasing every year, the cost of social welfare will only rise; this could
have serious implications for the country’s finances as well as its economic activity. With the government on a deficit
reduction path, welfare costs need to be controlled. The government’s finances are under severe pressure to meet the
needs of its aging population.
Figure 10: Old age dependency ratio
90.0
80.0
70.0
Percentage points
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Denmark
Hungary
Austria
Mexico
Germany
New Zealand
Portugal
Australia
Greece
Slovak Republic
Slovenia
Spain
Sweden
Japan
Luxembourg
Korea
Poland
Belgium
Chile
France
Norway
Finland
Ireland
Israel
Netherlands
Switzerland
Turkey
Iceland
Italy
Canada
United States
United Kingdom
Estonia
Czech Republic
2015 2050

PESTLE Analysis
Rising inequality
Rising inequality is a concern. According to the OECD, as of 2013, UK’s Gini coefficient (a measure of inequality in
income) was 0.351 compared to the OECD-34 average of 0.315. The Gini coefficient score of zero corresponds to
complete equality while a score of one corresponds to complete inequality. While in the OECD countries the richest 10%
of the country earn an average income that is around 9.6 times than that of the poorest 10%, in the UK the average
income of the richest 10% is 10.5 times that of the poorest 10%. The UK ranks among the top countries in terms of rising
inequality.
The government has been forced to undertake prudent fiscal measures to strengthen public finances, which is expected
to increase the disparity in income in future. Inequality creates political, social and economic challenges and stifles
upward social mobility. Taxes and benefits need to be reformed and redistributive policies need to be framed to
challenge increasing inequality
Figure 11: Gini coefficient of household disposable income, 2013 and S90/S10 ratio
35.0 0.600
30.0 0.500
25.0
0.400
S90/S10 income decile share
20.0
Gini coefficient
0.300
15.0
0.200
10.0
5.0 0.100
0.0 0.000
DEU
KOR
MEX
LUX
CZE
POL
PRT
BEL
DNK
FRA
GRC
NLD
NOR
SWE
AUS
IRL
OECD
EST
HUN
ITA
NZL
ESP
CHE
GBR
USA
AUT
FIN
ISR
ISL
SVK
SVN
S90/S10 Gini coefficient

PESTLE Analysis
Technology analysis
Overview
The government has been successful in steering the R&D in the right direction, and is taking steps to boost
competitiveness. Increasing R&D expenditure is a positive; however, the dearth of skilled personnel could pose a serious
challenge to the country's attempts to maintain its competitiveness. Increasing cyber-attacks poses a risk to the country.
Table 6: Analysis of the UK’s technology landscape

▪ Effective intellectual property rights ▪ Lack of skilled personnel
▪ Increasing R&D expenditure ▪ Regulatory control over indigenous innovations

▪ Scope for new industries ▪ Increasing cyber attacks
▪ Government policies towards encouraging R&D
Current strengths
Effective intellectual property rights
As the UK is at the forefront of innovation and R&D globally, it has concurrently developed its legislation concerning the
protection of intellectual property rights (IPR). The UK Intellectual Property Office (UK-IPO) is responsible for granting
IPR. Although the UK does not have a general statutory register of copyright, the UK-IPO is responsible for maintaining
registers of trademarks, designs and patents. IPR protection legislation is frequently enacted and amended in line with
industry developments.
Increasing R&D expenditure
The UK is renowned for the quality of its R&D and its strengths in science and innovation. The country has also
traditionally been keen to encourage R&D in both the public and private sectors. According to MarketLine, total
expenditure on R&D increased by 3.10% to £27.84 billion in 2013, compared to 2012. Further, BERD (business
enterprise expenditure in R&D), which accounted for 46.5% of the UK R&D expenditure in 2013, also witnessed an
increase from 46.2% compared with 2012, according to Eurostat.
Current challenges
Lack of skilled personnel
Despite the quality of educational and research institutions within the UK, there is a shortage of work force in the R&D
sector. One of the reasons for this could be the attractive opportunities available outside of research within the UK.
Moreover, technicians in R&D (per million people) were 1,248 in 2014, while Germany (1, 722) in 2013 and France (1,
822) fared better than the UK on this parameter, according to the World Bank. Technicians in R&D are people, whose

PESTLE Analysis
main tasks require technical knowledge and experience in engineering, physical and life sciences (technicians), or social
sciences and humanities (equivalent staff). They participate in R&D by performing scientific and technical tasks involving
the application of concepts and operational methods, normally under the supervision of researchers. The decline in the
working age population has had an impact on the progress of R&D within the country.
The UK has also witnessed a serious shortfall in IT and telecom talent, as the number of graduates with IT-related
degrees has declined substantially in recent years. Both R&D and IT are vital to a growing economy, and the dearth of
personnel could pose a serious challenge to the country's attempts to maintain its competitiveness in these areas.
Regulatory control over indigenous innovations
The authorities face the unenviable challenge of striking a balance between keeping the distribution of indigenous
technology profitable and maintaining a competitive advantage. For instance, the UK is a key player in the defense
industry. However, even if companies within this field are able produce innovative products, they might not be able to
profit as much as they could out of doing so, as the dispersion of this technology is sensitive. The government must
therefore closely monitor developments in such industries and decide on a relevant export policy.
Future prospects
Scope for new industries
As the UK is at the forefront of new technology, there are good opportunities for the development of relatively nascent
fields such as nanotechnology, space exploration and tourism, and alternative energy. The government has implemented
incentives such as tax concessions to make investment in such industries an attractive proposition. While such ventures
are generally capital-intensive and returns are uncertain, prospects are extremely bright for companies that do manage
to make a breakthrough, as is the case with other traditional technology-intensive industries such as pharmaceuticals
and telecommunications.
Government policies towards encouraging R&D
The country needs to innovate in export-oriented sectors given the UK’s competitiveness in high technology exports.
Providing impetus to R&D is the key for UK to raise its productivity and living standards. Hence, the government’s
incentives to foster R&D are comparatively better than its European peers such as Germany, Spain and Italy. In
November 2016, Prime Minister Theresa May announced £2 billion of government investments per year until 2020 to
keep the country at the forefront of research and development. An adoption of a new industrial strategy challenge fund to
boost priority technologies like robotics and biotechnology to push the country as a frontrunner in industrial and
commercial lead was also put into effect. Further, the government has created “catapult centers" – technology and
innovation clusters for scientists, engineers and businesses to work together to turn R&D into new products and services.
The government has identified the following seven “catapult centers": high-value manufacturing, offshore renewable
energy, cell therapy, digital economy, future cities satellite applications and transport systems. This could be beneficial in
the long-run as companies will find it more attractive to invest in R&D.

PESTLE Analysis
Figure 12: Government funding of business R&D, 2013
0.4500
0.4000
0.3500
Percentage of GDP
0.3000
0.2500
0.2000
0.1500
0.1000
0.0500
0.0000
MEX
DEU
KOR
POL
ZAF
JPN
PRT
BEL
FRA
RUS
NLD
NOR
CZE
SWE
CHE
CAN
FIN
DNK
IRL
CHN
EST
ESP
CHL
GRC
ITA
BRA
SVK
NZL
AUS
TUR
GBR
USA
HUN
ISL
ISR
AUT
SVN
Direct government funding of BERD Indirect government support through R&D tax incentives
Future risks
Increasing cyber attacks
According to the research published in June 2015 by CEBR (Centre of Economics and Business Research) along with
computer security group Vera code, cyber-attacks by professional hackers cost the UK £34.0 billion every year. The
threat of cyber-attacks is also impeding innovation by companies as increased spending on IT security is reducing the
capital available for innovation, which can be deployed for future growth. ONS estimates show that in 2015 alone there
were 2.46 million cyber incidents with around 2.11 million victims of cyber-crime in the UK.
In November 2016, Chancellor Philip Hammond raised his voice on the persisting cyber-attacks, with special emphasis
on “foreign players” who are developing technologies, which targets UK’s electric and airport grids. The government
plans to spend £1.9 billion in beefing up the cyber-security space of the country. The same month saw Tesco’s banking
arm drawn into an awkward situation, where it encountered a cyber-fraud resulting in the money being drawn out from its
20,000 current accounts.

PESTLE Analysis
Legal analysis
Overview
The legal system in the UK is organized, transparent, and efficient. This makes for an environment that is conducive to
business, as legislation is passed in a practical manner, keeping all stakeholders in mind. At the same time, this
legislation is enforced in a fair manner by a number of agencies set up for monitoring specific areas. The government
has brought in general tax-avoidance rules to make evasion more difficult in the country. The British overseas territories
have signed a treaty to improve tax transparency, which is likely to improve tax compliance. The UK government will
have to bring about changes in its policies to attract FDI and to compete with BRIC and other advanced economies.
Table 7: Analysis of the UK’s legal landscape

▪ High in business Freedom ▪ Finding balance between traditional liberties and increased terror
threat
▪ Effective enforcement of legislation
▪ Low total tax rate and tax compliance cost
▪ Measures to cut down tax evasion ▪ Lack of incentives to attract FDI
▪ Improving product market regulations
▪ Corporate tax reduction
Current strengths
High in economic freedom
Laws that affect the UK’s business environment have been created and amended with the interests of investors in mind.
This is evident from the fact that domestic and foreign players have shown a continuous commitment to investing in the
country. The majority of multinational corporations based outside Europe prefer to control their European operations from
the UK. According to the 2016 Index of Economic Freedom, the UK ranked 10th in the world and fourth in Europe. The
country scores high in business freedom, labor freedom, trade freedom, investment freedom and financial freedom. The
government has made continuous efforts to ensure that the overall environment is conducive to business.
Efficient regulatory environment for doing business
An effective regulatory environment in which companies can conduct their business without too many regulatory hassles
is important for a country’s growth. According to the World Bank's Doing Business indicators for 2017, the UK ranked
seventh out of 189 countries in overall ranking. In 2013, it made starting a business easier by providing model articles
that can be used in preparing memorandums and articles of association. It takes 4.5 days to start a business in the UK,
compared to the Organisation of Economic Co-operation and Development (OECD) average of 8.3 days. Moreover, the
number of days taken in enforcing a contract is 437 days, which is lower than the OECD average of 553 days.

