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The United Kingdom has established itself as one of the closest and most strategic partners for Mexico in Europe; both nations favor free trade in goods and services, increased cooperation, and mutual investment.
United Kingdom: Trade & Business Statistics
The United Kingdom’s economy is a highly developed social market and market-orientated economy.
It accounts for 3.3% of world’s GDP. The currency of the UK is the pound sterling, which is the world's fourth-largest reserve currency after the United States dollar, the Euro and the Japanese yen, and is also one of the 10 most-valued currencies in the world.
In 2019, the UK had the third-largest inward foreign direct investment, and the fifth-largest outward foreign direct investment. In 2020, the UK's trade with the 27 member states of the European Union accounted for 49% of the country's exports and 52% of its imports.
The service sector dominates, contributing around 80% of GDP; the financial services industry is particularly important, and London is the second-largest financial center in the world. Edinburgh is ranked 17th in the world, and 6th in Europe for its financial services industry in 2020.
Britain's aerospace industry is the second-largest national aerospace industry, while its pharmaceutical industry is the tenth-largest in the world. Furthermore, of the world's 500 largest companies, 26 are headquartered in the UK.
There are significant regional variations in prosperity, with South East England and North East Scotland being the richest areas per capita. The size of London's economy makes it the largest city by GDP per capita in Europe.
The UK is a member of the Commonwealth, the G7, the G20, the International Monetary Fund, the Organization for Security and Co-Operation in Europe, NATO, the United Nations Security Council, the World Bank, the World Trade Organization, Asian Infrastructure Investment Bank, and the United Nations.
Trade & invest with one of the world’s major economic nations
Steady growth forecast through 2023
#1 destination for FDI in Europe
Over 66 million people live in the UK
Fast easy access to the world. The UK offers the largest air transport system in Europe and the 2nd largest ports industry providing an ideal location for exporters.
In 2018, the United Kingdom was:
#5 economy in the world in terms of GDP
#5 in total exports
#5 in total imports
#9 economy in terms of GDP per capita
#13 most complex economy according to the Economic Complexity Index (ECI)
Why the UK?
The United Kingdom was the 8th recipient of global FDI flows, behind the United States, China, the Netherlands, Hong Kong, Singapore, Germany, and Australia.
The Brexit process has raised concerns among some investors about the increase in trade costs with Europe and the volatility of the pound sterling. The UK’s main investment partners were the United States, the British offshore islands (Channel Islands and Isle of Man), the Netherlands, Luxembourg, Belgium, Japan and Germany (ONS, 2019). Most FDI flows are directed to the financial services sector, professional, scientific and technical services, IT, trade and repair, and transportation.
Though a deal between the EU and the UK which provides for non-discriminatory treatment between national and foreign investors was reached at the end of 2020, uncertainty remains concerning the possible reactions of investors.
Stability & Security
A stable legal and regulatory environment in one of the world’s oldest democracies.
Infrastructure Network
The country has the largest air transport system of any major European economy, it operates a robust energy grid supported by the world’s largest offshore windfarm, & benefits from advanced road networks, a modern rail system and 100 sea ports, connecting it seamlessly to the rest of Europe.
Tax & Incentives
The UK has one of the lowest Corporation Tax rates in the G20. It was is rated by the World Bank as the most business-friendly of Europe’s 10 largest economies & has a range of tax reliefs to give flexibility to domestic and international businesses.
Transparency & Simplicity
Transparent, flexible corporate law and governance that makes it easy to do business.
A Hub for Innovation
The UK is ranked top 5 on the Global Innovation Index 2019 & prides itself on a rich heritage of exploration and innovation. It
enjoys R&D tax reliefs of up to 230%, and 50% of all R&D expenditure coming from foreign-owned companies.
Talent & Labor
When it comes to talent, the UK is the top-rated major European economy for attracting global talent; it has one of the largest labor forces in the EU with 32 million people employed; and has lower labour costs than Italy, France or Germany.
Transparency & Simplicity
Transparent, flexible corporate law and governance that makes it easy to do business.
UK & Mexican Economic Background
Mexico is the United Kingdom’s 42nd largest trading partner, accounting for 0.4% of total trade. Total trade in goods and services with Mexico was $7.4 billion in 2019.
EXPORTS
In 2019, UK exports to Mexico were $3.6 billion, making it the country’s 40th largest export market (accounting for 0.4% of all exports). Between 2002 and 2017 EU goods exports to Mexico had increased by 12.0%.
IMPORTS
Additionally, UK imports from Mexico were $3.7 billion, making it their 43rd largest import source (accounting for 0.4% of all British imports). EU goods imported from Mexico grew by 19.6% between 2002 and 2017.
