Political and Economic System of United Kingdom

This report discusses the political and economic system of United Kingdom and its impact on foreign investments. It also covers the current measures taken by the UK government to attract foreign investors. The report highlights the free entry to foreign investments and businesses in the UK, the friendly FDI environment, and the flexible tax policies. It also discusses the protection of foreign investors' property and the strong supply chain in the country.

INDIVIDUAL REPORT

Table of Contents
POLITICAL AND ECONOMIC SYSTEM OF UNITED KINGDOM..........................................3
CURRENT MEASURES AND IT'S IMPACT...............................................................................4
REFERENCES................................................................................................................................1

POLITICAL AND ECONOMIC SYSTEM OF UNITED KINGDOM
In UK there is a combination of political scenarios which consist of the monarchy,
parliamentary system and unitary system. The country has a combination of authorities which
comes together and decides. There is a political instability in the UK currently as prime minister
Boris Johnson has stepped down (Lampadarios and Kyriakidou, 2020). For a country like UK
such moves affect the trade feasibility in the country. Such instability makes the foreign
investors really reconsider the decision of investing in the country. The decision-making of
foreign investment is highly influenced by the political situation of the country as the new
government may enforce certain laws and regulations whi9ch may not be in the favour of the
business. Hence, the investors uphold the investment decision for the time being.
Also, UK government's recent move 'Brexit' has affected the global business
environment. As various trade barriers, taxation, other policies has levied the cost which has
impacted the business cost for the people. According to the political theory of Marxist, there is
a constant focuses on the struggle among working class and capitalists. It creates class conflict
and exploitative relationship in the country. The country has constantly faced the strong political
measure which have supported the foreign investment. Yet to save the domestic businesses
county is also taking the measures which can ensure that business remains afloat. Consumerism
in the country is at all time high which gives space to the foreign investors to have business in
the country (Montezuma and McGarrigle, 2019).
The economic system in the country is totally derived by the demand and supply forces.
And some bodies have been created which constantly regulate the demand and supply forces in
the county. According to the Keynesian economic theory the government is the most vital
driving force in the economy and the aggregated demand is measure as a sum of the spendings
by the households and businesses. In united kingdom there is free entry to the foreign
investments and businesses as government has established the same set of rules for both
domestic as well the foreign investor. In the eyes of the UK law foreign investors are treated no
different from the domestic ones. This system makes foreign investor feel welcomed in the
country.
Yet there are some limited areas where foreign investments are allowed only some
percentages like real estate. There are few government owned and controlled industries which
are essential to the county such as gambling, betting, atomic energy, railways etc. therefore this

political and economic factors in the UK makes this country attractive to the foreign investors.
The recent havoc caused in the economic system of country by the covid-19 has impacted the
business environment (Otto, 2020). As covid led to the unemployment and inflation rate in the
country was at all time high and this hiked the prices of the products as raw material became
costly. Yet political authorities in the country has constantly worked towards making the
situation better for the business in the country.
CURRENT MEASURES AND IT'S IMPACT
The UK government supports the foreign investments as it understand the impact of
globalization and consumerism. UK has becomes an attractive place for foreign investments as it
allows easy access to the customers, suppliers, product innovators and partners. United kingdom
was the home to around 993 FDI projects in 2021 and it provided very good return on investment
at the rate of 12%. It is a rich market which has diverse and world-class industries like ICT,
finance, aerospace, automotive etc.
There are various measures taken by th country to make the UK even a better place for
the foreign investment. One of the important measure is making of separate laws which can
address the foreign investors issues and protect there interest. The protection of the property of
foreign investor act under article 29, this act protects the right of the foreign investor's property
in the country. Another important measure taken by the country is the free movement of goods
and access to the consumers, there are no restrictions on the foreign investors to approach the
customers and establish the business strategy (Sadeghi and et.al., 2019).
A friendly FDI environment is created as it brings the employment to the country.
Political measures like the corporate friendly environment has been established to accommodate
even the small investors. Different locations like Ireland, Scotland, England, Wales has been a
collaborative place for the businesses. There are various factors at economic, political and
legislative level which determines the business environment of the UK. There are various
regulation which are formed to protect the interest of investors and save the domestic market
from the malpractices.
UK has been ranked at the 7th place globally for being an easier place to do the business
than many other countries. The tax policies are also flexible, and the corporate taxation is the
lowest of all time standing at 9%. UK is the 3rd country providing the least tax slab to the
corporates (Seid, 2018). The base will provide the market research support before the market

entry, provides access to the technical, human resources and financials. Consumerism in the
economy is high which has a good faith in foreign products and services.
As the most important part of any business, is having a good portfolio of customers.
There are already many international businesses in the united kingdom which are flourishing.
There are flexible labour regulations in the country having the language knowledge and skills
supporting the ideas. Government id constantly supporting the research and development in the
economy to know the market and make the business innovative (Solarin and Al-Mulali, 2018).
Various infrastructure support which accommodates the foreign outlets, institutes,
factories and requirements are also provided. For a smooth supply of goods and services in the
country a strong supply chain which has potential and optimum capability to keep the inline
supply on point. In the times when country faced a set back due to pandemic, then also the
foreign businesses were given support to bring back the profitability in the businesses. Therefore,
the UK economy makes for an attractive place for foreign investments.

REFERENCES
Books and journals
Lampadarios, E. and Kyriakidou, N., 2020. Critical Success Factors for SMEs in the UK
Chemical Distribution Industry: The ‘Brexit’Effect. In The Changing Role of SMEs in
Global Business (pp. 155-177). Palgrave Macmillan, Cham.
Montezuma, J. and McGarrigle, J., 2019. What motivates international homebuyers? Investor to
lifestyle ‘migrants’ in a tourist city. Tourism Geographies. 21(2). pp.214-234.
Otto, L. S., 2020. What Is a Foreign Direct Investment?. In YSEC Yearbook of Socio-Economic
Constitutions 2020 (pp. 507-587). Springer, Cham.
Sadeghi, V.J. and et.al., 2019. An institution-based view of international entrepreneurship: A
comparison of context-based and universal determinants in developing and
economically advanced countries. International Business Review. 28(6). p.101588.
Seid, S., 2018. Global regulation of foreign direct investment. Routledge.
Solarin, S. A. and Al-Mulali, U., 2018. Influence of foreign direct investment on indicators of
environmental degradation. Environmental Science and Pollution Research. 25(25).
pp.24845-24859.
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