The United Kingdom is a modern and prosperous European nation, third largest economy in Europe.
The United Kingdom is a leading trading power and important financial center attracting investors from all over the world by its stable environment and financial and corporate legislation. Among more than 350 credit institutions operating in the United Kingdom, there are about 140 branches of foreign credit institutions from 40 different countries. Most of the British Crown dependencies and Overseas territories are also financial centers specializing in offshore finance and banking.
1 EUR = 0.8825 GBP (2017-12-11)
During the last 11 years EURGBP exchange rate was within the range 0.66325 - 0.95250, reaching its maximum in Dec 2008 and falling to its minimum in Jan 2007.
Chart 1. Euro to Pound sterling (EURGBP). Source: ECB.
|Nominal GDP (2016)||Nominal GDP per Capita (2016)||Real GDP Growth (2016)|
|2 366.9 bln EUR (-0.09%)||36 100 EUR (-0.09%)||2.0 % (2015: 2.2 %)|
According to Eurostat, nominal GDP of United Kingdom in 2016 was 2 366.9 bln EUR.
United Kingdom outperforms the European Union in terms of real GDP growth with the average annual differential coming to 0.2% over the past 10 years (2006 - 2016). In 2016 real GDP growth was 2.0% which was above the Euro Area average (1.8%) and above the European Union average (1.9%). Real GDP growth in 2017 - 2022 are IMF's estimates.
Chart 2. Real GDP Growth in United Kingdom. Source: Eurostat, International Monetary Fund.
In 2016, nominal GDP per capita in United Kingdom was 36 100 EUR.
United Kingdom has an above-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, exceeded that of the European Union by 5.4% over the past 10 years (2006 - 2016). GDP per capita at PPP in 2017 - 2022 are IMF's estimates.
Chart 3. GDP Per Capita at Purchasing Power Parity in United Kingdom; European Union = 100.
|CPI, MoM (Aug 2017)||CPI, YoY (Aug 2017)||CPI, Year Average (2016)|
|0.6 % (Jul 2017: -0.1 %)||2.9 % (Jul 2017: 2.6 %)||0.7 % (2015: 0.0 %)|
According to Eurostat, inflation rate in United Kingdom in 2016 expressed as annual percentages of average consumer prices was 0.7% which was above the Euro Area average (0.2%) and above the European Union average (0.3%). Inflation rates in 2017 - 2022 are IMF's estimates.
Chart 4. Inflation Rate in United Kingdom. Source: Eurostat, International Monetary Fund.
|Unemployment Rate (2016)|
|4.8 % (2015: 5.3 %)|
|Government Bond Yield (Jun 2017)|
|0.98 % (May 2017: 1.03 %)|
Chart 5. Government bond yield of United Kingdom. Source: Eurostat.
|AA (very high credit quality), outlook negative||Aa1 (high grade), outlook negative|
Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.
Withholding tax rates applied on payments of interest and dividends in United Kingdom are shown in Table 1.
|Natural person, resident||0.0 %||20.0 %|
|Natural person, non-resident||0.0 %||0.0 %|
Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.
United Kingdom signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 1 January 2013 the date of coming into force is given in brackets):
There are also several agreements between United Kingdom and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 1 January 2013 of signing the agreement is given in brackets):
There are 3 ways for jusrisdictions to exchange information on tax matters:
Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.
Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.
Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.
