Successfully investing in Great Britain

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last updaten on 3 July 2023 | reading time approx. 4 minutes

 

 

 

How do you assess the current economic situation in Great Britain?

The current economic situation in the UK is challenging but also demonstrates resilience, with better-than-expected growth in early 2023, primarily driven by industrial output and construction while experiencing a temporary decline in the services sector. Business investment and household consumption also showed positive trends. The Bank of England’s response to address inflationary pressures reflects the government's commitment to maintaining stability. Revised forecasts project an expansion of only 0.25 percent (GDP) in 2023. There are further risks to consider, such as persistently high inflation and strikes in the public sector. While the global outlook of the UK has improved, the projected GDP growth for 2023 is negative.

 

How would you describe the investment climate in Great Britain? Which sectors offer the largest potential?

The government has implemented measures such as full expensing of capital allowances on qualifying plant and machinery investments until March 2026, which aims to attract investment and increase productivity. The UK also offers a clear and competitive tax system, with the current Corporation Tax rate of 25 percent being the lowest among G7 countries. There are various tax reliefs and incentives available to businesses, including ven­ture capital schemes, R&D expenditure tax credits, and the Patent Box, which offers a reduced corporation tax rate on profits from patented inventions and other intellectual properties. Additionally, the UK has top uni­ver­sities, a highly educated workforce, and flexible labour laws, which provide businesses with access to talent and the ability to adapt to changing needs. Although the UK is currently struggling in its attempt to establish various trade agreements, it remains a relatively open market with few regulations. This is portrayed by its Ease of Doing Business Rank, placing the UK in 8th place, whereas Germany is currently 22nd. Despite the previ­ously named incentives and the ease of doing business the UK is still limited by its import and export res­tric­tions from Brexit. However, a rise in insolvencies provides opportunities to invest into the restructuring of these insolvent companies which are active in various industries.
  

What challenges do German companies face during their business ventures into Great Britain?

When German companies venture into the UK market, they encounter a range of challenges that require careful navigation and strategic adaptation. There are still implications from Brexit, that companies have to overcome, such as evolving trade regulations and new partnerships. The nature of talent dynamics in the UK necessitates the adjustment of resourcing strategies to attract and retain skilled employees. Further challenges that German companies encounter include such as opening a bank account, which is hindered by residency requirements and banks’ loss of passporting rights, staff mobilisation, which proves difficult without an employer with a bank account, and increasingly complex regulations in relation to import and export, which lead to supply chain disruptions and VAT changes originating from Brexit. Additionally, the UK data protection diverging from the EU data protection standards will likely lead to future complications as well, since certain types of data will be given different degrees of sensitivity. However, German companies can optimise their supply chains, leverage technology, and collaborate with experienced partners in customs brokerage to overcome these challenges. Furthermore, the UK market offers strong investor protection and local tax support, which eases obligations and fosters a favourable business environment. Efficient contract enforcement and insolvency resolution processes ensure stability, safeguarding the interests of German companies. By embracing adaptability, resilience, innovation, and strategic alliances, German companies can find success and growth in the competitive UK market.

 

What are the current immigration policies in the UK that impact the recruitment and employment of international workers by German companies operating in the country?

After Brexit the UK has established a whole new immigration policy system. This system was abridged at first by allowing EU nationals that have entered the UK to apply for the EU Settlement Scheme before the 30 June 2021, which grants the right to remain and work in the UK post Brexit. This is now no longer being an option, which incentivises domestic employment. The new immigration policies in the UK provide avenues to recruit and employ international workers of any nationality. These policies, which were implemented in 2020, have introduced pathways such as the Skilled Worker route and the Senior or Specialist Worker route, enabling companies to access a wide pool of internal and external talent. By obtaining a sponsor licence from the Home Office and meeting the specific documentary and evidential requirements, German companies can recruit skilled individuals from around the world. Compliance with right-to-work checks is vital to ensure adherence to immigration regulations, and understanding the available routes, such as the Global Talent route and the Youth Mobility Scheme, provides employers with the flexibility to attract talented individuals globally. Although the immigration policies have become a lot more uniform applying the same immigration hurdles for all nations, as compared to pre-Brexit policies, it is still a fairly open system that can be safely navigated by experts.

 

In your opinion, how will Great Britain develop?

The UK's development in the coming years is expected to be challenging and uncertain due to political instability, trade disruptions, an energy crisis, and high inflation. However, there are opportunities for the country to address and overcome these issues. The recovery will vary across sectors, with the COVID-19 pandemic accelerating digitization and remote working. Businesses that embrace strategic foresight, adapt to changing customer and employee habits, and invest in innovation can lead the recovery. The new trading relationship with the EU presents challenges and opportunities, and businesses need to navigate uncertainties while capitalising on growth opportunities. Overall, the UK's development hinges on addressing current challenges, embracing innovation, and being agile in a changing economic landscape.

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