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.

 

St Paul's Cathedral

 

Brexit Update:

Since the UK officially left the European Union on January 31, 2020, the relationship between the two has evolved and continues to be shaped by the ongoing implementation of the withdrawal agreement.

Key Dates:

  • January 31, 2020: UK officially left the EU and entered a transition period that ended on December 31, 2020.

  • December 31, 2020: The transition period ended, and the UK fully exited the EU single market and customs union.

  • January 1, 2021: The UK-EU Trade and Cooperation Agreement came into effect, outlining the post-Brexit relationship between the two entities.

  • 2023/2024 Current: The UK and EU are still navigating the ongoing implementation and potential revisions of their post-Brexit relationship.

It's crucial for businesses operating in either the UK or the EU to stay informed about the latest developments and adjust their operations accordingly.

Resources for Further Information:

 

 

Governance In The UK

 

Governance and Business:

The UK offers a generally supportive environment for small and medium-sized enterprises. While some concerns exist regarding regulatory complexity, the UK remains attractive for doing business.

While the country's ranking on the World Bank's Doing Business report has fluctuated, it currently sits at 36th out of 190 economies (as of 2023). This reflects a decline from previous years but still indicates a relatively conducive environment for starting and operating a small business.

The World Bank considers various factors in its ranking, including:

  • Starting a business: Procedures, time, and cost involved.

  • Dealing with construction permits: Efficiency and transparency of the process.

  • Getting electricity: Ease of connection and cost of electricity.

  • Registering property: Efficiency and transparency of the process.

  • Getting credit: Access to finance and ease of obtaining loans.

  • Protecting minority investors: Laws and regulations safeguarding their interests.

  • Paying taxes: Complexity and efficiency of the tax system.

  • Trading across borders: Ease of importing and exporting goods and services.

  • Enforcing contracts: Efficiency and fairness of the legal system.

  • Resolving insolvency: Mechanisms for dealing with business failure.
     

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 highly on most 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): UK citizens enjoy a high degree of political participation and fundamental freedoms like speech, association, and a free press.

  • Political Stability and Absence of Violence/Terrorism (62.4): While this is the UK's lowest score, it remains above the median and reflects the country's relative stability compared to many others.

  • Government Effectiveness (93.8): The UK excels in public service quality, a competent civil service, and effective policy implementation.

  • Regulatory Quality (98.6): The UK demonstrates exceptional ability to enact regulations that foster private sector development.

  • Rule of Law (93.8): Strong rule of law prevails, with robust contract enforcement, property rights protection, and efficient legal systems.

  • Control of Corruption (94.2): The UK maintains a low level of corruption, both petty and grand, signifying responsible use of public power.

 

Globig TipWhat 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 93.8 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:

  • Contract enforcement consistency

  • Adherence to property rights (personal, business, intellectual)

  • Ability and effectiveness of the courts to make and enforce laws

  • The likelihood and ability of the police to enforce laws

  • 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

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 2022, perceived public sector corruption is relatively low in the United Kingdom. The UK's ranking is 18th out of 180 countries, with a score of 73. The report looks at a number of areas where corruption can take place, including things such as whistleblowing and access to information.

The UK boasts a robust legal framework to combat corruption, featuring the Bribery Act 2010 as one of the world's strictest anti-bribery laws. It criminalizes both offering and accepting bribes, holding individuals and corporations accountable. However, relying solely on legislation is insufficient. Building a strong anti-corruption culture requires ongoing efforts involving businesses, civil society, and the government.

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.

 

 

Globig Resources

World Bank Report, Doing Business 2020

To see the World Bank Group's Ease of Doing Business rankings

For the World Bank Group’s Worldwide Governance Indicators site

For information about Transparency International

Transparency International’s Corruption Perceptions Index 2023

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