The UK economy outperformed most major developed states in 2015, and will continue to surpass the eurozone in 2016 and 2017
In light of positive structural economic reforms undertaken by the government, coupled with flexible monetary and exchange rate policies, we remain bullish on the long-term economic prospects for the UK relative to the eurozone over the longer term.
Major Forecast Changes.
We have revised up our estimate for the UK's current account deficit to 4.4% of GDP, from 5.0% previously, on the back of stronger than expected growth in services exports and a narrowing in the primary account deficit.
Key Risks To Outlook
Downside Risks To Medium-Term Growth: There are downside risks to our economic growth forecasts, particularly stemming from the impact of fiscal consolidation and the eurozone sovereign debt crisis. In the case of the latter, we stress that even though near-term crisis risks in the euro area have dissipated somewhat, the anaemic pace of structural reform means that the single currency union will remain vulnerable to renewed stresses.
Brexit Risks Still Underpriced: We believe there is a non-negligible chance that the British electorate will vote to leave the EU at the upcoming referendum, which poses material risks to the UK's growth and investment outlook, as well as the performance of a number of sectors including banking, chemicals and the automotive industry.
|Real GDP growth, % y-o-y||2.9||2.4||2.5||2.5|
|Nominal GDP, USDbn||2,949.7||2,940.3||2,998.7||3,123.3|
|Consumer price inflation, % y-o-y, eop||0.5||0.5||1.5||1.9|
|Exchange rate GBP/USD, eop||0.64||0.61||0.66||0.61|
|Budget balance, % of GDP||-5.5||-5.0||-3.6||-1.8|
|Current account balance, % of GDP||-4.7||-4.4||-3.9||-3.5|
The United Kingdom Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in United Kingdom. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.
An influential new analysis of United Kingdom's economic, political and financial prospects through end-2019, just published by award-winning forecasters, Business Monitor International (BMI).
- Forecast the pace and stability of United Kingdom's economic and industry growth through end-2019.
- Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
- Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
- Contextualise United Kingdom's country risks against regional peers using BMI's country comparative Risk Index system.
- Evaluate external threats to doing business in United Kingdom, including currency volatility, the commodity price boom and protectionist policies.
BMI provides our fully independent 5-year forecasts for United Kingdom through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.
Economic Outlook Contents
The United Kingdom Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.
Key Areas Covered:
- Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
- BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.
- Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
- Balance of Payments - trade and investment, current and capital account.
- Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
- Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
- Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
- Foreign Direct Investment - approvals, inflows and climate.
- External Debt - debt profile (short and long-term plus public and private sector obligations).
- Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.
- Rely upon BMI's 100% independent forecast scenarios for United Kingdom and underlying assumptions - we take no advertising and are privately-owned.
- Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on United Kingdom, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
- Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.
What are the political risks to doing business in United Kingdom over the next 5-years?
BMI's United Kingdom country Risk Index evaluates the short- and medium-term threats to political stability.
Political Outlook Contents
- SWOT Analysis for the United Kingdom Market - Political Strengths, Weaknesses, Opportunities and Threats facing United Kingdom.
- Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for United Kingdom's risk are compared with regional and global averages.
- Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
- Long-Term Political Outlook BMI examines the structural risks to the stability of United Kingdom’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.
- Benchmark United Kingdom's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
- Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
- Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.
What are the current operational risks and difficulties associated with doing business in United Kingdom?
The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks United Kingdom against its neighbours.
Operational Risk Contents
The chapter provides a summary of the main threats in the country, within:
- Labour Market Risk (Education; Availability of Labour; and Labour Costs)
- Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
- Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
- Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).
Key Sector Outlook*
Which industry sectors in United Kingdom will grow fastest, and where are the major investment opportunities in the market?
BMI identifies investment opportunities in United Kingdom's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.
Key Areas Covered:
- Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
- 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
- Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.
- Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
- Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.
*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.