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Economic and political overview

Economic Overview

e EU Commission, GDP is expected to grow by 0.7% in 2026 and 1.2% in 2027. Private consumption is forecast to increase by 1.2% in 2026 and 1.4% in 2027. Investment is projected to rise slightly in 2026 and 2027, supported by lower interest rates, especially for residential investment. Imports and exports are expected to grow modestly, with goods trade remaining weak due to post-Brexit supply chain issues and the economy’s significant exposure to the energy price shock. Net trade is not anticipated to significantly drive growth.

According to official governmental figures, borrowing for the financial year ending March 2026 was GBP 129.0 billion, GBP 22.8 billion lower than the previous year, marking the sixth-highest borrowing in any financial year since records began in the financial year ending March 1947. Public sector net debt, excluding public sector banks, was provisionally estimated at 94.1% of GDP by July 2026, down 0.8 percentage points from July 2025, remaining at levels last seen in the early 1960s. The new UK government's budget, presented in October 2024, plans a significant increase in public current and investment spending, about 2% of GDP by 2026, funded by higher taxes and increased borrowing. As a result, total public expenditure is projected to decline only slightly as a share of GDP in 2026 and 2027, while total receipts as a share of GDP are expected to rise. The general government deficit is forecast to narrow slowly, remaining around 4.6% in 2027, with overall government debt continuing to rise throughout the forecast period (EU Commission). Prices in the UK rose by 3.1% in the 12 months to August 2026, keeping inflation above the 2% target of the Bank of England, which has made five cuts since August 2024. CPI was 3.1% for the year to August 2026, up from 2.9% in July, mainly due to rising motor fuel prices, with further upward contributions from housing and household services and from electricity and gas. In holding Bank Rate at 3.75% in September 2026, the Bank left borrowing costs unchanged since its December 2025 cut.

The UK labour market has shown moderate signs of loosening recently, with vacancies continuing to fall and now at pre-pandemic levels. The unemployment rate was 4.9% in May to July 2026, with 1.78 million people aged 16+ unemployed, up by around 82,000 over the year (ONS). With tepid GDP growth expected in the coming quarters, labour market slack is anticipated to rise, and nominal wage growth is projected to slow gradually throughout the forecast period. The country’s GDP per capita (PPP) was estimated at USD 64,606 in 2025 by the World Bank, but the relatively solid macroeconomic performance of the United Kingdom conceals weaknesses and situations of inequality. Thus, as the IMF has emphasised, strengthening human capital remains a key priority for the country's economy.

 
Main Indicators 20252026 (E)2027 (E)2028 (E)2029 (E)
GDP (billions USD) 4,003.024,264.794,466.084,675.054,898.45
GDP (Constant Prices, Annual % Change) 1.30.81.31.61.6
GDP per Capita (USD) 57,60861,05663,70466,41969,288
General Government Balance (in % of GDP) -5.4-3.9-3.1-2.6-2.0
General Government Gross Debt (in % of GDP) 102.3103.6104.1103.9103.5
Inflation Rate (%) 3.43.22.42.02.0
Unemployment Rate (% of the Labour Force) 4.95.65.34.84.5
Current Account (billions USD) -125.15-144.18-140.40-134.10-125.62
Current Account (in % of GDP) -3.1-3.4-3.1-2.9-2.6

Source: IMF – World Economic Outlook Database , Latest data available

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

The agricultural sector accounts for only 0.6% of GDP and 1% of employment (World Bank, latest data available), but is very productive, the country managing to produce enough to meet around 60% of its food demand. The main crops produced in the UK are potatoes, beets, wheat and barley. Livestock farming (especially sheep and cattle) remains a major agricultural activity. The fishing sector is also well developed but is currently suffering from the depletion of fish volumes in traditional fishing areas (the subject was a key issue of the trade deal concluded with the EU, which states that the UK will have the right to completely exclude EU boats after 2026). According to the latest data from the Department for Environment, Food and Rural Affairs (Defra), in 2025, the UK’s utilised agricultural area (UAA) covered 17 million hectares, accounting for 69% of the total land, while the croppable area reached 6.1 million hectares (36% of UAA). The arable crop area fell by 1.1% from 2024 to 4.1 million hectares, with cereals comprising 71% (almost 3.0 million hectares). The country’s total income from farming in 2025 was GBP 8.4 billion, +20.5% year-on-year; while the total livestock output was GBP 22.2 billion (+10.2% - Defra, latest data available).

