major macro economic indicators
|GDP growth (%)||3.1||2.2||2.0||1.1|
|Inflation (yearly average) (%)||1.5||0.1||0.7||2.5|
|Budget balance (% GDP)||-5.6||-4.3||-3.3||-3.1|
|Current account balance (% GDP)||-4.7||-5.4||-5.7||-5.0|
|Public debt (% GDP)||88.1||89.1||89.3||89.6|
- Hydrocarbon production meeting three-quarters of energy needs
- Advanced sectors (aerospace, pharmaceuticals, automotive)
- Low corporate taxes
- Uncertainties about the implementation and impact of the decision to leave the EU.
- Economy's dependence on financial services
- High level of public debt
- Sizeable private debt (especially property debt being 125% of disposable household income)
Uncertainties related to Brexit will weigh on short-term growth
Despite the unexpected decision in favour of leaving the European Union on 23 June, the British economy has proved resilient in the second half of 2016. Nevertheless, the uncertainty surrounding the exit terms will weigh on the economic outlook: private investment is not expected to contribute significantly to growth this year as investors adopt a wait-and-see attitude. Insolvencies should thus move in line with the slowdown in activity. However, exports could benefit from the sharp fall in the pound sterling against the dollar (more than 15% in the second half of 2016), hence a slightly positive contribution from foreign trade. In addition, a lower tax rate for companies is not excluded. Moreover, private consumption, the main driver of activity is expected to slow down due to the lower momentum of wage growth, a less buoyant labour market and rising inflation due to the depreciation of the pound sterling and the gradual rise in oil prices.
In this context of uncertainty and increased political risk in Europe, risks are many. A sharp depreciation of the pound against the dollar in 2017 is possible if the arrangement with the EU is less favourable than expected by markets. Moreover, new monetary easing measures are not excluded in case of a faster downturn than expected in activity, but that would weigh on the country's attractiveness. Volatility could prevail in the financial markets and a crisis of confidence could also lead to price correction in the property market. The sector is indeed showing poor performance and the risk of transfer to the banking sector is to be monitored because of the high number of SMEs with property as collateral. This risk is nevertheless limited, as banks are better capitalised since the crisis.
Budgetary consolidation is only partly questioned
In November 2016, the Chancellor of the Exchequer decided not to opt for a massive stimulus plan (+0.1 percentage point of additional GDP growth in 2017) but the pace of of budgetary consolidation should be less marked. Indeed, revenues should be less supported in connection with the slowdown in activity and spending should increase moderately, particularly those related to capital (the government should spend between 1 and 1.2 percentage point of GDP per year until 2020 in infrastructure). The establishment of the innovation and infrastructure fund allocating £23 million over a five-year period is not expected to solve the problems of low productivity. The rate cut should also help to limit interest payments on debt servicing and offset the effects of rising inflation. Furthermore, the objective of budgetary consolidation in 2020 was abandoned and the falling public debt/GDP ratio would not materialise until at least the 2020–2021 horizon. The country leaves room for manoeuvre to react to negative impact on growth.
After a record in 2016, the current account deficit is expected to narrow slightly in 2017, due to the lower momentum of imports linked to the expected slowdown in domestic demand, despite the increase in the price of imports due to the depreciation of the pound. In addition, this depreciation should support gains in price competitiveness and therefore exports, supported also by the demand made to the country. The strong weakening of investment income in 2016 should also weigh less on the current account in 2017 (more favourable returns).
The uncertain future of the UK
Prime Minister Theresa May wants the results of the referendum to be upheld and activation of Article 50 of the Lisbon Treaty governing the EU exit process before March 2017. However, the High Court in London ruled that Parliament should be consulted and the Supreme Court is expected to deliver its verdict early in 2017. Early elections are not excluded in the event of an unfavourable ruling.
In the event that the exit becomes effective in April 2019, the trade regime will be less open than in the past, and the migration policy should be more restrictive. Some highly integrated sectors in the EU, such as the pharmacy and automotive sectors, would be further hindered. Europe should take a hard line considering that, if the United Kingdom brings an end to free movement of European citizens, it will not have access to its single market, so as to prevent other European countries will follow suit. Indeed this would further destabilise the Union, already weakened politically (rise of populism).
While the Brexit issue divides, Scotland has announced its wish to remain in the EU (62% voted to remain in the EU) and Scottish Prime Minister Nicola Sturgeon wishes to hold a referendum on the country's independence.