United Kingdom signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 1 January 2013 the date of coming into force is given in brackets):
There are also several agreements between United Kingdom and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 1 January 2013 of signing the agreement is given in brackets):
United Kingdom signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.
the United Kingdom has signed bilateral agreements with 49 jurisdictions to automatically receive information:
the United Kingdom has signed bilateral agreements with 55 jurisdictions to automatically send information:
Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).
|FATCA Status in the United Kingdom|
|IGA in effect since 12 September 2012, Model 1|
United Kingdom has FATCA agreement with the U.S. in effect since 12 September 2012 (Intergovernmental Agreement Model 1). Financial institutions operating in United Kingdom are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: the United Kingdom's financial accounts hold in U.S. financial institutions will be reported to the United Kingdom's authorities.
|Financial Market Development|
|5.0 (max 7.0), 13th out of 138 countries|
|5.2 (max 7.0), 59th out of 138 countries|
According to World Economic Forum's Global Competitiveness Report 2017-2018, financial market development in United Kingdom is scored 5.0 out of maximum 7.0 and ranked 13th out of 138 analysed economies, trustworthiness and confidence of financial market is scored 5.1 (25th place).
Chart 6. Financial Market Development in United Kingdom. Source: WEF.
Soundness of banks is scored 5.2 bringing United Kingdom into the 59th place.
Chart 7. Soundness of Banks in United Kingdom. Source: WEF.
|Maximum Protected Amount|
|85 000 GBP|
Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.
From a depositor's point of view it is important to know:
All these details about deposit guarantee scheme in United Kingdom are summarised in Table 2.
|Scheme Participants||all credit institutions operating in United Kingdom (including branches of foreign banks), branches of the United Kingdom's banks abroad|
|Eligible Depositors||private individuals, small companies|
|Maximum Protected Amount||85 000 GBP|
|Paid In Currency||GBP|
Table 2. Deposit guarantee scheme in United Kingdom.
Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.
|Local Currency (Pound sterling)||Foreign Currency|
|Aaa (prime)||Aaa (prime)|
Local currency (Pound sterling) deposit ceiling for United Kingdom is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).
|Average Deposit Rate (Aug 2017, GBP)|
|0.85 % (Jul 2017: 0.79 %)|
Chart 8. Deposit Rates in United Kingdom. Source: ECB.
|Number of Banks|
|Consolidated Assets (2016)|
|10 935.75 bln EUR (-4.81%)|
|Recent Changes (2016)|
|new banks: 18, closed banks: 13|
Currently there are 375 credit institutions operating in United Kingdom.
In 2016 consolidated banking assets in the United Kingdom were 10 935.75 bln EUR. The consolidated banking assets' evolution is shown at Chart 9 below.
Chart 9. Consolidated banking assets in United Kingdom.
Recent structural changes (2013 - 2016) of the banking sector of United Kingdom are summarised in Table 3.
|Number of Opened Banks||9||8||5||18|
|Number of Closed Banks||22||9||7||13|
Table 3. Recent structural changes in the banking sector of United Kingdom.
The list of the most recently opened banks in United Kingdom is provided in Table 4.
|Monzo Bank Ltd (new)||December 2016|
|BFC Bank Ltd (new)||November 2016|
|Caceis Bank France (new)||October 2016|
|Clearstream Banking S.A. (new)||September 2016|
|Mirabaud and Cie (Europe) SA (new)||August 2016|
|China Merchants Bank Co Ltd (new)||July 2016|
|Bank of Communications Co Ltd (closed)||July 2016|
|Starling Bank Limited (new)||July 2016|
|BARCLAYS CAPITAL SECURITIES LIMITED (new)||July 2016|
|Bank Leumi (U.K.) P.L.C. (new)||July 2016|
Table 4. The most recently opened banks in United Kingdom.
All the credit institutions operating in United Kingdom can be classified into several categories. Table 5 summarises the number of banks in each category.
|Category||Number of Banks|
|Branches of foreign banks||148|
There are 148 branches of foreign banks from 38 different countries in United Kingdom. Table 6 shows 10 countries having the biggest number of branches in United Kingdom.
|Country of Origin||Number of Branches|
|1||The Royal Bank of Scotland plc|
|2||National Westminster Bank (NatWest)|
|3||HSBC Bank plc|
|4||Barclays Bank plc|
|5||Bank of Scotland|
|6||Lloyds TSB Bank plc|
|7||Standard Chartered Bank|