PESTLE Analysis
Low total tax rate and tax compliance cost
According to Paying Taxes 2016, the UK’s total tax rate (aggregate of profit taxes, labor taxes and other taxes) has been
32%, which was lower than the EU&EFTA average of 40.6%. Further, time to comply with taxes is 110 hours, far lower
than the EU&EFTA average of 173 hours. A low tax burden and compliance costs make a country more investment
friendly for businesses and startups as it reduces the cost of operating a business.
Current challenges
Finding a balance between traditional liberties and tackling the increased threat of terrorism
The government faces the challenge of maintaining a traditionally liberal society while taking steps to combat terrorism.
For instance, a 2006 law bans the "glorification" of terrorism and gives law enforcement agencies special powers to act
against websites deemed inflammatory. While the House of Commons approved the law by a comfortable margin,
members of the House of Lords criticized it as restricting freedom of speech. In much the same way, legislation such as
the Terrorism Act 2006 and the Prevention of Terrorism Act 2005 were controversial. The new immigration act of 2014,
which has empowered authorities to strip suspected terrorists of citizenship, has also attracted controversy in the UK.
landlords who are renting their premises to illegal immigrants can face criminal charges. According to the act, employers
who are hiring illegal immigrants will come under the scanner facing criminal sanctions. The bank accounts and driver’s
license of those migrants would be seized, who do not have the permission to stay in the country.
Future prospects
Measures to cut down tax evasion
The British overseas territories have signed a treaty to improve tax transparency. British territories of Anguilla, Bermuda,
Montserrat, the Turks and Caicos Islands and the British Virgin Islands have signed a treaty with the UK and other G5
nations to share tax information. The government has hailed this as a significant step to check tax evasion. Further, The
Swiss/UK Tax Cooperation Agreement, which came into force from January 2013, is expected to improve information
exchange and disclosures related to British assets in Swiss banks. Moreover, in June 2013, the G8 countries agreed to
take steps to target tax evasion and avoidance. The government has recruited additional criminal investigators to
prosecute those who evade tax because of which the number of people prosecuted for tax evasion went up from 420 in
2010–11 to 915 in 2013–14. Moreover, over the past few years the government has also taken various regulatory
measures to crack down on evasions. The recent figures highlighted the reduced UK’s tax gap from 8.3% in the year
2005–06 to 6.5% in 2014–15. The progress underlines the digital transformation of collecting the right amount of tax. The
government has shown intent on the improvement of general anti-abuse law and on identifying newer conditions under
which some promoters repeatedly avoid market tax.
Improving product market regulations
The UK has not done well in product market regulation. Product market indicators are a set of metrics that measure the
extent to which policies framed by the government promote or inhibit competition in areas where competition is possible.
Many of the sectors in the UK are not as tightly regulated as they are in its OECD counterparts. This is indicative of a
more competition-friendly market and lesser monopolies in various sectors. Moreover, during 2008–13, it fell further,
which suggests of more deregulation in the product and services market. Lower regulation increases the purchasing

PESTLE Analysis
power of households and reduces expenses for businesses through lower costs of production. Moreover, the easing of
regulations will attract investment in various sectors, which will open up new avenues of employment.
Figure 13: Product market regulations, 2013
3
Index scale 0 (least restrictive) to 6 (most restrictive)
2.5
1.5
0.5
2013 2008
Corporate tax reduction
The government has cut the UK corporate tax rate to 20% from April 1, 2015—this will be among the lowest for G20
nations. This rate reduction is a welcome change for businesses, as they can spend a greater share of their profits on
expansion. This policy will also make the UK a favorable investment destination for large businesses.
Future risks
Lack of incentives to attract FDI
A number of emerging economies have introduced various pioneering schemes in an attempt to attract foreign
investment. India, Russia, and China, for instance, have introduced various versions of special economic zones, which
attract marquee global investors looking for tax exemptions or tax concessions. One trend that may define this decade is
the increasing attractiveness of Germany to international investors. Germany’s emergence from recession and its
economic leadership in Europe is likely to field a challenge to the UK as a destination for foreign investment. The UK
government will have to change policies to compete with other developed economies including the BRIC nations to
attract FDI. The UK has to make efforts to improve its ranking in the FDI restrictiveness index, which makes it amply
clear that it is way behind countries such as Germany.

PESTLE Analysis
Figure 14: FDI restrictiveness Index 2015
0.070
0 (least restrictive) to 1 (most restrictive)
0.060
0.050
0.040
0.030
0.020
0.010
0.000
Spain Germany Belgium France Italy United
Kingdom

PESTLE Analysis
Environmental analysis
Overview
The UK, considered one of the strongest players in global politics, has a large role to play in determining future global
policies. Increasingly, world leaders are viewing climate change and sustainable development as global issues that
require concerted global efforts and the UK has a major role to play in convincing other countries to commit to this cause.
The government must also ensure that it meets its own commitments to send a positive signal to other countries.
The UK must achieve a greater reduction in the emission of pollutants if long-term environmental protection is its aim.
Although targets have been set through a number of international and internal agreements, the process should be
developed further. The great challenge lies in balancing economic development with progress in the environmental
situation. This will be especially difficult in the face of increasing competition from emerging markets.
Table 8: Analysis of the UK’s environmental landscape

▪ Strong global influence ▪ High air pollution
▪ Good track record in implementing policies

▪ Proactive policy toward Kyoto Protocol successor ▪ Balancing environmental protection with economic development
▪ Carbon budget
▪ Impetus provided by Infrastructure bill
▪ Effective implementation of COP21
Current strengths
Strong global influence
With its position as an industrialized global power and as a member of the G8, the UK has a leadership role to play in the
global effort towards sustainable development and environmental protection. The UK has close ties with a number of
countries and an influential position in the Commonwealth. Consequently, it has the ability to extract commitments from
developing nations that are unwilling to sacrifice economic growth to protect the environment.
Good track record in implementing policies
The UK has a good record of accomplishment in achieving a number of its environmental objectives and in expanding its
environmental infrastructure. The country has broadened its environmental objectives because of various international
commitments, and partly as a response to its goal of sustainable development. The step towards integrated pollution
control is a major component of environmental management, although it is only half-complete and its scope is still limited
to large sources of pollution.
The Energy Act 2011 brought about a significant change in the provision of energy efficiency measures for both homes
and businesses. The act seeks to enable and secure low carbon energy supplies and ensure fair competition in energy
PESTLE Analysis
markets. Seven environment-related directives have been combined into one piece of legislation to improve the
framework of the act. The Energy Act 2013 succeeded the Act of 2011, focusing to set de-carbonization target for the
UK with a special emphasis on reforming the electricity market. The government has stated that it is committed to the
use of market forces, although it is yet to make extensive use of economic instruments as part of its environmental
policy.
Current challenges
High air pollution
In June 2010, the European Commission issued a second and final warning to the UK over air quality, and asked it to
come up with a pragmatic solution to pollution. London suffers from high air pollution, while Manchester, Glasgow and
Birmingham have dangerous levels of NO2. Exhaust fumes and emissions from factories and power stations around
London are the main causes of pollution.
In May 2013, the Supreme Court ruled that the government failed to bring down air pollution levels as per EU directives
and the European Commission can take legal action against the government for non-compliance. In July 2014, the
Department of Environment, Food and Rural Affairs reported that London is projected to fail EU air quality limits until at
least 2030, thus missing the deadline by two decades. New data from the World Health Organization (WHO) found more
than 40 towns and cities in the UK encroaching the safe limits of air pollution. It indicated that more than 80% of the
population in urban areas are exposed to dangerous levels of air pollution, with the agency calling it “a public health
crisis”. This poses significant health hazard to its residents. Around 29,000 deaths in the UK every year are due to air
pollution. The government has to take immediate and decisive steps to control air pollution in the country.
Future prospects
Proactive policy toward Kyoto Protocol and COP21 successor
The UK played a central role in galvanizing support for extending the Kyoto Protocol beyond 2012. The UK supported
ratification of the Kyoto Protocol’s second commitment period, and worked to secure a mandate for a comprehensive
legally binding instrument in protocol form by 2015. Indeed, by committing to a second commitment period, the UK
through the EU has championed the next round of negotiations, helping to maintain essential elements that include its
potential long-term viability as a framework. This is a significant step forward in curbing emissions to tackle global climate
change. In November 2016, the government also ratified the COP21 agreement after the UN climate change conference
in Paris, thus committing itself to lessen its balance on carbon-dependent growth.
Carbon budget
Under the Climate Change Act, the UK government has to report annually to lawmakers on its progress in meeting its
carbon budgets. The government has set an overall target of an 80% reduction in emissions from 1990 levels by 2050.
The UK's reduction also compares well to cuts achieved in other countries. Furthermore, the government has started a
new mandatory scheme for large public and private sector organizations to boost energy efficiency and reduce carbon
emissions.
Impetus provided by Infrastructure bill
The new Infrastructure bill gives special impetus towards environmental conservation. It aims to safeguard environment
from invasive, non-native species, which cause destruction to biodiversity and water environment. It also aims to
preserve the underground environment from hydraulic fracturing by bringing in place a variety of measures with respect
to exploration of shale energy. A new exploration company has to comply with all the environmental permits and rules.
PESTLE Analysis
The Secretary of State will now have to seek advice from the Committee of Climate Change regarding the carbon
budgets issue.
Effective implementation of COP21 agreement
In November 2016, the UK government took full lead in the Marrakesh talks in the COP22 summit held to put the
commitments declared by the respective countries in COP21 summit into action. The government also supported
initiatives like the improvement of national carbon reduction strategies, bolstering innovation to steer forward cleaner
energy on a global scale. It also lays emphasis on gearing up the transparency in actions, setting a deadline of 2018 for
its finalization.
Future risks
Balancing environmental protection with economic development
The dilemma of striking a balance between economic developments and protecting the environment is one that will
remain an issue in the near future. In the UK, the relative decline of the industrial sector has meant that there is less
pressure on the environment, although even the transition to a services-driven economy has not erased the harmful
impact that overall economic development is having on the planet. The UK’s economic growth would not be sustainable
unless the government focuses on “green growth”. Further, the continuing debate to choose between environmental
protection and economic development is not mutually exclusive and the government has to take into account
environmental issues in its growth strategies.

