United Kingdom Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

The UK’s main trading partner is regularly EU countries. In 2021, UK exports of goods and services were £625 billion and imports were £654 billion. In 2021, the EU represented 42% of UK exports of goods and services and 45% of imports. The UK imports more services and goods from the EU than it exports. Although this has been the case since at least 1999, since 2016 the trade balance between the UK and the EU has been more significant. In 2021, the UK was the second largest partner for exports of goods from the EU (13.0%) and the fourth largest partner for imports of goods from the EU (6.9%). In 2021, Germany was the largest importer of goods and at the same time the largest exporter of goods to the UK. In 2020, the UK was the EU’s largest trading partner for services exports, in terms of services imports, the UK was the EU’s second largest trading partner.

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 346,345 366,503 370,321 303,535 293,892
Imports into the EU (million EUR) 276,837 294,064 293,109 254.005 261,760
Balance with the EU (million EUR) -69,508 -72,439 -77,212 -49,530 -32,132

Source: businesscarriers.com

Trade relations with the Czech Republic

In 2021, the UK was the 7th largest export market for the Czech Republic and the 16th largest import market. According to the size of the turnover of mutual trade, the UK is in 10th place. While Czech exports to the UK fell by 13.1% for the entire year 2020, exports from the Czech Republic to the UK increased by 5.4% year-on-year for 2021. Imports from the Czech Republic to the UK decreased by 4.2% in 2020 and increased by 8.7% year-on-year in 2021. In the trade relationship with the UK, the Czech Republic has been recording a deficit since 2018.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 99 203.8 206.2 179.2 188.9
Imports to the Czech Republic (billion CZK) 211 83.2 68.4 65.5 71.2
Balance with the Czech Republic (billion CZK) 112 -120.6 -137.8 -113.7 117.8

Source: CZSO

Trade relations with countries outside the EU

Since 2012, the value of UK exports to countries outside the EU has been higher than the value of imports, leading to trade surpluses. For the 11th month in a row, imports from non-EU countries continue to be higher than from EU countries. Fuel imports have continued to be the main driver of the EU/non-EU import gap in recent months, despite small declines compared to October 2021 levels. The UK had a trade surplus of £3 billion with non-EU countries in 2021 EU.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 310,251 325,120 349,617 300,006 360,589
Imports to countries outside the EU (million EUR) 353,264 369,261 406,141 355,892 363,614
Balance with non-EU countries (million EUR) 43,013 44,141 56,524 55,886 3.025

Source: ONS

Foreign direct investment

In 2020, the UK was the 3rd most popular investment destination in the world and the 2nd most popular investment destination in Europe. FDI into the UK was £trillion at the end of 2020, an increase of 17.6% on 2019. The US was the largest investor of FDI in the UK at the end of 2020 at £479.2 billion (24.8% ), followed by the Netherlands (10.4%), Jersey (7.0%) and Belgium (6.8%). Strongest areas include the financial sector, professional services, manufacturing, retail and transportation.

UK FDI was £trillion at the end of 2020, an increase of 0.8% on 2019. The US was the top destination for UK FDI at the end of 2020, with £399.9 billion invested in 2020, the UK was the 4th largest global investor, and the 2nd largest European investor. Among the strongest areas in recent years are the financial sector, manufacturing, professional services and others.

For the Czech Republic, the UK is the 11th largest source of foreign direct investment. Good trade relations between the countries are supported by the fact that since 1990, British companies have invested more than CZK 70 billion in the country. According to a report issued in 2015 by the British Department for International Trade, more than 300 British companies operate in the Czech Republic, including large international companies such as BAE Systems, Marks & Spencer and Allen & Overy, which have chosen the Czechia as the location for their Central European headquarters. British companies in the Czech Republic employ approximately 65,000. people.

Sectors in which UK investors are most active include shared services, IT and software development, automotive, engineering, high-tech engineering and clean technology.

Major British investors in the Czech Republic: Barclays, Dixons Carphone Group, Edwards, Ricardo, Smiths Group, Tesco, Vodafone

List of opportunities for Czech investors on the British government website.

FTAs and treaties

Treaties with the EU

The United Kingdom left the EU on 31 January 2020. Until the end of 2020, mutual relations were governed by EU rules as part of a transition period, from 1 January 2021 they are governed by the EU-UK Trade and Cooperation Agreement (TCA).

