KNOWLEDGE BASE Governance In The UK
The information on this page was current at the time it was published. Regulations, trends, statistics, and other information are constantly changing. While we strive to update our Knowledge Base, we strongly suggest you use these pages as a general guide and be sure to verify any regulations, statistics, guidelines, or other information that are important to your efforts.
January 31st, 2020 Update: On March 29, 2017, UK Prime Minister Theresa May triggered Article 50, which formally started the process whereby the UK would leave the European Union. The original plan was for the UK to leave the EU on March 29th, 2019 but on October 28th, 2019, the EU agreed to push the extension deadline to January 31, 2020.
The council agreed to conclude the withdrawal, and it took effect at midnight on January 31st, 2020. After this date, the UK is no longer an EU member state. This will obviously shift how business is done in the UK. We will keep updating this page to reflect these changes.
Learn more about Brexit here.
Governance In The UK
From a governance perspective, the UK is a supportive place for small and medium-sized companies. Based on a number of measures, it is considered easy to do business in the UK. Its citizens enjoy the ability to participate in the election of their government, freedom of expression, freedom of association, and a free media. In the United Kingdom, you’ll find a supportive regulatory environment, effective governance, and low perceived corruption in the public sector.
Ease of doing business in the UK - Regulatory environment
The World Bank Group ranks the UK 7th out of 190 countries for ease of doing business within the country as a small or medium-sized company. Specifically, regulations applying to companies through their life cycle were studied by the World Bank Group. A high ranking indicates that the regulatory environment is relatively more conducive to starting and operating a company locally. The World Bank Group ranking takes into consideration the following parameters:
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Starting a Business
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Dealing with Construction Permits
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Getting Electricity
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Registering Property
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Getting Credit
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Protecting Minority Investors
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Paying Taxes
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Trading Across Borders
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Enforcing Contracts
- Resolving Insolvency
Learn about the annual report and download the World Bank Report, Doing Business 2017: Equal Opportunity For All. You can see all of the World Bank Group's rankings and also specifically the World Bank Group Ranking information on the UK.
The effectiveness of the UK’s governance
The World Bank Group also evaluates and reports on world governments and their effectiveness in their Worldwide Governance Indicators reports, and the UK ranks very highly on nearly all of its governance effectiveness aggregate scores (0 is bad and 100 is good) - another reason to consider doing business in that country. The six parameters for which perceptions are captured and the UK's scores are:
Voice and Accountability - 92.1
The extent to which a country's citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and a free media
Political Stability and Absence of Violence/Terrorism - 62.4
The likelihood of political instability and/or politically-motivated violence, including terrorism. The UK received its lowest score in this category, although it still ranks higher than more than 60% of all countries in the report. Within the report, you will find resources to help you understand what factors go into their rankings
Government Effectiveness – 93.8
The quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies
Regulatory Quality – 98.6
The ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development
Rule of Law - 93.8
The extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence
Control of Corruption - 94.2
The extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as "capture" of the state by elites and private interests
What is Governance?
According to the World Bank Group, “Governance consists of the traditions and institutions by which authority in a country is exercised. This includes the process by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them.”
The Significance of Rule of Law: When asked about which factor is most important when evaluating which countries to do business in, many companies will say that Rule of Law is their biggest concern. The UK scores 94.2 out of 100, indicating it has effective governance in this area.
As stated above in the World Governance Indicators results, The Rule of Law concept considers the extent to which business operators within a select country have confidence in and abide by the rules or laws of that society. Some of the characteristics that should be evaluated to make a sound decision encompasses the clarity, certainty and predictability of laws and their application.
Some considerations are:
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Contract enforcement consistency
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Adherence to property rights (personal, business, intellectual)
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Ability and effectiveness of the courts to make and enforce laws
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The likelihood and ability of the police to enforce laws
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The extent of crime and violence
Some of the specific practices to watch out for are the freedom from expropriation, physical security of persons, respect for contracts, access to effective and efficient courts, and government adherence to agreements and clear dispute resolution procedures. Well-functioning law and justice institutions and a government bound by the rule of law are important to economic, political and social development, and the United Kingdom demonstrates effective Rule of Law.
The Worldwide Governance Indicators Report provides an extensive list of resources to help you understand their Rule of Law ratings.
Resources
For the World Bank Group’s World Governance Indicators site
The UK has low perceived public sector corruption levels
According to Transparency International’s Corruption Perceptions Index 2016, perceived public sector corruption is low in the United Kingdom. The UK ties for 10th out of 176 countries and territories in the report. The report looks at a number of areas where corruption can take place, including things such as whistleblowing and access to information.
You will find that the British place a high value on fairness and are not prone to bribery - the chances of having a bribe accepted are low. The consequences are high and the UK’s Bribery Act is among the strictest legislation internationally on bribery.
Through the Globig Marketplace, you can find local legal and regulatory experts to help you be sure you are following the subtleties of the laws within the UK. If you are in doubt on any legal requirements, we recommend you contact an appropriate law firm. The Globig Marketplace Legal Services section provides a list of firms for your consideration, both local and global.
World Bank Report, Doing Business 2017: Equal Opportunity For All
To see the World Bank Group's Ease of Doing Business rankings
For specific World Bank Group Ease of Doing Business ranking information on the UK
For the World Bank Group’s Worldwide Governance Indicators site
For information about Transparency International
Transparency International’s Corruption Perceptions Index 2016
For more information on the areas of corruption that Transparency International analyzes
UK’s Transparency International Chapter
For Transparency International’s discussion on the Bribery Act 2010
KNOWLEDGE BASE Governance In The UK