Political Landscape
POLITICAL LANDSCAPE
Summary
The UK has strong democratic traditions. There is great respect for human rights and civil liberties, and the public sector
is transparent and accountable. The system of governance in the UK has developed from a monarchy into a democratic
parliamentary system of governance known as the Westminster system. The legislative, executive, and judicial functions
are entrusted to separate bodies. Executive authority is vested in the cabinet, led by the prime minister, while legislative
authority is vested in a bicameral parliament and judicial authority is vested in a system of courts. None of these
institutions has absolute authority over the other, and there is an adequate system of checks and balances in place. The
monarch, Queen Elizabeth II, is the head of state, but this position is largely ceremonial.
The UK emerged from the world wars as a dominant, industrialized nation, largely on the back of continuous economic
development. As a result, the UK became a major force in global politics as a permanent member of the United Nations
Security Council and the North Atlantic Treaty Organization (NATO), and an important member of the European Union
(EU). The UK has distanced itself from complete European integration, but at the same time, the government has tried to
keep itself involved in the EU's international commitments. The country was criticized for its support of the US-led war on
terror in Afghanistan and Iraq.
In May 2010, elections to the House of Commons brought about an historic change in the political composition of the UK.
The Conservative Party headed by David Cameron won the elections and it was re-elected for a second term in the May
2015 elections after winning 331 seats out of the 650 seats available. However, after the referendum held in June 2016
to decide the future of the country in EU resulted in favor of Brexit from the Union, Mr. Cameron resigned from the office
taking responsibility for that event. Following this, in July 2016, former home secretary Theresa May became the prime
minster.
Evolution
Pre-1950s
Early medieval Britain consisted of a number of small kingdoms, which formed into the kingdoms of England and
Scotland. The King of Scotland inherited the English throne in 1603 and acted as sole ruler over the two territories.
These kingdoms were combined to form the Kingdom of Great Britain in 1707. In 1801, the Kingdom of Great Britain
merged with the Kingdom of Ireland to form the United Kingdom of Great Britain and Ireland, which became a dominant
power in the 19th century. The nation later became the United Kingdom of Great Britain and Northern Ireland after some
parts of Ireland seceded in 1927.
At the height of its power, the “British Empire” covered around a quarter of the earth’s surface. However, the nation
suffered great losses during the two world wars in the first half of the 20th century. After World War II ended, the Labour
Party came into power and established a welfare system. The UK became a permanent member of the UN Security
Council and a founder member of NATO. The end of World War II also heralded the start of decolonization, whereby a
number of the UK’s colonies gained independence.
1950–90
In 1961, the UK’s application to join the European Economic Community (EEC) was opposed by the then French
president Charles de Gaulle, although the country eventually joined in 1973 despite widespread strikes. The late 1960s
saw the start of intense violent conflict in Northern Ireland between elements of the unionist community and the
Political Landscape
nationalist community. Apart from the dispute between the two parties over the status of Northern Ireland within the UK,
the minority nationalist community (primarily Roman Catholic) resented the treatment they received from the majority
unionist community (primarily Protestant), while the unionists opposed the dominance of the nationalists.
The Conservative Party came to power in 1979, led by Prime Minister Margaret Thatcher. In 1982, the UK sent special
forces teams to the Falkland Islands (an archipelago located off the coast of South America) after they were invaded by
Argentina, and successfully regained control over the territory. Under Thatcher, economic reforms took place with the
introduction of free market policies and the privatization of various state enterprises. Thatcher was re-elected twice, in
1983 and in 1987, but resigned in 1990 after facing a challenge for the leadership of the Conservative Party. John Major
was then named prime minister.
1991–2016
In 1991, the UK, as one of the US’s allies, helped liberate Kuwait from Iraqi occupation. The Northern Ireland peace
process received a boost in 1993 when the UK government issued a joint peace proposal with the Irish government.
Eventually, the Belfast Agreement in 1998 ended the conflict in Northern Ireland. In recent times, there has been a
significant devolution of powers from the central government to various sub-national entities. The devolved system of
government is different from a federal system of government in that, under the doctrine of parliamentary sovereignty,
devolution is in theory reversible and sub-national entities are subordinate to the UK parliament.
In 1997, the Labour Party, led by Tony Blair, emerged with a landslide victory over the Conservatives. Blair’s party was
subsequently re-elected twice, in 2001 and again in 2005, despite the party’s policy of staunch support for the war on
terror in Iraq and Afghanistan. In 2007, Gordon Brown succeeded Tony Blair as both the head of the Labour Party and as
the prime minister.
In June 2009, the governing Labour Party lost the European elections, ending in third position with only 15.7% of the
vote, while the Conservative Party received 27.7%. In the May 2010 elections to the House of Commons, the
Conservative Party won with a 36.1% share of the vote, winning 305 seats. The Conservative leader David Cameron
subsequently went on to form a coalition government with the Liberal Democrats. In the May 2015 elections to the House
of Commons, the Conservative Party won 331 out of total 650 seats, with the return of David Cameron for the second
term.
In December 2011, Prime Minister Cameron disagreed with proposals to make changes in the EU’s Lisbon treaty stating
that these proposals will jeopardize the status of London as a financial center. In December 2012, both the British and
the Scottish government agreed on a referendum for Scottish Independence in September 2014, however, the people of
Scotland voted against it. In January 2013, Prime Minister David Cameron proposed a referendum by 2017 on whether
to leave the EU. However, after the referendum held in June 2016 to decide the future of the country in the EU resulted
in favor of Brexit from the Union, taking responsibility for this event, Mr. Cameron resigned from the office. Following this,
in July 2016, former home secretary Theresa May became the prime minster.

Political Landscape
Figure 15: The UK – political events timeline
1914−50 1951 − 80 1981−90 1991−2001 2001 Onwards
• World War I began in • Queen Elizabeth II was • In 1981, the Thatcher • In 1991, the UK took • The Labour Party won a
1914. crowned as queen in government began the part in the US-led third successive term in
1953. process of privatization military campaign to office in 2005.
• War ended in 1918
of state-run industries. liberate Kuwait from
with several hundred • Gordon Brown succeeded
• The UK intervened in Iraqi occupation.
thousand UK soldiers Tony Blair as the prime
Suez Canal crisis, but • In 1982, Argentina • Major was re-elected
dead. minister in 2007.
withdrew due to US invaded the Falkland as prime minister in
• First Labour pressure in 1956. Islands in the South 1992. • In May 2010, the
government was Atlantic, which was • The UK government Conservative Party won
elected in 1924. • The UK’s bid to join the recaptured by the UK. along with the Irish the House of Commons
EEC was vetoed by government issued the elections with 36.1% of
• Major worldwide
French President • Thatcher was re-elected Downing Street the vote and formed a
economic crisis was
Charles de Gaulle in in 1983 in the midst of declaration on Northern coalition government.
witnessed in 1931.
1961. high unemployment and Ireland in 1993. David Cameron became
• World War II started unrest in the inner cities. • The Labour Party led the prime minister.
in 1939. • The UK joined the EEC by Tony Blair won a
• In May 2015 elections,
in 1973. • Thatcher resigned after landslide victory in
• War ended in 1945 the Conservative Party
she lost the leadership 1997.
and a welfare state won 331 of the total 650
• EEC membership was of her party and she was • The voters of the
was introduced by the seats. David Cameron
endorsed in a succeeded by John Republic of Ireland and
newly elected Labour returned as prime
referendum in 1975. Major in 1990. Northern Ireland
government. minister.
approved the Good
• The UK became a Friday Agreement for a • Theresa May became the
permanent member of political settlement in prime minister in July
the UN Security 1998. 2016, following the
Council in 1945. resignation of David
• The Labour Party led
Cameron after the Britain
• The UK became a by Tony Blair won its
voted for exit from the EU.
founder member of second successive
NATO in 1949. election in 2001.

