PESTLE Analysis of UK

Introduction

The United Kingdom or UK is a country situated on the northwest coast of Europe. She is comprised of the Great Britain Island, north-eastern Island of Ireland and other similar islands. The area of the UK consists of four different countries like Wales, Scotland, Northern Ireland and England. Belfast, Edinburgh, Cardiff, and London are her four capitals.

London is the cultural and financial center and the world’s largest city where 10.3 million people inhabit. English is the official language of the country, whereas Irish and Scottish Gaelic are also widely spoken languages.

Now we’ll discuss pestle analysis of UK; how political, economic, social, technological, legal and environmental factors are affecting the country.

Political factors

Following are the political factors affecting the UK.

Stable Government

Many factors determine the stability of the government like the rule of law, controlled or low corruption, and effectiveness of the government policies. If the government is performing well in all of these factors, then it would not only be stable but also a successful government, and the UK is among one of them. According to the ranking of the world’s bank, UK ranks at the top in terms of political stability in 2007.

Administrative System

UK falls into the category of the world’s most powerful countries. However, the government system of the country is comprised of constitutional monarchy and parliamentary democracy, whereas the prime minister is the head of the government and the monarch is the head of state. Currently, Boris Johnson is the prime minister and Queen Elizabeth 2nd is the monarch of the UK. According to a report of BBC published in 2019, legally the role of the monarch and royal family is mostly tradition and ceremonial.

Scottish national party, labor, libel democrats and conservative are the four major political parties that dominate the whole country.

Associates and Allies

Having a strong economy and a permanent seat at the UN provides UK a great influence over global issues like political, economic, social, cultural, military and scientific. The UK and the US have many social and cultural values that are in common, which makes them a strong ally. Both countries have maintained strong friendly relations over the years. However, critics usually hail on the support of the British government to the military dictators of other countries.

Brexit

Brexit means the exit of the British from the European Union. The Brexit movement has created an atmosphere of uncertainty in recent years. Finally, it culminated in the deal of the UK leaving the EU on January 24, 2020. Many people believed the withdrawal from the EU would result in the economic prosperity of the country, and it would create many employment opportunities.

Economic Factors

Below are the economic factors that can affect the United Kingdom.

Country’s GDP Trends

The estimated nominal GDP of the country in 2019 was 2.744 trillion US dollars, which puts the UK’s economy at the 6th position globally. Per capita of the country in 2019 was 41030 US dollars, it’s the world’s 20th highest per capita.

Diverse Economy

The reason behind the success of the UK’s economy is diversity. Her market is so diverse that it provides an equal opportunity for all the businesses to grow and flourish. As long as it adds values in the lives of customers, and there’s a demand in the market.

Foreign Direct Investment

When a society has a diverse culture, it means that it provides foreigners a space to live and grow. Consequently, her economy has attracted the attention of many across the world. Therefore, many individual investors and companies have invested their resources and capital in various fields like real estate, science, technology, food, clothing, grocery, entertainment, and sports.

Tax Rate

Currently, the corporate tax rate for companies is 19%. There was an announcement in 2016 that the government would reduce the tax rate to 18% by the end of 2020. If it does happen, then she would attract more investors.

Inflation

Currently, inflation in the UK is 1.94%. In 2019, it was round about 1.7%. It has increased by approximately 3.1% since 2017. According to the regulation of the Bank of English, it shouldn’t go more than 2%. Although it is a slight increase, and it doesn’t mean anything, but it’s a rise. According to some financial analysts, the increment in the inflation rate is over; we won’t see many changes soon.

Unemployment

In February 2020, the unemployment rate of the UK’s economy was approximately 3.8%. If we compare it with the rate of previous years, then it has fallen roundabout 0.2%. It is much lower, what it means that the people are earning. That’s why per capita of the country is higher; because everyone is contributing one’s share in the economy.

Social Factors

Below social factors can affect the UK government and population.

Population

According to the Office of National Statistics, the population of the UK is estimated to reach 74 million people by the end of 2039. It is because currently, the birth is exceeding the mortality rate, as a result, the labor market and health care system would be first in line. But it would also create opportunities for the businesses to fill the needs of more people. As we know that the UK is the world’s biggest consumer market. Insurance companies, real estate, and health care industries have gained a lot of profit in the previous population rise.

Health Care System

People spend a great amount of money on their health insurance. Consequently, the health care system of the UK has progressed a lot in the recent years in terms of providing quality service to their patients. Therefore, people from all over the world prefer the British health care system for serious and complicated injuries and diseases.

Education

The interesting thing about the UK’s education system is that it keeps on updating annually with the latest information. Her education system includes the modern mythologies of teaching and learning. Therefore, the degrees of the British education system are recognized worldwide.

Income level

Fall in the unemployment rate and a reasonable inflation rate puts the UK citizen in the high-income earners. Therefore, per capita of the country higher and it falls among the world’s top 20 countries.

Technological Factors

The country has the world’s leading research and development institutes, and they are always in a consistent effort of breaking the barriers almost in every field. Her economy provides great opportunities for entrepreneurs. Every invention and development contributes to the country’s economy. Nowadays, she is making more progress in the tech field. Even British tech institutes are succeeding over Indian, Japanese, Korean and American institutes.

Legal Factors

Companies that are operating their businesses in the UK have to follow the Employment Act 1996. Whether it’s sick pay, minimum wage, holiday pay, maternity or paternity leave, this act protects their rights. On the other hand, the Equality act 2010 protects people from being discriminated against because of their race, gender, color or any other differences.

Environmental Factors

Every industrial developed faces serious environmental issues because an economy can’t move forward without industrialization. Pollution and other environmental issues also come along with it. However, government, private corporations, and other charity organizations have been taking steps and spreading information about recycling, less plastic waste, and eco-friendly products and services.

The country also faces environmental issues like bad weather. But the British summer attracts tourists from all over the world.  According to an estimate, her tourism industry generates approximately more than 127 billion pounds every year.

Conclusion: PESTLE Analysis of UK

Britain is undoubtedly among the world’s leading developed countries. Tech industry has become her main source of income for the past few years, but she shouldn’t avoid environmental issues. She should use technology to recover the environment and become a role model for the developing countries.

Photo by Oleg Magni