The TCA is primarily a trade agreement, for European goods that meet the rules of origin, it ensures zero tariffs and zero quotas, it also ensures preferential rules for freight transport and air cargo, cooperation in the field of energy and selected other areas. However, the area of ​​services is minimally addressed, and the contract does not ensure the free movement of people, automatic recognition of qualifications or certifications.

Northern Ireland remained part of the EU customs union even after Brexit, and European rules of the internal market continue to apply in the territory.

Contracts with the Czech Republic

Economic relations between the Czech Republic and the UK are implemented mainly on the basis of the Agreement on Trade and Cooperation between the EU and the UK, and also on the basis of the Agreement on the Avoidance of Double Taxation for Income Tax and Capital Gains (in force since 20 December 1991) Companies can find more detailed information on of Brexit on these pages of the European Commission, more detailed instructions, also in the Czech language, for companies exporting to the UK can be found on the website of the General Directorate of the Commission for Taxes and Customs. A guide for entrepreneurs to the effects of Brexit on the website of the Ministry of Industry and Trade of the Czech Republic.

Summary information on the issue of Brexit is then presented in Czech on the website of the European Commission and on the website of the Section for European Affairs of the Office of the Government of the Czech Republic.

Citizens of the Czech Republic who live in the United Kingdom of Great Britain and Northern Ireland can find practical information in relation to Brexit on the website of the Embassy of the Czech Republic in London and on the website of the British government.

Developmental cooperation

The Ministry of Foreign Affairs and Development ( Foreign, Commonwealth and DevelopmentOffice, FCDO ) is in charge of providing development funds. The UK is a provider of development aid, for which 0.7% of GDP was allocated, but due to the ongoing pandemic, contributions were reduced to 0.5% of GDP for the following period.

The UK Government is tackling major global challenges, including poverty and disease, mass migration, insecurity and conflict, and is leading the drive to end extreme poverty. The aim of UK international aid is a safer, healthier and more prosperous world for people in developing countries. The largest aid recipients include Ethiopia, Nigeria, Pakistan, Yemen and Kenya, while government priorities include health, banking and financial services, government and civil society, industry and disaster relief.

FCDO also provides Research4Development (R4D) up-to-date information on FCDO-funded research, including details of over 35,000 past and current projects, on the FCDO website. How to become an FCDO supplier on the Ministry’s website.

UK Export Finance is a British export credit agency that, in addition to insuring British exports, provides financing for selected development projects using loans. The condition for British participation in the project is 20%, the projects concern developing countries and aim, for example, at the healthcare sector.

Prospective fields of study (MOP)

Transport industry and infrastructure

In the field of transport, one of the main topics of ecology. Within the transport industry, space is offered for Czech companies whose products can contribute to the development of electromobility in the UK (building the necessary charging station infrastructure, technological development of vehicles, batteries, etc.). Over CZK 30 billion will be allocated for the construction of charging stations. At the same time, the government will continue to invest in the renewal and development of the transport network; one of the major transport projects in the coming years will be the construction of the high-speed railway HS2, which represents an interesting opportunity for Czech companies in the field of construction and construction of railway infrastructure. The government also intends to invest considerable resources in projects aimed at promoting cycling and walking.

Energy industry

The UK aims to achieve carbon neutrality by 2050. Alternative and renewable energy sources (mainly wind, to a lesser extent also solar and water energy), nuclear energy and also hydrogen as a clean energy source represent opportunities. In the field of nuclear energy, it is worth mentioning the support of the so-called small modular reactors (SMR), the development of which is being worked on by a consortium led by the company Rolls-Royce, as well as the project for the construction of a new block of the Sizewell C nuclear power plant. Companies focusing on the development of energy storage technologies and, above all, the capture and subsequent processing of CO2. Britain’s main goal is to achieve carbon neutrality by 2050, which is to be achieved through two main routes – through renewables and nuclear and industrial decarbonisation. Climate protection and energy efficiency permeate all sectors. It outlines the strategyEnergy White Paper.

ICT

One of the areas that has experienced the most significant boom during the pandemic is information technology. The possibilities of application in this direction are really wide not only for Czech IT companies; there is a great demand for innovative and interactive IT solutions in e-commerce, education and healthcare. A number of companies request IT services in connection with a partial or even complete transition to the home office model, with which they remain even after the relaxation of anti-pandemic measures. Companies that are able to contribute to building the physical infrastructure for connection, in which the government intends to invest up to CZK 150 billion in the coming years, could also have an opportunity. Last but not least, the trend is the growing demand for solutions in connection with the development of automation. Also in the financial sector, innovation will play a vital role, especially in the areas of financial inclusion, SME financing and the digital transformation of the financial services sector. Innovations in this sector will also be able to benefit from state support, for example a fund of 37.5 billion CZK (1.25 billion GBP) has already been created.