Political Landscape
Structure and policies
Key political figures
Key political figures in the UK are:
 Prime minister Theresa May
 Head of state Queen Elizabeth II
Figure 16: Key political figures
Queen Elizabeth II is the monarch of the UK and she is the only monarch of more than one
state in the world. Queen Elizabeth II is a constitutional monarch of the country and she takes on
certain representational duties, which are ceremonial in nature. The monarch of the UK has the
right to dissolve the parliament and appoint a prime minister. Moreover, the monarch is the head
of the commonwealth and so the official head of state for fifteen countries, which is largely a
ceremonial position.
Theresa May has been elected as the prime minister in July 2016, after the ex-prime minister
David Cameron stepped down following Britain’s vote to leave the EU in the referendum of 2016.
She was elected as the Chairman of the Conservative Party from 2002 to 2003. She has also
been the Home secretary of the UK since 2010.
Structure of government
The UK subscribes to a democratic, parliamentary system of governance known as the Westminster system. This
system, developed over several centuries, is named after the location of the UK parliament. The Westminster system is
characterized by the presence of a titular head of state, who in practice is more of a ceremonial figurehead, and a
bicameral legislature in which at least one of the houses is elected. Other key features are a de facto executive branch
led by the head of the executive—who is usually the head of the party with the largest representation in parliament, and a
judicial branch that is independent of the legislature and the executive.
Center/federal
Legislative power is vested in both the government and the two chambers of parliament: the House of Commons and the
House of Lords.
On a broad level, the duties of the houses are similar and involve monitoring the work of the government, passing
legislation, and discussing issues of significance. There is a system of checks and balances, as the decisions made by
one house usually have to be approved by the other.
State/provincial
In the late 1990s, a significant devolution of authority was carried out in the UK through the transfer of powers from the
central government to various sub-national bodies. Despite the creation of a national parliament in Scotland and a
national assembly in both Wales and Northern Ireland, the UK parliament had retained overall authority over these
devolved institutions. Referendums held in Scotland, Wales, and Northern Ireland in 1997 and 1998 confirmed that the
Political Landscape
public was in favor of devolution, and by 1999, the devolved powers were formally transferred.
Following the passage of the Scotland Act 1998, the Scottish parliament and executive formally came into existence; the
parliament has the power to make laws, with certain areas being reserved for the parliament of the UK. All areas that are
not reserved for the parliament of the UK come under the purview of the parliament of Scotland. The parliament and the
executive have powers in specific areas such as economic development, education, health, law and home affairs, local
government, transport, social services, housing, and the environment.
Key political parties
Labour Party
The Labour Party initially came into existence in 1900 as a political pressure group that was formed out of the trade
union movement, and was influenced by the socialist political parties of the time. A leading left party in England,
Scotland, and Wales since the 1920s, it has been a party of self-proclaimed democratic socialism. In recent times, the
party has adopted a "third way" approach to policymaking, combining both socialism and laissez-faire principles.
Under the leadership of Tony Blair and Gordon Brown, it was at the helm of affairs in the UK from 1997 until 2010,
although its majority in the House of Commons fell rapidly during this time. Brown took over from Blair as prime minister
and head of the party in June 2007. In the May 2015 elections for the House of Commons, the party got 232 seats out of
650, and lost to the Conservatives.
Conservative Party
The Conservative Party is arguably the oldest political party in the world, with roots in the Tory party of the 18th and 19th
centuries. Indeed, even today, the Conservatives are often referred to as the Tories. The party is the largest in the UK in
terms of public membership, and is the most successful party in the UK in terms of number of election victories.
The Conservative Party won the May 2015 House of Commons elections with 331 seats out of 650. The party had 330
seats in the assembly as of December 2016.
Liberal Democrats
The Liberal Democrats trace their roots back to the formation of the Liberal Party in 1859. In terms of public membership,
the Liberal Democrats are the UK’s third largest party. In general, the party promotes social liberalism, which focuses on
individual liberty, minimal state intervention in an individual’s personal affairs, and the decentralization of power away
from "unaccountable" public bodies. Nick Clegg was elected leader of the Liberal Democrats in December 2007 after the
resignation of his predecessor, Sir Menzies Campbell.
The Liberal Democrats' policy initiatives are based on the objective of maintaining “a fair, free, and open society". For
example, the party supports the decentralization of power away from national government and free education for all
citizens including university students. The party opposes the anti-terror laws that were brought in by the previous Labour
government.
In the general elections of May 2015, the Liberal Democrats won only six seats in parliament. As of December 2016, the
Liberal Democrats has eight seats in the parliament.
Scottish National Party
Scottish National Party (SNP), under the leadership of Nicola Sturgeon, emerged, as the third largest party in Britain,
winning 56 out of total 59 seats, in May 2015. It completely decimated Labor party’s strong influence in Scotland, giving
an indication as to how the politics of Scotland has become different from the one in UK. The party came into existence

Political Landscape
by making the devolution of rights between Scotland and rest of UK as its key agenda. However, people of Scotland
defeated its referendum on independence of Scotland in September 2014. SNP, with majority of parliamentary seats in
the region under its belt in recent elections, stands stronger than ever to challenge the federal government.
Composition of legislature
While the Labour Party managed to secure 232 seats in parliament, the Scottish National Party won 56 seats. As of
December 2016, the conservatives has 330 seats in the parliament.
Figure 17: Composition of legislature
Other , 32
SNP, 56
Conservative ,
330
Labour, 232
Key policies
Economic and social policies
The economy has continued to be weak since the financial crisis of 2008. The government since then has been
bolstering the economy with unprecedented financial support. The banking sector has not yet recovered from the crisis
and concerns over bank balance sheets remain. In addition, elevated private sector and household debt continue to
restrain investment and consumption. The housing market has been frothy in recent times; however, no significant
measures have been taken to cool it, making it a potential point of vulnerability for the economy. On the external front, a
lingering debt crisis in the Eurozone, a major market for British exports, has affected exports and manufacturing. The
government’s front loaded fiscal consolidation has narrowed the deficit figure, although it has remained elevated over the
past few years.
Against this economic background, the 2016 budget, has proposed GDP growth of 2.0% in 2016 and 2.2% in 2017. It
forecasted an employment figure of 31.5 million in 2016, rising up to 32.1 million in 2020. In the wake of Britain’s vote to
leave the EU, the Autumn statement released by the new Chancellor Philip Hammond saw the government take pro-
active approach to tackle the sagging mood of the economy. A National Productivity Investment fund worth £23 billion

Political Landscape
has been announced to narrow down the UK’s productivity gap with its peers.
Foreign
The UK is one of the most prosperous and influential nations in the world and has a large role to play on the international
stage. The country is one of the five permanent members of the UN Security Council, is one of the founding members of
NATO, and a member of the G8. Despite being a member of the EU for a long time, it has always followed a
conservative approach to European integration. After the referendum, the UK-EU tensions could escalate in the near
term as the government renegotiates the terms of membership with the latter. A modified relationship may lead to a
diminishing role for the UK as far as future EU policy matters are concerned. The issue of Scottish independence
remains a serious risk, as there is a resurgence of SNP in recent elections, after their referendum on independence was
defeated in September 2014. With the Scottish National Party pressing for independence, the future of the union remains
uncertain. Although full independence is unlikely, there may be more devolution of powers. The UK will continue to
remain a close ally of the US. The country’s stature as the European heavyweight has suffered a setback post the victory
of Brexit vote in the referendum held in June 2016. External agenda of the new prime minister’s remaining term will be to
chart a peaceful process for the UK’s seccession from the EU, while keeping its stature intact.
Defense
As a permanent member of the UN Security Council, the UK has a responsibility towards global peacekeeping and crisis
management efforts. The UK has committed troops to a number of peacekeeping missions in countries such as Sudan,
Liberia, Sierra Leone, the Democratic Republic of the Congo, Cyprus, Kosovo, Bosnia, Georgia, Iraq and Afghanistan.
As one of its main defense policy objectives, the UK aims to combat terrorism and the proliferation of weapons of mass
destruction. The UK has established a close relationship with the US, and has participated in the latter’s war on terror in
Iraq and Afghanistan. As part of its defense policy relating to the war on terror and tyranny, the UK has committed its
forces against the Gaddafi regime in Libya and contributed to his overthrow. The current conflict in Syria and Iraq has not
attracted an overt UK response.
Performance
Governance indicators
The World Bank report on governance uses voice and accountability, political stability and absence of violence,
government effectiveness, regulatory quality, rule of law, and control of corruption as indicators for 215 countries and
territories over 1996–2015. Daniel Kaufmann of the Brookings Institution, Massimo Mastruzzi of the World Bank Institute
and Aart Kraay of the World Bank Development Economics Research Group conducted the study. For any country, a
percentile rank of zero corresponds to the lowest rank and 100 correspond to the highest.
The UK ranked in the 92.12 percentile for voice and accountability in 2015. This parameter measures the extent to which
a country's citizens are able to participate in selecting their government, along with freedom of expression, freedom of
association, and the availability of free media. The UK ranks high due to its openness and liberal attitude toward the
press. The UK is ahead of its neighbor France, which ranked in the 86.21 percentile.
The UK ranked in the 62.38 percentile for political stability and absence of violence in 2015. This parameter measures
perceptions of the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means,
including domestic violence and terrorism. The UK was ahead its neighbor France, which ranked in the 56.67 percentile.
The UK ranked in the 93.75 percentile for government effectiveness in 2015. This parameter measures the quality of
public services, the quality of civil services and the degree of their independence from political pressures, the quality of
Political Landscape
policy formulation and implementation, and the credibility of the government's commitment to such policies. The UK’s
rank on this indicator has been impressive throughout recent times, as successive governments have broadly pursued
similar economic policies, leading to stability in policy formulation and implementation. France was slightly behind the UK
with a percentile rank of 89.42.
The UK ranked in the 98.56 percentile for regulatory quality in 2015. This parameter measures the ability of the
government to formulate and implement sound policies and regulations that permit and promote private sector
development. A high ranking indicates fair implementation of policies and regulations in the private sector. Under this
category, France trailed the UK, ranking in the 83.65 percentile.
The UK ranked in the 93.75 percentile for rule of law in 2015. This parameter measures the extent to which agents have
confidence in and abide by the rules of society, and in particular the quality of contract enforcement, the police, and the
courts, as well as the likelihood of crime and violence. In this category, France was placed lower than the UK, ranking in
the 88.46 percentile.
The UK ranked in the 94.23 percentile for control of corruption in 2015. This parameter measures the extent to which
public power is exercised for private gain, including both petty and grand forms of corruption, and the appropriation of the
state by elite and private interests. France was placed lower at 87.98.
Outlook
Ex-Prime Minister David Cameron indicated that there would be a "seismic shift" in how the country was governed after
unveiling a historic coalition with the Liberal Democrats in mid-May 2010. After the referendum held in June 2016, he had
to step down as the prime minister, following the defeat of his stand which was against leaving the EU. The abolition of
the Human Rights Act (HRA) was his top goal, which continues to be on top of Ms. May’s agenda too. The government
has a strong majority in parliament, and with their chief rivals embroiled in internal fights, the grip of the Conservatives is
strong in the Parliament. In the short term, the incumbent government would have to negotiate with the demands for
more autonomy by the Scottish National Party, which have intensified post- Brexit. Furthermore, the incumbent
government would have to tread cautiously with regard to the UK’s relationship with the EU, especially to guarantee a
smooth secession from the block.

