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Competitive Advantages

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Competitive Advantages

The United Kingdom is the most favoured inward investment location in Europe, attracting around 40 per cent of Japanese, US and Asian investment into the European Union. The United Kingdom is the sixth largest exporter of goods in the world and the second largest exporter of services, accounting for almost 7 % of world trade in service and 5 % of world trade in goods.

The United Kingdom was ranked seventh at attracting inward investment and fourth in its outward investment (source United Nation).

The reasons for its popularity are many as it has a great deal to offer overseas companies. Fast, easy access to the European Union singles market (the world's largest market with 380 million consumers), a highly skilled, flexible, English-speaking workforce, and an environment, which allows business to prosper.

The UK offers:

  • Fast, easy access to the European Union Single Market;
  • 28 million skilled and adaptable workers;
  • Lowest utilities costs in the European Union;
  • Regulatory environment designed to encourage growth and profits;
  • World-class research, design and development;
  • Economic stability;
  • Commitment to free trade;
  • Growth of foreign direct investment worldwide in 2005/2006;

Internal Market:

The UK is a member State of European Union and the free movement of goods, persons, services and capital is a fundamental principle of the European Union.

The United Kingdom is part of a customs union where goods imported into the European Union can circulate freely within it, once customs duty and any other charges have been paid. Customs duty is not charged for goods that are in free circulation and move between the United Kingdom and the other European Union member states.

The single market is the world's largest international free trade area. This has meant that there is a wider market for UK goods - with EU enlargement, UK business has access to over 450 million customers and in 2003, British companies exported approx 105bn worth of goods to the EU15. Since 1990, UK exports to the 10 new member states have grown more than twice as fast as those to the rest of the world and imports three times as fast.

Overseas Companies:

Investment and expansion projects by overseas companies created more than 25,000 jobs in 2003/4, with the number of projects rising from 709 to 811. Almost one third of the projects were in manufacturing. Other sectors with growing investment included IT, software, electronics and biotechnology/pharmaceuticals.


The United Kingdom is the top European investment location for research, development, headquarters operations, software, electronics, pharmaceuticals, financial services and telecommunications, including call centres. It has also increased its market share - the United Kingdom won 23 per cent of investment into Europe in 2003, compared to 19 percent in 2002.

International investment projects into Europe rose by two per cent in 2003, halting the decline seen since investment last peaked in 2000.

Exportation and Importation:

The United Kingdom Government has simplified the exportation and importation of goods to and from non European Union member states with schemes such as the New Exports System and by offering increased facilitation for traders who opt to control the movement of goods through the New Computerised Transit System.

The United Kingdom, together with 64 other European, North African and near Asian countries, is part of the Transport International Routers Convention (TIR), which also facilitates the international transport of goods to and from countries that are not members of the European Union.

As a result of several trading agreements, many exports from the United Kingdom receive preferential tariff rates of duty (often nil) in their country of destination.


The single market has also reduced fiscal barriers and, although tax is primarily a national issue, the European Union does have limited and specific competence in this area. For example, the Community has competence in indirect tax such as VAT as this is required to make the single market work. However, Article 93 of the treaty also states that proposals on taxation must be agreed unanimously. The United Kingdom therefore has a veto on indirect taxation.

On direct tax, there is no explicit Community competence and decisions remain primarily a matter for national governments. The Treaty does allow measures on direct tax to be adopted where necessary for the operation of the single market, but these too must be adopted by unanimity.

Tax is a key aspect of national identity and the United Kingdom Government will continue to insist that unanimity applies for tax matters and will vigorously oppose any proposals in Europe for tax harmonisation that would harm UK interests.

The UK Government believes that in tax policy the challenges of an increasingly global marketplace can best be met by delivering open, flexible and competitive tax systems across the EU. Neither the demands of the modern global economy, nor the principles of subsidiarity and political legitimacy can justify harmonisation of tax rates or bases at an European Union level.

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