United Kingdom Country Risk Report


    Updated July 2016 with BMI’s revised post-Brexit forecasts, updated core views and full analysis of the impact of Brexit on the UK. The report provides comprehensive data and in-depth analysis of political, financial and economic risk.

    Why you should buy this report

    • Understand and measure the political, business environment and operational risks to your company in post-Brexit United Kingdom
    • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
    • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
    • Get the long-term political outlook and explore possible scenarios for change in the post-Brexit United Kingdom

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

Why you should buy this report

  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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United Kingdom Country Risk Report
Product Price
$1,195.00

Core Views

  • Brexit will weigh heavily on UK growth, predominantly in H216 and H117 when uncertainty over the UK's future relationship with the EU is at its highest. We have revised down our real GDP growth forecasts for 2016 and 2017 to 1.4% and 0.2% respectively, from 1.8% and 2.2% previously.

  • The Bank of England (BoE) will ease monetary policy in light of the British vote to leave the EU on June 23, with an interest rate cut and resumption of quantitative now expected in H216. However, with interest rates already at record lows and inflation poised to rise on the back of pound depreciation, monetary stimulus will have little beneficial impact on the real economy.

  • While there remains considerable uncertainty as to the makeup and policy direction of the next UK government, we expect a relaxation of deficit reduction targets in light of a slowing economy.

  • 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 over the longer term.

  • Outgoing Prime Minister David Cameron is aiming to put UK politics into a holding pattern until October. By delaying the start of EU exit negotiations until his successor is in place this is aimed at preventing knee-jerk political reactions amid a very fractious political climate.

Major Forecast Changes.

  • We have revised down our real GDP growth forecast in 2016 and 2017 to 1.4% and 0.2%, from 1.8% and 2.2% previously.

  • We now forecast the current account deficit to narrow to 2.9% of GDP by 2018, from 4.1% previously.

  • We now forecast the first rate hike only in 2019, from late-2017 previously, and expect the BoE to resume quantitative easing (QE) by the end of this year.

  • We forecast the fiscal deficit to remain around 4.0% of GDP in 2016-2018, from a previous forecast for fairly aggressive consolidation.

Key Risks

  • Downside Risks To Medium-Term Growth: There are downside risks to our economic growth forecasts, particularly stemming from the impact of fiscal consolidation, persistent weakness in the eurozone economy, and ongoing headwinds facing global emerging markets.

Macroeconomic Forecasts (United Kingdom 2014-2017)
Indicator 2014 2015e 2016f 2017f
e/f = BMI estimate/forecast; Source: BMI/ONS
Real GDP growth, % y-o-y 2.9 2.3 1.4 0.2
Nominal GDP, USDbn 2,991.8 2,848.5 2,483.6 2,566.4
Consumer price inflation, % y-o-y, eop 0.5 0.2 1.0 2.8
Exchange rate GBP/USD, eop 0.64 0.68 0.77 0.75
Budget balance, % of GDP -5.6 -4.4 -4.2 -4.0
Current account balance, % of GDP -4.7 -5.4 -4.6 -3.6
Executive Summary
5
Core Views
5
Major Forecast Change
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Brexit Scenarios: Implications For Growth
8
GDP By Expenditure Outlook
11
TABLE: GDP GROWTH FORECASTS
11
TABLE: PRIVATE CONSUMPTION FORECASTS
12
TABLE: GOVERNMENT CONSUMPTION FORECASTS
12
TABLE: FIXED INVESTMENT FORECASTS
12
TABLE: NET EXPORTS FORECASTS
12
Monetary Policy
13
No Rate Hikes In 2016
13
Monetary Policy Framework
14
External Trade And Investment Outlook
15
Brexit Would Accelerate External Rebalancing
15
Outlook On External Position
17
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
17
TABLE: EXPORTS
18
TABLE: IMPORTS
18
Fiscal Policy And Public Debt Outlook
19
Fiscal Consolidation Drive Faces Mounting Headwinds
19
Structural Fiscal Position
21
TABLE: MAIN REVENUE & EXPENDITURE CATEGORIES
21
Chapter 2: 10-Year Forecast
23
The UK Economy To 2025
23
UK Will Outperform Eurozone Over The Long Term
23
TABLE: LONG-TERM MACROECONOMIC FORECASTS
23
Chapter 3: Political Outlook
25
SWOT Analysis
25
BMI Political Risk Index
25
Domestic Politics I
26
Johnson's Support For 'Leave' A Blow To 'Remain' Camp And PM
26
TABLE: POLITICAL OVERVIEW
26
TABLE: SUPPORTERS OF LEAVE AND REMAIN - DIVIDING LINES ARE DRAWN
27
Domestic Politics II
29
Brexit Could Push Scotland Towards Second Independence Referendum
29
Long-Term Political Outlook
31
Eight Factors That Could Cloud The 2020 General Election
31
Chapter 4: Operational Risk
33
SWOT Analysis
33
Operational Risk Index
33
Operational Risk
34
TABLE: DEVELOPED STATES - LABOUR MARKET RISK
34
TABLE: DEVELOPED STATES - LOGISTICS RISK
38
TABLE: DEVELOPED STATES - CRIME AND SECURITY RISK
41
TABLE: DEVELOPED STATES - TRADE AND INVESTMENT RISK
43
Chapter 5: BMI Global Macro Outlook
45
Global Macro Outlook
45
Emerging Markets Near Inflexion Point
45
TABLE: GLOBAL ASSUMPTIONS
45
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
46
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
46
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
47
TABLE: MACROECONOMIC DATA & FORECASTS
49

Assess your risk exposure in United Kingdom with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in United Kingdom with confidence.

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