UK-Mexico Trade Continuity Agreement
On 15 December, 2020, the United Kingdom and Mexico signed the UK-Mexico Trade Continuity Agreement, providing continuity in trade between these countries after the end of 2020. The agreement provides certainty for UK and Mexican businesses trading the goods and services that make up our bilateral trade relationship, which accounts for over 5 billion dollars per year.
This is done in an effort to strengthen trade in services between both countries.
The UK-Mexico Trade Agreement delivers vital coverage for the automotive, pharmaceutical, textiles, agriculture, food and drink and other manufacturing industries.
It follows the recent signing of the UK – Mexico Agreement on the Mutual Recognition and Protection of Designations for Spirit Drinks, an important geographical indications agreement between the United Kingdom and Mexico to protect the spirits of both countries.
Investment relations will continue to take place under the Agreement between the Government of the UK and the Government of Mexico for the Promotion and Reciprocal Protection of Investments.
Future Relationship
The Agreement also commits the UK and Mexico to begin negotiations on a new ambitious and modern UK-Mexico Trade Agreement at the earliest opportunity in 2021 and strive to conclude it within three years. The UK reiterated its intention to formally apply in early 2021 to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and Mexico expressed its support for this process.
Political Dialogue & Cooperation
The UK and Mexico remain committed to a joint political dialogue covering all bilateral and international matters of mutual interest, including continuing and intensifying all areas of current cooperation.
Both countries remain steadfast in their commitment to implementing the principles outlined in the UK-Mexico Partnership for Sustainable and Inclusive Growth, signed by their Foreign Ministers in August 2019. Maintaining their bilateral political cooperation as specified in the Partnership remains a top priority for their future relationship. This includes cooperating closely on foreign policy, an inclusive COVID-19 recovery, and international peace and security.
It encompasses a common vision on the reduction of poverty and inequality, of action on climate change and environmental protection, promotion of sustainable investment, the protection of the oceans and of biodiversity, the defense of free trade, multilateralism and the international rules-based system. UK and Mexico will continue to regularly discuss our shared values of democracy, the comprehensive promotion and protection of human rights, the rule of law, gender equality and social inclusion.
Sectors with potential
The United Kingdom has a favorable investment climate thanks to its economic growth, infrastructure, highly qualified workforce, and access to global markets.
Sectors with investment opportunities
Software & Technology Sector
Britain’s tech sector attracted more venture capital investment and tech IPOs than any other European hub in 2018. London ranks second in the world for most connected places for tech, after Silicon Valley.
Financial Sector Leader
The UK is home to one of the world’s financial centers due to its regulatory framework, standards and network enabling global market access. Other countries look to and follow the UK’s high standards.
Healthcare & Lifesciences
The UK is the number one destination for health and life sciences FDI in Europe and is home to world-class resources to develop ideas. The UK has a world-renowned research, test bed and delivery partner in its National Health Service (NHS).
Creative Excellence
The creative industry is the fastest growing sector in the UK economy, with a value of £101.5 billion in 2017. The UK’s film and TV industries are thriving with continued investment from global players. The UK games industry is continuing to break boundaries globally and is worth £5.7 billion in 2018.
E-Commerce
UK consumers are early adopters and open to innovative models of service delivery, for example Amazon tested their drone delivery services in the UK. UK has the highest spend per capita on e-commerce, spending ~£3,161 annually.
Around 93% of UK internet users are expected to do shopping online this year – the highest online shopping penetration rate in Europe.
Automotive
The UK is a global leader, shaping the future of mobility, and leading developments in connected, autonomous, shared and electric transport. The local content of UK-made cars rose from 36% in 2011 to 44% in 2017 and is continuing to increase.
Aerospace
The UK aerospace sector is the second largest in Europe, and third largest globally. Capable of delivering whole-aircraft capability. They have expertise in aerostructures, propulsion, systems, aircraft interiors and through-life services.
Moving Forward
Nexus is ready to help your company to do business with the United Kingdom and make your operations in North America more agile. Our team of experts designs integral supply chain solutions that are able to export your products to the United Kingdom in the most timely, cost-efficient, and secure way through any one of Mexico’s and the US’s air and sea ports of entry.
Furthermore, Nexus consultants are the ideal partners for British companies in North America - whether you are seeking to improve your operations, expand existing operations, or are interested in establishing a presence for the first time.
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Sources: UK Department of International Trade, Atlas of Economic Complexity, Harvard University, UK Foreign & Commonwealth Office, Trading Economics, UK Government