The United Kingdom is one of the world's largest producing countries, with particularly important civil and military aerospace and pharmaceutical industries, and has considerable mineral resources. Once the 10th-largest oil producer in the world with huge natural gas reserves, its production is declining rapidly. Nevertheless, groups such as British Petroleum (BP) continue to be among the world leaders in the petroleum industry. The industrial sector, which accounts for 16.5% of GDP and employs 16% of the working population, is not very competitive, mainly due to low productivity. Some of the main sectors include machine tools, transport equipment and chemicals. Among the sectors with strong potential are information and communication technologies, biotechnologies, aviation, renewable energies and defence. In 2023, the UK had 269,000 manufacturing organizations, with over 250,000 being SMEs (90%). The sector contributed GBP 217 billion in output (data The Manufacturer).

The tertiary sector is the backbone of the British economy, representing 73.1% of GDP and over 83% of employment. Despite Brexit, London remains the largest financial centre in Europe, on par with New York, and it is also home to the headquarters of many multinationals. The banking sector has been very dynamic, the same as the tourism sector, which generates around 10% of GDP. There are more than 370 monetary financial institutions in the UK, with just under half the sector balance sheet being held in GBP, less than a fifth in EUR and a third in other currencies (European Banking Federation). The retail sector is also pivotal: in 2024, retail sales in Great Britain reached GBP 517 billion, up 1.4% from 2023 (data House of Commons).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 0.85 15.91 83.23
Value Added (in % of GDP) 0.64 16.49 73.10
Value Added (Annual % Change) 2.44 0.37 1.61

Source: World Bank - Latest available data.

 
Monetary Indicators 20212022202320242025
British Pound (GBP) - Average Annual Exchange Rate For 1 USD 0.730.810.800.780.76

Source: World Bank - Latest available data.

 

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Foreign Trade

The United Kingdom is one of the main players in international commerce, with foreign trade representing 62% of its GDP in 2025 (World Bank). Gold trade weighs heavily on goods trade figures: in 2025, gold was the main export (14.4% of the total), followed by turbojets (9.6%), motor cars (5.5%), medicaments (3.3%), and crude oil (3.1%); whereas imports were led by gold (16.3%), motor cars (6.5%), turbojets (3.7%), crude oil (2.7%), and refined petroleum products (2.5% - data Comtrade).

At a country level, in 2025, the UK mainly exported towards the United States (15.9%), Germany (7.7%), China (6.6%), the Netherlands (5.9%), Switzerland (5.5%), and France (5.4%); with imports coming chiefly from the United States (11.9%), China (11.4%), Germany (8.4%), Switzerland (5.5%), and France (4.5% - data Comtrade). The EU as a whole remains the UK's main trading partner. In order to diversify its business partners, the UK has signed a wide network of free trade agreements with nations and trade blocs, including a Comprehensive Economic and Trade Agreement with India, in force since 15 July 2026.

The country has a structural trade deficit, even though it has a large surplus in the services sector. According to WTO data, in 2025, the United Kingdom imported USD 948.6 billion worth of goods (+15.7% y-o-y) and exported USD 555.8 billion (+6% y-o-y); in the same year, exports of services stood at USD 719.6 billion (+11.1% y-o-y), against USD 450.1 billion in imports (+9.1% y-o-y). The overall trade balance was estimated to be negative by 1.3% of GDP by the World Bank (compared to -0.7% one year earlier). According to preliminary estimates from the ONS, after adjusting for inflation, total annual imports of goods and services increased by GBP 32.0 billion (3.4% y-o-y) to GBP 959.2 billion in 2025, while total annual exports increased by GBP 17.9 billion (2.0%) to GBP 902.8 billion in 2025.