Economic Landscape
ECONOMIC LANDSCAPE
Summary
The UK’s economic development has historically been based on its strong industrial centers. However, in recent times
the services sector has overshadowed the industrial sector to become the key driver of economic growth. This shift has
led to unbalanced economic growth, as London and the South East have consistently grown, while the Northern cities
such as Manchester, Liverpool, Newcastle, Sheffield, Leeds and Birmingham, which have traditionally been dependent
on industrial activity, have not benefitted much.
The economy made a marginal dip in 2015 by registering a growth rate of 2.40% from a growth of 2.85% in 2014. Public
debt remains elevated and thus remains a significant cause for concern. The government maintained that it would go
ahead with fiscal consolidation measures to reduce the fiscal deficit. Strong fiscal consolidation is in progress and
remains vital to achieve a more sustainable budgetary position that will reduce fiscal risk. The growth in 2016 is expected
to dip to 1.40%, according to MarketLine.
Evolution
The UK has traditionally been at the forefront of economic progress. After the two world wars, a government led by
Clement Attlee, the then leader of the Labour Party, was established. This government went about the nationalization of
various industries and institutions such as the inland transport system, electricity, gas, telephones, coal mining, and even
the Bank of England (BoE). The Labour Party still considers the establishment of the National Health Service in 1948 one
of its most important achievements.
Led by Harold Wilson, the Labour government of the 1960s had a different focus than the government of the 1940s,
choosing to concentrate on economic planning and the modernization of the British industry. The government created
large public sector companies that were technology-intensive, funded the creation of infrastructure to support industry,
and encouraged innovation and the adoption of new technologies.
The victory of Margaret Thatcher and the Conservative Party in the 1979 elections brought about a change in direction
for the UK economy. Under Thatcher, economic reforms took place with the introduction of free market policies and the
privatization of various state enterprises, and the government sold a number of large public sector enterprises created by
previous governments. Thatcher was re-elected twice, in 1983 and in 1987, but resigned in 1990 after her leadership of
the party was challenged. John Major succeeded her as prime minister.
Since the 1990s, the UK economy has made a pronounced shift from its traditional dependence on its industrial sector.
The services sphere has come to the forefront, and successive governments have promoted this trend. During 2000–07,
economic growth averaged 2.89%. However, due to the global financial crisis, the country’s GDP contracted by 0.47%
and 4.19% in 2008 and 2009, respectively. The economy recovered in 2010 to register growth of 1.54%, and ticked
upward again in 2011 to 1.97%. Economic growth was nearly stagnant in 2012 as the economy grew by 1.18%.
However, in 2013 and 2014, the economy made a strong recovery led mainly by strong domestic demand. The economy
made a marginal dip in 2015 by registering a growth rate of 2.40%, and growth in 2016 is expected to dip to 1.40%,
according to MarketLine.

Economic Landscape
Figure 18: Historical GDP growth, 2005–2015
4.00
3.00
2.00
1.00
Growth rate (%)
0.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-1.00
-2.00
-3.00
-4.00
-5.00
Year
Financial authorities and regulators
From April 2013 the Financial Services Authority ceased to exist and became two separate regulatory authorities. The
Financial Conduct Authority was established to supervise the financial services authority and the Prudential Regulation
Authority was formed to supervise banks, building societies, credit unions, insurers and major investment firms.
Stock markets and derivatives
The London Stock Exchange (LSE) is responsible for providing a platform to trade in a wide array of securities, including
domestic and international equities, covered warrants, exchange-traded funds, depository receipts, debts, and fixed
interest products. The LSE allows companies of every size to raise capital through four primary markets. It comprises the
following components:
 The Main Market: Arguably the most prestigious listing and trading environment in the world.
 The Alternative Investment Market (AIM): The equities market for smaller companies.
 The Professional Securities Market: For depository receipt securities and listed debt.
 The Specialist Fund Market: Dedicated to specialized investment entities.

Economic Landscape
Insurance
According to MarketLine, the UK insurance market is expected to generate total gross written premiums (GWPs) of
$357.9 billion in 2015, representing a compound annual rate of growth (CAGR) of 2.1% in the period 2011–15. In
comparison, the French market and German markets will grow with compound annual growth rates (CAGRs) of 1.4%
and 2.1%, respectively, over the same period, to reach respective values of $274.1 billion and $260.5 billion in 2015. The
life insurance segment is expected to be the most lucrative for the UK insurance market in 2015, with total GWPs of
$235.3 billion, equivalent to 65.7% of the market's overall value. In comparison, sales of non-life insurance will generate
GWPs of $122.6 billion in 2015, equating to 34.3% of the market's aggregate revenues.
The performance of the market is forecast to decelerate with an anticipated CAGR of 1% for the five-year period 2015–
20, which is expected to drive the market to a value of $376.9 billion by the end of 2020. Comparatively, the French and
German markets will grow with CAGRs of 1% and 2.9%, respectively, over the same period, to reach respective values
of $288.8 billion and $300.1 billion in 2020.

Economic Landscape
Performance
GDP and growth rate
Overview
During 2000–07, economic growth averaged 2.89%. However, due to the financial crisis, the country’s GDP contracted
by 0.47% and 4.19% in 2008 and 2009, respectively. The economy rebounded in 2010 to register growth of 1.54%, while
exhibiting further uptick again in 2011 to 1.97%. Economic growth was nearly stagnant in 2012 as the economy grew by
1.18%. However, in 2014, the economy made a strong recovery led mainly by strong domestic demand registering
growth of 2.85% from 2.16% in 2013.The economy made a marginal dip in 2015 by registering a growth rate of 2.40%,
and growth in 2016 is expected to dip downwards to 1.40%, according to MarketLine.
Figure 19: GDP and GDP growth rate, 2010–20
3.50 3.00
3.00
2.50
2.50
Growth rate (%)

2.00
$ trilliion
2.00
1.50
1.50
1.00
1.00
0.50
0.50
0.00 0.00
2010 2011 2012 2013 2014 2015 2016f 2017f 2018f 2019f 2020f
Year
GDP Real GDP growth rate

Economic Landscape
GDP composition by sector
Traditionally, industrial activity has been concentrated in the northern parts of the country, while the southern region has
been driven by the services sector. Because of the relative decline in the importance of the industrial sector and surging
activity in the services sector over the past few decades, the South has flourished while the North has developed at a
much slower pace. The industrial sector accounted for close to 20.68% of GDP in 2015, while the services sector’s
contribution stood at 78.63% and agriculture made up for the remainder.
Figure 20: Sector-specific contribution to GDP, 2015
Agriculture, 0.68%
Industry, 20.68%
Services, 78.63%

Economic Landscape
Agriculture
Because of the UK’s high population density and relative scarcity of land, only around a third of total production is
devoted to arable crops, while the rest is devoted to livestock. According to MarketLine, the sector grew by an average
rate of 2.96% during 2003–15, with agricultural output expected to post a growth of 2.65% in 2016.
Figure 21: Agricultural output, 2010–15
11.50 30.00
25.00
11.00
20.00
Growth rate (%)

15.00
10.50
£ billion
10.00
10.00
5.00
0.00
9.50
-5.00
9.00 -10.00
2010 2011 2012 2013 2014 2015
Year
Agriculture output Growth rate

Economic Landscape
Industry
Much has been made of the steady decline in the relative contribution of the industrial sector toward GDP over the past
couple of decades. The main commodities produced by the industrial sector are machine tools, electric power
equipment, automation equipment, railroad equipment, ships, aircraft, motor vehicles and parts, electronics and
communications equipment, metals, chemicals, coal, petroleum, paper and paper products, textiles, and clothing. The
UK has a large number of globally recognized industrial brands, and its main exports include manufactured goods, fuels,
chemicals, food, and beverages. According to MarketLine, the sector grew by 2.48% during 2003–15, with industrial
output expected to grow by 1.80% in 2016.
Figure 22: Industrial output, 2010–15
350.00 8.00
340.00 7.00
330.00
6.00
320.00
5.00
310.00
£ billion
Growth rate (%)

4.00
300.00
3.00
290.00
2.00
280.00
270.00 1.00
260.00 0.00
2010 2011 2012 2013 2014 2015
Year
Industry output Growth rate

Economic Landscape
Services
The UK’s services sector has been consistently growing in importance over the past decade and, as is the case with
most developed countries, it dominates in comparison to the other sectors. London is arguably the world’s largest
financial center, and thus the UK services sector is dominated by financial services—especially insurance and banking.
In recent years, tourism and education have emerged as important contributors to the economy, with the UK growing in
popularity among foreigners with disposable income and the student community in particular. Public services and
defense have also contributed significantly to the sector’s recent growth. According to MarketLine, the sector grew by
4.46% during 2003–15, with services output expected to grow by 2.39% in 2016.
Figure 23: Services sector output, 2010–15
1.35 5.00
4.50
1.30
4.00
1.25
3.50
1.20
3.00
£ trillion
1.15 2.50
Growth rate (%)