Last update : January 2017
Cheques are generally used for both domestic and international commercial transactions.
Bank transfers are common with SWIFT transfers being utilised regularly.
Direct Debits and Standing orders are recognised as an effective method of making payment for regular and expected financial transactions.
The debt collection process usually begins with the debtor being sent a “demand for payment” followed by a series of further written correspondence, telephone calls and, debt value permitting, personal visits and debtor meetings. Each stage of the collection process is designed to escalate from an amicable – pre-legal- collection phase towards litigation should the debtor fail to remedy the debt.
The Court judiciary consists of:
1)The County Court, has a purely civil jurisdiction.
Judges handle claim for collection of debts, personal injury, breach of contract concerning goods or property, recovery of land, family issues (divorce, adoption). Cases valued at less than GBP 25,000 (and GBP50,000 inpersonal injuries cases) must start in the county court.
2)The High court of Justice,
The High Court is based inLondonand also has provincial districts known as “District Registries” all acrossEnglandandWales. There are three divisions.
3)The Court of Appealconsists of two divisions: the “Civil Division” and the “Criminal Division”
4)The Supreme Courtis composed of 12 professional justices, with a president and a deputy president.
The United Kingdom has a “common law” system.
A) The Civil Procedure Rules
The Civil Procedure Rules / CPR (cf. Lord Woolf reform) were implemented inEnglandandWales, on 26 April 1999. The rules aim to simplify and speed up the process of taking cases through the courts.
There is an identical procedure and jurisdiction in both the County Court and the High Court.
Ø A number of litigation “tracks” have been created, each having their own procedural timetables.
Claims are allocated to a track by a procedural judge according to their monetary value.
B) The litigation process
They are transactions process which should be followed before starting an action in court. These transactions are in place to encourage parties to try to settle a dispute without the need for court proceedings, thus minimising costs and court time.
2)Proceedingsare formally started when the claimant (formerly “the plaintiff”) issues a Claim Form in the County Court or the High Court.
There is a standard claim form for both High Court and County Court actions.
ð Full details of the complaint are set out in the Particulars of Claim.
ð The Claim Form must be served either by the court, or by the claimant, on the defendant.
The defendant then has the opportunity to respond to the claim form within 14 days of service.
An extension of time for a total of 28 days is agreed for debtor’s filing a defence and/or a counterclaim.
3) Once the parties have exchanged these formal documents, the court will order the parties to complete an “Allocation Questionnaire”.
4) Disclosure of documents
The parties will be required to make a reasonable search for documents which are relevant to the case.
The new rule states the parties should only have to disclose (i.e. provide to each other) documents which are necessary to determine the issues.
The purpose of disclosure is to prevent either party being taken by surprise in the course of the trial.
When the court requires technical evidence or expert opinion, the court may appoint a single expert to assist the judge. The court can direct the parties to appoint a single joint expert.
Experts are required to give independent evidence to assist the court.
This is only permitted on limited issues upon application to the court where it is established that such cross-examination is necessary.
However, cross-examination of all factual witnesses and experts often is automatic and broad.
The claimant’ witnesses may be cross-examined by the opponent’s counsel and then re-examined on behalf of the claimant.
6) Freezing order (formerly Mareva Injunction)
A "freezing injunction" or "freezing order" is a special issue of interim order stopping a party from disposing of assets or removing them out of the country.
- The judge adjudicates on the evidence put before him and does not make his own independent enquiries.
- The judge will consider previous court decisions in similar matters (common law system) and is usually bound to follow these.
- The judge will either give his judgment immediately, or if the matter is complex, will give judgment at a later date.
C) Enforcement of judgment.
If the claimant is successful in obtaining a monetary judgment, but if the defendant does not pay voluntarily, the methods are:
1)The garnishee order (third party debt order).
The claimant may obtain a court order which directs a third party who owes a debt to the defendant to pay directly the debt to the claimant.
2)The charging order.
The claimant may obtain a court order which grants a charge on certain assets of the defendant (e g. property, stocks, shares) .
3)The writ of execution (execution order).
The court bailiff seizes personal goods (except essential livings items) at the defendant’s home or premises to be sold by auction and to pay off the debt.
4)The attachment of earnings.
If the debtor has a professional activity, the claimant may apply for a court order that the employer deduct a proportion from the debtor’s wages each week or month in order to pay off the debt.
5)The winding up petition or the bankruptcy petition.
Ø Insolvency Act 1986 - regularly amended.