HSBC Treasury Management Profiles 2018 -

Current section, Introduction


The UK is one of the world’s leading economies thanks to its highly competitive services-based economy (the services sector contributes more than 80 per cent to GDP) and strong financial sector. The UK’s economic growth since the global financial crisis has been slow but steady with average GDP of 1.98 per cent since 2010. However, while the country is growing (recording GDP growth of 1.8 per cent in 2016) and unemployment is falling (4.3 per cent in the months May-July, the lowest rate since the mid-1970s), uncertainty about the country’s economic outlook remains. According to the OECD, continuing lack of clarity over the UK’s future relationship with the EU after Brexit is deterring business investment and dampening consumer confidence. Figures released by the Office of National Statistics reveal that business investment growth in Q2 2017 (GBP43.8 billion) was broadly unchanged from Q2 2016 (GBP43.7 billion). The OECD forecasts UK GDP will drop from 1.6 per cent in 2017 to 1 per cent in 2018. The UK’s budget deficit was GBP46.6 billion at the end of March 2017, GBP25.6 billion less than the previous financial year. The current government has pledged to continue its austerity policies in pursuit of eliminating the UK’s budget deficit (the deficit is expected to reach GBP36 billion by 2021-22, more than twice the official forecasts, according to the Institute for Fiscal Studies) and securing a stronger economy. Higher taxes are being introduced on dividends, insurance and cars, for example, and there are plans to cut the welfare bill by GBP12 billion by 2019-20.

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Legal and regulatory

  • Foreign exchange and domestic currency (GBP) accounts can be held by residents both domestically and abroad. Resident domestic currency accounts are convertible into foreign currency
  • Non-resident bank accounts are permitted in both foreign and domestic currency. Non-resident domestic currency accounts can be held abroad and are convertible into foreign currency
  • There are no central bank reporting requirements

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  • Resident companies are subject to taxation on their worldwide income
  • Non-resident companies are taxed on UK-sourced income only
  • The standard rate of corporation tax is 20 per cent
  • The UK is a signatory to the Multilateral Competent Authority Agreement, under which information will be exchanged between tax administrations, giving a single, global picture on some key indicators of economic activity within multinational enterprises

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Payment instruments and systems

  • Credit transfers are used for both high-value corporate and low-value retail transactions. Over 90 per cent of salaries are currently paid via credit transfer. The cheque remains a common payment instrument among small businesses, but its overall use is in decline. Payment card use, particularly of debit cards, is rising
  • SEPA covers all 28 EU member states, the four EFTA member states, Monaco, San Marino and Andorra
  • The UK operates four national payment systems: CHAPS, an RTGS system; BACS, for low-value electronic credits and debits; FPS, for one-off payments with a value no greater than GBP100,000; and the C&CC system for paper-based payments

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Cash management

  • Domestic and cross-border notional pooling and cash concentration are permitted between resident and non-resident accounts. Cross-border cash concentration and notional pooling are both permitted
  • Automated collection methods are used by the majority of medium-sized and large businesses in the UK

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Electronic banking

  • There is no bank-independent electronic banking standard in the UK
  • Internet and mobile banking services are provided by UK banks. PayWithMyBank enables secure online payments, VocaLink’s Multi-Channel Gateway processes payments from mobile phones in real time and Paym, the security-protected mobile payments service, is offered by 17 banks and building societies
  • In 2015, 53 per cent and 34 per cent of all account holders used internet and mobile banking services, respectively

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The materials contained on this page were assembled in July 2017 (unless otherwise dated).



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