2.00
1.10
1.50
1.05
1.00
1.00
0.50
0.95 0.00
2010 2011 2012 2013 2014 2015
Year
Services output Growth rate

Economic Landscape
Fiscal situation
The government has embarked on fiscal consolidation over the past few years to bring down the deficit. As of 2015,
budget deficit stood at 4.24%, down from 5.59% of GDP in 2014. The quick recovery of the UK economy has helped in
raising tax receipts, and the deficit is expected to come down to 3.29% of GDP in 2016, according to the IMF.
Current account
The UK has maintained persistent current account deficits since the 1990s. According to the IMF, the current account
deficit as of 2015 stood at 5.36% of GDP, widening from 4.66% in 2014. This deficit is expected to increase to 5.93% in
2016.
Exports and imports
The UK’s major trade partners are almost exclusively European Union (EU) member nations. According to CIA – The
World Factbook, the main destinations for goods and services produced in the country in 2015 were the US (14.6%),
Germany (10.1%), Switzerland (7%), China (6%), France (5.9%), the Netherlands (5.8%), and Ireland (5.5%).
In 2015, the UK sourced its imports from Germany (14.8%), China (9.8%), the US (9.2%), the Netherlands (7.5%),
France (5.8%) and Belgium (5%). Exports fell from $843.06 billion in 2014 to $826.31 billion in 2015, while imports rose
from $880.86 billion to $922.69 billion over the same period.
Figure 24: The UK's external trade position, 2011–15
2000.00
1800.00 1723.92 1749.01

1666.66 1698.70
1653.82
1600.00
1400.00
1200.00 880.86
858.71 875.77 845.30 922.69
1000.00 843.06
807.94 853.41
$ billion
826.31
778.05
800.00
600.00
400.00
200.00
0.00
2011 2012 2013 2014 2015
Year
Exports Imports Total trade

Economic Landscape
International investment position
According to the United Nations Conference on Trade and Development Investment estimates for 2016, foreign direct
investment (FDI) inflow reached $39.53 billion in 2015, down from $52.45 billion in 2014.
Credit rating
In June 2016, the S&P downgraded its rating by two notches from AAA credit rating to AA as the referendum held in
June 2016 paved the way for the nation’s exit from the EU.
Monetary situation
Key monetary indicators
Inflation
Inflation eased to 0.00% in 2015 from 1.52% in 2014 on the back of lower commodity prices. Inflation is expected to rise
marginally to 0.81% in 2016 on the back of easing by the central bank.
Figure 25: Consumer price index and consumer price index-based inflation, 2010–20
140.00 5.00
4.50
120.00
4.00
100.00 3.50
Percentage (%)
Consumer Price Index
3.00
80.00
2.50
60.00
2.00
40.00 1.50
1.00
20.00
0.50
0.00 0.00
2010 2011 2012 2013 2014 2015 2016f 2017f 2018f 2019f 2020f
Consumer price index Inflation

Economic Landscape
Interest rates
Since August 2016, the Bank of England (BoE) has kept its base interest rate at a historic low of 0.25% in order to meet
its inflation target of 2%.
Employment
According to MarketLine, the unemployment rate was 5.40% in 2015, down from 6.20% in 2014, due to faster economic
recovery in 2015.
Figure 26: Unemployment in the UK, 2010–20
3.00 9.00
8.00
2.50
7.00
Unemployment in Millions
2.00 6.00
5.00
Percentage (%)
1.50
4.00
1.00 3.00
2.00
0.50
1.00
0.00 0.00
2010 2011 2012 2013 2014 2015 2016f 2017f 2018f 2019f 2020f
Year
Total unemployment Rate of unemployment (%)
Outlook
Ex-prime minister David Cameron and ex-Chancellor George Osborne have already unveiled a host of measures to cut
fiscal deficit. The outcome of the referendum resulting in Brexit from the EU has not augured well for the economy. The
intense revisions in the OBR’s forecasts post the referendum have signaled weakness to persist in the fiscal standing of
the government in the near term. Besides, depreciation of the pound is going to dent household incomes in 2017.
Weakening house prices amid the fears from Brexit have aggravated the problem of indebtedness. The government’s
plan to launch the National Productivity Investment Fund is a welcome step but the deteriorating fiscal picture in the
coming years casts a dark shadow on its future success.

Social Landscape
SOCIAL LANDSCAPE
Summary
The UK is one of the most densely populated developed countries. The standard of living enjoyed by residents is among
the best in the world. Apart from the civil liberties and rights afforded to individuals by the authorities and government,
residents have access to one of the best social welfare systems in the world. The majority of the population relies on
public healthcare services, and there are special projects to care for children, the unemployed, the disabled, and the
aged. The education system is world-renowned and attracts a large number of international students. The UK is home to
people from a number of countries. The demographic characteristic that is a cause for concern is a rapidly aging
population, which poses a number of social, economic and political challenges.
Evolution
Since World War II, the UK has developed into a multicultural, multi-ethnic and secular country with a large white majority
and minority communities from all over the world. The standard of living is among the highest globally and the system of
social welfare is one of the best in the world.
In contrast with some European countries, immigration is contributing to a rising population, accounting for about half of
the population increase between 1991 and 2001. The Labour Party came into power in the UK shortly after World War II
and focused on an approach that leaned left, in line with public opinion at the time. The years between the world wars
saw the Conservative Party associated with widespread poverty and mass unemployment, so the Labour government
focused on industrial development and the creation of a solid social infrastructure. The concept of the welfare state was
introduced and several industries were nationalized. The establishment of the National Health Service (NHS) in 1948 is
one of the party’s biggest achievements.
The victory of Margaret Thatcher and the Conservative Party in the 1979 elections brought about a change of direction in
the UK economy. The Thatcher government was more focused on involving the private sector and developing the
economy as a whole rather than on the creation of a welfare state. More recently, the Labour government of the late
1990s and 2000s adopted the "third way", a combination of the previous approaches to governance.
In September 2016, the government stated its intent on hauling the retirement reforms of long-awaited pension
dashboard. A pilot version of the online dashboard is slated to begin in March 2017, before the public is given full access
in 2019. This will allow the public see their savings from the workplace state pension at one platform for the first time.
Demographic composition
Composition by age and gender
Approximately 17.6% of UK's population is below 15 years of age and around 17.5% is above 65 years of age, according
to MarketLine. The UK is a relatively old country, with a median age of 40.5 years in 2016, according to CIA – The World
Factbook.

Social Landscape
Figure 27: Mid-year population by age (as % of Population), 2015

Mid-year population by age Female Male
0–4 5.8 6.3
5–9 5.8 6.1
10–14 5.2 5.6
15–19 5.6 6.0
20–24 6.4 6.8
25–29 6.8 7.2
30–34 6.4 6.8
35–39 5.9 6.3
40–44 6.4 6.8
45–49 7.2 7.5
50–54 7.3 7.2
55–59 6.2 6.2
60–64 5.5 5.3
65–69 5.7 5.4
70–74 4.3 3.9
75–79 3.5 2.9
80+ 6.0 3.7

Social Landscape
Religious composition
The largest religion in the UK is Christianity, accounting for 59.5% of the total population in 2011. Historically, the Church
of England and the Church of Scotland had significant roles to play in British society. The UK has evolved as a secular
society that embraces people of various faiths. Due to the large number of residents with ethnic roots in the Indian sub-
continent, in 2001, Muslims, Hindus, and followers of other religions accounted for a large section of the total population.
Furthermore, 25.7% of the population do not follow a religion.
Figure 28: Major religions in the UK, 2011
Christians (59.5%)
Muslim (4.4%)
Hindu (1.3%)
Other and unspecified

(9.2%)
None (25.7%)
Education
System of education
Schooling is compulsory for all children aged between five and 16, and most children attend government-funded schools.
The UK is famous for its educational institutions, especially its higher education institutions, which attract students from
all over the world.
While the systems in place in England, Wales, and Northern Ireland are broadly similar, Scotland has a different
educational system. The Education Reform Act of 1988 introduced the National Curriculum for state primary and
secondary schools in England, Wales, and Northern Ireland. Independent schools, which do not depend on the
government for funding, can decide on their own curriculum.
In general, the National Curriculum attempts to focus on a greater depth of knowledge across a narrower range of
disciplines, while the Scottish Curriculum attempts to focus on a broader range of disciplines. The National Curriculum

Social Landscape
covers core subjects, foundation subjects, and basic curriculum subjects. Core subjects include science, mathematics,
and English; foundation subjects include history, geography, art and design, music, technology, ICT, and modern foreign
languages; and the basic curriculum includes citizenship, religion, and physical education.
Primary and secondary education
Parents may choose to enroll their children in pre-school activities such as playgroups or nursery school before sending
them to primary school. Children usually begin attending primary school between the ages of four and six. Parents can
send their children to a local school, which must accommodate them without imposing any special conditions. The first
year of secondary education usually starts between the ages of 11 and 13. Students who go on to pursue higher
education are usually between the ages of 17 and 19.
Tertiary education
The majority of students who wish to pursue higher studies use the Universities and Colleges Admissions Service,
although for certain courses different admission services may be required. While the UK’s universities are not owned by
the state, most are financed by the government.
Healthcare
The NHS was established in 1948 as the single authority for public health in the UK. Since the devolution of power, the
constituent countries of England, Scotland, Wales and Northern Ireland each have their own services that are mainly
funded through public taxation. While independent healthcare organizations do exist, the health services of the
constituent countries provide the majority of healthcare services.
The Health and Social Care Act of 2012 was passed to curtail burgeoning costs against the backdrop of the UK’s aging
population. While the government argues that the reforms will reduce costs by 45% while expanding treatment options, it
remains to be seen if it can bring significant changes to the strained NHS.
Performance
Healthcare
The UK’s total healthcare expenditure was $231.32 billion or 7.84% of GDP in 2014, according to MarketLine. Physicians
per 1,000 population (head count) was 2.8 in 2013, which was lesser than the OECD average of 3.2. Nurses per 1,000
population (head count) was 8.2 in 2013, which was also lower than the OECD average of 8.8.