 
Foreign Trade Values 20212022202320242025
Imports of Goods (million USD) 695,115823,592791,544820,194948,641
Exports of Goods (million USD) 472,147546,151525,016524,286555,829
Imports of Services (million USD) 252,982322,389374,068412,087449,181
Exports of Services (million USD) 463,124529,031572,933647,267718,470

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20212022202320242025
Foreign Trade (in % of GDP) 58.569.265.062.862.5
Trade Balance (million USD) -208,678-245,025-238,643-261,956-320,414
Trade Balance (Including Service) (million USD) 1,420-38,781-40,127-26,755-50,832
Imports of Goods and Services (Annual % Change) 5.313.9-1.62.74.1
Exports of Goods and Services (Annual % Change) 2.915.2-2.31.32.1
Imports of Goods and Services (in % of GDP) 29.235.133.131.831.9
Exports of Goods and Services (in % of GDP) 29.334.131.931.130.6

Source: World Bank ; Latest available data

Foreign Trade Forecasts 2026 (e)2027 (e)2028 (e)2029 (e)2030 (e)
Volume of exports of goods and services (Annual % change) 1.71.21.51.51.4
Volume of imports of goods and services (Annual % change) 3.21.71.21.01.1

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
The United Kingdom is a member of the following international economic organisations: IMF, Commonwealth, G-5, G-8, G-10, G-20, ICC, WHO, OECD, among others. For the full list of economic and other international organisations in which participates the United Kingdom click here. International organisation membership of the United Kingdom is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by the United Kingdom can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)		 2025
United States 15.9%
Germany 7.7%
China 6.6%
Netherlands 5.9%
Switzerland 5.5%
See More Countries 58.3%
Main Suppliers
(% of Imports)		 2025
United States 11.9%
China 11.4%
Germany 8.4%
Switzerland 5.5%
France 4.5%
See More Countries 58.3%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
King: Charles III (since 8 September 2022)
Prime Minister: Andy Burnham (since 20 July 2026)
Next Election Dates
General elections (House of Commons): by 15 August 2029 at the latest
Main Political Parties
Historically, the three dominant parties are:
- Labour Party: left-wing socialist and social democratic, grew out of trade union movement in the 19th century;
- Conservative Party: centre-right; believes in free-market economy, strong military and traditional cultural values;
- Liberal Democrats: centrist, moderate pro-European;

Other parties represented in the parliament include:
- Scottish National Party (SNP): centre-left;
- Democratic Unionist Party: right-wing;
- Reform UK (Brexit Party): right-wing, Eurosceptic;
- Green Party of England and Wales (GPEW - Greens): environmentalist;
- Plaid Cymru – the Party of Wales: centre-left to left-wing, Welsh nationalism;
- Social Democratic and Labour Party (SDLP): advocates Irish reunification;
- Alliance Party of Northern Ireland (APNI): liberal, centrist.
Executive Power
The King is the head of state. But above all he plays a symbolic and representational role. He continues to exercise three essential rights: the right to be consulted, to advise and to warn. Following legislative elections to the lower house of parliament, the leader of the majority party or coalition is usually appointed Prime Minister by the King and remains in office as long as he/she retains the confidence of the House of Commons. The Prime Minister is the head of government and has all executive powers, which include law enforcement and the conduct of the day-to-day affairs of the country. The Prime Minister selects members of the Cabinet and other ministers, who are then formally appointed by the monarch.
Legislative Power
The United Kingdom has a bicameral legislative system. The parliament consists of the House of Lords (the upper house) and the House of Commons (the lower house). The House of Lords includes life peers, who are appointed by the King on the advice of the Prime Minister and the House of Lords Appointments Commission, and 26 members of the clergy (Lords Spiritual). The House of Commons has 650 seats, and its members are elected by universal suffrage, generally for a 5-year term. The government is directly responsible to and dependent on parliament.
 

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