Healthcare and pharmaceutical industry

British healthcare has long been an underfunded area, which is reflected in its less than satisfactory condition in a number of respects. Thus, large-scale investments in the health sector represent one of the main priorities of the current government. A significant amount of funds will go to the renovation of British hospitals, both construction and, above all, equipment; a number of hospitals report either a shortage or obsolescence of necessary medical equipment and diagnostic equipment (e.g. magnetic resonance imaging, computed tomography,…). A special topic is support for the modernization of cancer diagnosis. In addition, the government has promised to build up to 40 new health facilities; a link with the construction industry is offered here (see below). The health sector (National Health Service, NHS) has long been one of the government’s declared priorities. The NHS urgently needs, first of all, to implement renovation projects for a number of hospitals (both construction and, above all, equipment), the deficit of maintenance work at hospitals amounts to approximately CZK 195 billion (GBP billion). However, the strategy also includes the construction of up to 40 new hospitals (CZK 111 billion, GBP billion), hospital wards, intensive care units and operating theaters, and the insufficient equipment of psychiatric clinics is to be improved. As part of the modernization, the outdated computer infrastructure should be renewed and the equipment modernized and supplemented. Already in 2019, the British government announced the allocation of CZK 54 billion (GBP billion) for the construction, maintenance and purchase of new equipment for the NHS in England, in particular magnetic resonance imaging, computed tomography and mammography. There is also a plan to modernize cancer diagnostics in the form of funding for 300 new diagnostic equipment in 78 hospitals across England. Digitalization of health care is also a trend, there is a demand for platforms that connect doctors with patients. A number of plans were announced during the pandemic, but due to the scale of the investment, they are still relevant. (Note: Scotland, Wales and Northern Ireland have their own health systems with their own budgets, but the trend is similar.)

Construction industry

After the slowdown caused by the global pandemic, space is also opening up again for Czech companies in the construction industry, whether construction companies as such or suppliers of building materials. In Britain, the demand is growing especially for modern construction solutions: modular construction, construction from innovative and environmentally sustainable materials or so-called green buildings. A big topic in the new government strategy is the issue of insulation and insulation of houses and public buildings, including significant support for heat pumps and a possible future ban on gas boilers. Opportunities are offered to Czech construction companies and suppliers of building materials. The demand for modern building solutions, for example modular construction, is growing. At the same time, the demand for companies that focus on innovative and environmentally sustainable materials and constructions from them is growing. Even after the pandemic, most companies are switching to a hybrid way of working, work from home has been partially preserved, work from offices is limited to a few days a week. Opportunities are thus found in the renovation of office buildings, which solve both how to redefine the space, but also how to lure employees back to the offices. The City of London, based heavily on commuter workers until the pandemic, is now leaning towards revitalizing the borough into a mix of housing and offices so that the City can function without the daily influx of workers. Similar trends apply to other large cities as well. The City of London, based heavily on commuter workers until the pandemic, is now leaning towards revitalizing the borough into a mix of housing and offices so that the City can function without the daily influx of workers. Similar trends apply to other large cities as well.

Agricultural and food industry

In Britain, there is a long-term growing demand for high-quality and healthy food: the British customer is increasingly looking for bio-quality food, plant-based alternatives to animal products (e.g. plant-based milks) and vegan food, as well as various dietary supplements and fitness products. From the point of view of consumer behavior, a significant trend is the transfer of customers from brick-and-mortar stores to the online environment (space for food e-shops). UK’s green strategy could represent an interesting opportunity for Czech companies offering new and innovative solutions and technologies in the field of agriculture. The trend is an ever-increasing demand for healthy food, bio-quality food, plant/vegan products and alternatives to animal products, or for fitness products such as protein food supplements. The sector has already seen significant growth (40%) over the past five years and the trend continues. Sales of vegetarian and vegan products are expected to grow by 35% to CZK 33bn (£1.1bn) by 2024. Britain is also the country of beer, the demand for interesting, craft beers is still high, there are also opportunities in the supply of technology for small breweries.

United Kingdom Trade