Social Landscape
Figure 29: Total healthcare expenditure, 2008–14
235.00 9.00
230.00 8.80
225.00
8.60
220.00
8.40
215.00
Percentage (%)
8.20
210.00
$ billion
8.00
205.00
7.80
200.00
7.60
195.00
190.00 7.40
185.00 7.20
2008 2009 2010 2011 2012 2013 2014
Year
Total Healthcare Expenditure Total Healthcare Expenditure as a % of GDP
Education
Compared to other OECD nations, the UK has a high number of people with a tertiary education as of 2011. In the age
group between 25–34 year-olds, the UK’s percentage of tertiary education population was 49.2% compared to its peers
Italy (25.1%) and Germany (29.6%). However, the state’s expenditure on education has been falling consistently from
$171.40 billion in 2008 to $155.17 billion in 2014, which is a cause for concern.

Social Landscape
Figure 30: Education expenditure, 2008–14
175.00 7.00
170.00
6.00
165.00
5.00
160.00
Percentage (%)
4.00
155.00
$ billion
150.00
3.00
145.00
2.00
140.00
1.00
135.00
130.00 0.00
2008 2009 2010 2011 2012 2013 2014
Year
Expenditure on education, Public Expenditure as % of GDP, Public
Outlook
The hauling up of the pension system in the country is a major step in the right direction. However, the government faces
a number of challenges when it comes to maintaining the level of public services on offer. Given the fact that the budget
deficit is a clear point of concern for the authorities, they will face the challenge of maintaining current levels of
expenditure on social welfare projects. In recent times, government expenditure and revenues have both increased
dramatically, but expenditure has outpaced revenues to quite an extent. The government has publicly declared its goal of
eliminating child poverty by 2020, and despite progress in the past; a recent forecast shows a likely increase in child
poverty by the end of this decade. The passage of Immigration Act 2016 has stipulated stiff conditions on illegal
immigrants and asylum seekers to the country making it tougher for immigrants to sustain in the country. Another
challenge facing the government is the falling state expenditure on education.

Technological Landscape
TECHNOLOGICAL LANDSCAPE
Summary
The UK is at the forefront of research and development (R&D) and innovation. The government has helped to establish
an environment conducive to the development of new technology in all sectors of industry. Expenditure on R&D and
other measures to encourage R&D within the private sector have borne fruit, and the UK has emerged as a key exporter
of technology. The Department for Innovation, Universities and Skills (DIUS) is the government department that oversees
the progress of the UK in this regard. The DIUS envisions its role as involving the creation and maintenance of a “world-
class research base” and utilizing this research base to “support innovation across all sectors of the economy”.
A few industries stand out in terms of innovation. Pharmaceutical, defense, e-commerce, and telecommunications firms
are competitive with their counterparts across the globe. In the face of increasing global competition, innovation will help
developed countries to compete with emerging economic powers.
Evolution
The Royal Society, which is the national academy of science in the UK and the Commonwealth, is the most prestigious
source of innovation in the UK. The Royal Society was set up in 1660, and since 1850, it has been the beneficiary of
government support. In subsequent years, many research centers were established in various scientific streams. These
include the Biotechnology and Biological Sciences Research Council, the Council for the Central Laboratory of the
Research Councils, the Medical Research Council, the National Environmental Council, and the Particle Physics and
Astronomy Research Council. There are also many private R&D centers in UK.
Intellectual property
The UK Intellectual Property Office (UK-IPO), an executive agency of the DIUS, is the official body responsible for
granting intellectual property rights in the UK, including trademarks, designs, patents, and copyright. Direct administrative
responsibility for the examination and issuing of patents lies with the UK-IPO. The number of patents received by the
country was 7,167, which was higher than France (7,026) but far below than that of Germany (17,752) and Japan
(54,422) in 2015, according to MarketLine.
Table 9: Comparative performance on receipt of patents, 2012–15
Year UK France Germany Japan

2012 5874 5857 15041 52773
2013 6551 5857 16605 54170
2014 7158 7103 17595 56005
2015 7167 7026 17752 54422

Performance
Opportunity sectors
Telecommunication services
According to MarketLine, mobile penetration stood at 131.25 per 100 people in 2015 with total subscribers at 85.09
million. Internet users as of 2014 stood at 59.31 million, with a penetration rate of 92% in the same year.
Figure 31: Internet users, 2010–14
60.00 94.00
59.00
92.00
58.00
Internet users in millions
57.00 90.00
Percentage (%)
56.00
88.00
55.00
86.00
54.00
53.00 84.00
52.00
82.00
51.00
50.00 80.00
2010 2011 2012 2013 2014
Year
Number of users Percentage of population
Aerospace and defense market in the UK
According to MarketLine, the UK aerospace and defense market had total revenues of $34.8 billion in 2013, representing
a compound annual growth rate (CAGR) of 3.8% during 2009–13. In comparison, the French and German markets grew
with CAGRs of 4.4% and 4.2%, respectively, over the same period, to reach respective values of $47.4 billion and $39.1
billion in 2013. The defense segment was the market's most lucrative in 2013, with total revenues of $19.3 billion,
equivalent to 55.3% of the market's overall value. The civil aerospace segment contributed revenues of $15.6 billion in
2013, equating to 44.7% of the market's aggregate value.
The performance of the market is forecast to accelerate, with an anticipated CAGR of 4.6% for the five-year period
2013–18, which is expected to drive the market to a value of $43.5 billion by the end of 2018. Comparatively, the French
and German markets will grow with CAGRs of 1.7% and 4.7%, respectively, over the same period, to reach respective
values of $51.5 billion and $49.3 billion in 2018.
Outlook
The UK has the world's largest aerospace industry outside of the US. Apart from being a key supplier of aerospace
requirements, the country also excels in the fundamental areas of research. Furthermore, the country also develops
advanced technology for nanomaterial and the usage of wave and tidal energy. As the UK is at the forefront of new
technology, there is a good possibility of it developing relatively nascent fields such as nanotechnology, space research
and tourism, and alternative energy. With the recent push from the new prime minister, the UK has all the required
makings to be at the frontier of innovation. However, cyber-threats remain a key challenge to the country’s security
systems. Chancellor Philip Hammond has also indicated that British electricity and grid systems are prone to attacks
from foreign players.

Legal Landscape
LEGAL LANDSCAPE
Summary
The judicial system in the UK is considered to be one of the fairest and transparent systems in the world. Scotland and
Northern Ireland each use a different legal system compared to that employed in England and Wales, but both are based
on the same fundamentals. There are a number of laws governing businesses in the UK. These laws are largely
conducive to the business environment. The most important laws relate to the incorporation of business, taxation,
monopolies, and restrictive trade practices, intellectual property rights (IPR), and labor laws.
Evolution
There are three different legal jurisdictions in the UK, with each having its own legal system; these are based on English
law, Northern Irish law, and Scots law. English law uses a common law system, while the law of Northern Ireland is
based on the common law system and is partly influenced by English law. Scots law is influenced both by the ancient
Roman law and by civil law, and as a result, it is called a mixed legal system. Laws pertaining to the commercial and
business sector are common for the whole region. Although the labor law was formed in 1823, all laws were amended
after the formation of the European Union (EU). Similarly, all laws relating to company law, commercial law, competition
law, and IPR have been amended.
Structure of the judicial system
The UK does not have a single criminal or penal code, and there is an emphasis on the separation of the judiciary and
the prosecuting authorities. England and Wales, Scotland, and Northern Ireland have separate legal systems. Common
law principles apply for English and Northern Irish law, while civil law principles along with some elements of common
law form the bedrock of Scots law. For England, Wales, civil cases in Scotland, and Northern Ireland, the Supreme Court
is the highest court. Furthermore, for criminal cases in Scotland, the highest court is the High Court of Justiciary. In the
past, the structure of the judicial system has been criticized for its lack of transparency and for being archaic. In response
to this criticism, the Constitutional Reform Act 2005 was passed, laying the foundation for the establishment of the
Supreme Court of the UK, which started functioning in 2009 and took over the House of Lords' jurisdiction as the highest
court in the land. The Supreme Court hears all appeals from England, Northern Ireland, and Wales, and civil appeals
from Scotland.
Tax regulations
Corporate income tax
From April 2015, the corporate tax rate has been revised to 20%. A tax rate of 25% is applied from April 2015 in case
MNC’s use arrangements to steer profits away to avoid the UK tax.
Individual income tax
Income tax rates are progressive, with a maximum of 45% beyond £150,000 for the year 2016–17.
Value added tax
The standard VAT rate is 20.0%. A reduced rate of 5% is applicable to certain items. Zero-rated exemptions are also

Legal Landscape
applicable to some specific items.
Performance
Effectiveness of the legal system
According to the 2016 Index of Economic Freedom, the UK ranked 10th in the world and fourth in Europe. The country
scores high in business freedom, labor freedom, trade freedom, investment freedom and financial freedom. The
government has made continuous efforts to ensure that the overall environment is conducive to business.
Outlook
The government is focused on creating the best business environment in the G20. Through reforms and deregulation,
the UK government wants to encourage more investment in the country, and the latest incentive is a further cut in
corporate tax, which has been reduced to 20% by 2015. The patent box regime, an incentive scheme that would
encourage businesses to retain and commercialize existing patents and to develop patented products, has been effective
from 2013. Moreover, the patent box would incentivize the creation of high value jobs and activity linked with the
development, manufacture and exploitation of patents in the UK. However, the UK government needs to continue with
deregulatory reforms in order to attract investment. In order to curtail tax avoidance and evasion, the government has
shown its intent on the improvement of general anti-abuse law and on identifying newer conditions under which some
promoters repeatedly avoid market tax.

Environmental Landscape
ENVIRONMENTAL LANDSCAPE
Summary
In the UK, the Department for Environment, Food and Rural Affairs (DEFRA) holds the responsibility for drafting and
implementing environmental protection and sustainable development policies. DEFRA identifies its priority as “the need
to tackle climate change internationally and through domestic action to reduce greenhouse gas emissions, and to secure
a healthy, resilient, productive, and diverse natural environment”. Environmental policy in the UK now aims to tackle air,
water, noise, and land and soil pollution as separate problems.
Evolution
The first initiative geared toward the environment in the UK was the establishment of the Control of Pollution Act 1974,
followed by the Environmental Protection Act 1990 (EPA), the Water Resources Act 1991, and the Land Drainage Act
1991. Environmental conservation activities in the UK were increased with the establishment of the Environmental Act
1995. This act brought the following institutions under its control: the National Rivers Authorities, Her Majesty's
Inspectorate of Pollution, the waste regulation authorities in England and Wales, and the London Waste Regulation
Authority.
Environmental regulations
DEFRA is the government department responsible for environmental concerns in the UK. DEFRA’s aim is to “enable
everyone to live within our environmental means”. Traditionally, environmental policy in the UK has been based on the
"command and control" principle, whereby possible polluters are given certain quotas or standards and the authorities
carefully monitor these and deal strictly with any infringements. The concept of integrated pollution control prescribed in
the EPA looks at dealing with pollutants in such a way that their harmful effects on the environment as a whole are
reduced.
Performance
Environmental impact
The UK has made significant improvements in reducing the impact of economic growth on the environment. It has
achieved strong progress in controlling major air pollutants and agrochemicals. This progress reflects both the reshaping
of the economy and the strengthening of the UK’s environmental policies in the EU context. The 2009 Renewable Energy
Directive sets a target for the UK to achieve 15% of its energy consumption from renewable sources by 2020 compared
to 3% in 2009.
As a result of the UK’s attempts to meet its target, CO2 emissions in the country came down from 585.50 million metric
tons in 2006 to around 486.31 million metric tons in 2013.

Figure 32: Carbon dioxide emissions (million metric tonnes) and growth (%), 2006–13
700.00 4.0
600.00 2.0
500.00 0.0
Percentage (%)
Metric Tonnes (Millions)
400.00 -2.0
300.00 -4.0
200.00 -6.0
100.00 -8.0
0.00 -10.0
2006 2007 2008 2009 2010 2011 2012 2013
Year
Volume Growth rate
The renewable energy market in the UK
According to MarketLine, the UK renewable energy market had total revenues of $17.8 billion in 2015, representing a
compound annual growth rate (CAGR) of 27.8% during 2011–15. In comparison, the French and German markets grew
with CAGRs of 9.1% and 11.5%, respectively, over the same period, to reach respective values of $13.5 billion and
$49.6 billion in 2015.
Market production volume increased with a CAGR of 22.3% between 2011–15, to reach a total of 81.0 TWh in 2015. The
market's volume is expected to rise to 108.4 TWh by the end of 2020, representing a CAGR of 6% during 2015–20. Wind
energy production had the highest volume in the UK renewable energy market in 2015, with total output of 39.9 TWh,
equivalent to 49.3% of the market's overall volume. In comparison, biomass and wind energy had a volume of 28.2 TWh
in 2015, equating to 34.8% of the market total. The performance of the market is forecast to decelerate, with an
anticipated CAGR of 10.6% for the five-year period 2015–20, which is expected to drive the market to a value of $29.5
billion by the end of 2020. Comparatively, the French and German markets are expected to grow with CAGRs of 9.2%
and 11.1%, respectively, over the same period, to reach respective values of $21.0 billion and $83.9 billion in 2020.

Outlook
The UK government started a green initiative of budgetary support to increase environmental awareness in the country in
2008. The government’s main objectives were to equip the country for the challenges of the future, and confront climate
change in the medium term. The UK adopted the Climate Change Act 2008, which made it the first country in the world
to have a legally binding long-term framework to cut carbon emissions. Under the act, the UK government has to report
annually to lawmakers on its progress in meeting its carbon targets. The UK, after having ratified the COP21 agreement
held in Paris, also put it to implementation in the COP22 agreement.
The government has set an overall target of 80% reduction in emission of pollutants from 1990 levels by 2050. The future
energy policies of the government will focus on both reducing energy bills and carbon emissions. The government would
be able to achieve both the objectives by helping lower the cost of renewable energy.

Appendix
APPENDIX
ISO codes of selected countries
OECD country ISO codes OECD country ISO codes

Australia AUS Japan JPN
Austria AUT Korea KOR
Belgium BEL Luxembourg LUX
Canada CAN Mexico MEX
Chile CHL Netherlands NLD
Czech Republic CZE New Zealand NZL
Denmark DNK Norway NOR
Estonia EST Poland POL
Finland FIN Portugal PRT
France FRA Slovak Republic SVK
Germany DEU Slovenia SVN
Greece GRC Spain ESP
Hungary HUN Sweden SWE
Iceland ISL Switzerland CHE
Ireland IRL Turkey TUR
Israel ISR United Kingdom GBR
Italy ITA United States USA
Emerging Country ISO codes Emerging Country ISO codes

Brazil BRA Indonesia IDN
China CHN Russian Federation RUS
India IND South Africa ZAF

Appendix
Ask the analyst
MarketLine’s Country Analysis Practice consists of a team of economists, analysts, and researchers, all with expertise
in their given fields. For any questions or comments about this report, you can contact the author directly at
[email protected]
Disclaimer
All Rights Reserved.
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The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that
the findings, conclusions and recommendations that MarketLine delivers will be based on information gathered in good
faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such,
MarketLine can accept no liability whatever for actions taken based on any information that may subsequently prove to
be incorrect.

Appendix
PESTLE |Country
MarketLine Analysis Report:
John Carpenter United
House, John KingdomStreet |
Carpenter ML00002-031/Published 12/2016
London, United Kingdom, EC4Y 0AN
T: +44(0)203 377 3042, F: +44 (0) 870 134 4371
E: [email protected]

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A Progressive Digital Media business

Country Profile Series

PESTLE Country Analysis Report: United Kingdom ML00002-031/Published 12/2016

The UK economy is developed, but high household indebtedness remains a concern

Increase in R&D expenditure is a positive, however, increasing cyber-attacks are a challenge

PESTLE Country Analysis Report: United Kingdom ML00002-031/Published 12/2016

PESTLE Country Analysis Report: United Kingdom ML00002-031/Published 12/2016

PESTLE Country Analysis Report: United Kingdom ML00002-031/Published 12/2016

Table 1: The UK – key fundamentals

2014 2015 2016f 2017f 2018f 2019f 2020f

Source: Country Statistics, MarketLine MARKETLINE

PESTLE Country Analysis Report: United Kingdom ML00002-031/Published 12/2016

Key Facts and Geographic Location ............................................................................................................................14

Key facts ........................................................................................................................................................................ 14

Geographical location ................................................................................................................................................... 15

PESTLE Analysis .........................................................................................................................................................16

Political analysis ............................................................................................................................................................ 17

Economic analysis ......................................................................................................................................................... 21

Social analysis ............................................................................................................................................................... 29

Technology analysis ...................................................................................................................................................... 33

PESTLE Country Analysis Report: United Kingdom ML00002-031/Published 12/2016

Environmental analysis ................................................................................................................................................. 40

Political Landscape ....................................................................................................................................................43

Structure and policies .................................................................................................................................................... 46

Economic Landscape ..................................................................................................................................................51

Structure and policies .................................................................................................................................................... 52

Social Landscape ........................................................................................................................................................62

Structure and policies .................................................................................................................................................... 62

Technological Landscape ...........................................................................................................................................68

Structure and policies .................................................................................................................................................... 68

Legal Landscape .........................................................................................................................................................71

Structure and policies .................................................................................................................................................... 71

PESTLE Country Analysis Report: United Kingdom ML00002-031/Published 12/2016

Environmental Landscape ..........................................................................................................................................73

Structure and policies .................................................................................................................................................... 73

ISO codes of selected countries ..................................................................................................................................... 76

Ask the analyst .............................................................................................................................................................. 77

PESTLE Country Analysis Report: United Kingdom ML00002-031/Published 12/2016

Figure 2: Multi-factor productivity growth 22

Figure 3: Labor productivity growth 23

Figure 4: Relative levels of GDP per hour worked 23

Figure 5: Capital to assets ratio 25

Figure 6: UK Basel III leverage ratio weighted average 25

Figure 7: General government deficit 26

Figure 8: Household debt and price to disposable income 27

Figure 9: Commercial real estate transactions 28

Figure 10: Old age dependency ratio 31

Figure 12: Government funding of business R&D, 2013 35

Figure 13: Product market regulations, 2013 38

Figure 14: FDI restrictiveness Index 2015 39

Figure 15: The UK – political events timeline 45

Figure 16: Key political figures 46

Figure 17: Composition of legislature 48

Figure 18: Historical GDP growth, 2005–2015 52

Figure 19: GDP and GDP growth rate, 2010–20 54

Figure 20: Sector-specific contribution to GDP, 2015 55

Figure 21: Agricultural output, 2010–15 56

Figure 22: Industrial output, 2010–15 57

Figure 23: Services sector output, 2010–15 58