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The Impact of the UK's Political Environment on Foreign Business Operations and Challenges in Regional Trading

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Introduction - Navigating Political Risk Factors for International Business in the UK

A group of political factors has been involved in the political environment of the UK such as trade restriction, labor law, and many more. The UK's political environment has impacted foreign business operations. In this research, the UK has faced challenges and competition in regional trading that has to be discussed. In order to join Trans pacific UK has started negotiations where 11 nations have joined. The European Union (Eu) is the regional trading bloc.

Section 1: internal political environment of the UK impacts foreign businesses operation

As per Akpan et al. (2020), The UK's political environment has depended on the government laws and decisions that influence foreign business. UK governments have new rules and regulations that need to be maintained where it is quite difficult for the other country to do business with foreigners. However, the UK's industries are feeling safe because of legislation that comes from the UK's government. Moreover, the UK has political risks such as terrorism, labor strikes that make their internal political environment difficult. Their marketing environment has changed through the government’s power that makes an impact on their foreign business. Corporation tax has been raised through the UK government which makes an impact on UK’s business growth that affects foreign business. Moreover, the business rates have increased an impact on the UK firm’s trade.

With the opinion of Kim et al. (2018), in some areas the UK government has faced some problems such as climate change. In a report in 2020, 72.63% have their confidence interval that makes their country safer. Government has built many infrastructures 71 airports, 41 important ports that make foreign business more sustainable. In many policy sectors in the UK the government has created instability that can easily plan business goals. The political environment of the UK has a negative impact such as the FDIeffect of Brexit.

The UK government has focused on traffic, efficiency, and energy in order to enhance subsidies. The UK government helps their domestic industry in order to build their relationship. The UK government has powerful national security that increases the popularity that helps them to trade with other countries. The UK government has good relationships with many countries such as the USA, India, Japan and many more. With the help of these countries, the UK's business is growing and they can buy and sell products easily. Moreover, in the pandemic of covid-19 UK government has announced lockdown and their economic growth breaks down. 

Issues and challenges for foreign businesses in the UK

As per Ghauri et al. (2021), the UK is known as one of the leading businesses and they have ranked 8th in business competition worldwide. However, the UK has faced some challenges for foregin business such as Brexit, construction permits, electricity, credit and many more.


The covid-19 pandemic has made their business so challenging that at that time there was no way to change the business in the UK because at that time they had limited trade, labor shortage and many more barriers (Kim et al. 2020).At that time the UK was going forward with providing many masks and opportunities to their business employees. Their business is much more dependent on government regulations and rules. In order to find balance in their country, it is quite difficult for them to update their business because due to the pandemic they are unable to find a trading partner.


In order to better their foreign business resources are the essential things where their economy depends. The UK needs a highly skilled workforce because due to this their future cannot move up.

Paying taxes

Their tax system is not easy due to their legal system. In order to complete tax 110 hours every year it takes.

Section 2: Challenges and competition UK faces to trade with a regional trading bloc


As per Buckleyet al. (2018), In order to trade with Eu, the UK has faced some challenges such as an economic crisis, customs union, and free trade areas. The UK needs to look at free trade places where they can eliminate traffic. In order to trade with close countries, they have no advantages in trade because of high prices, and decreased export potential. Moreover, the low development growth can make their trade in the lower competition (Buckley et al. 2021). The UK has trade with the integrated bloc EU because regulation and free trade is involved in the Eu. In order to free trade, the UK’s national industry can find losses.

As per Kim and stuckler (2018), external traffic is in a custom region where the UK has followed on the import traffic. In the UK goods travel from different countries and they have no option to check the goods because most of the time import traffic is similar. Moreover, the UK has faced disadvantages with trading with customs unions such as the UK being unable with their trade deals (Buckley et al. 2018). It has been observed that trade deals are sometimes complicated. As an example, the EEC customs union has been joined through the UK and it has been observed that UK's needs import traffic. This can cause the loss of their business because European countries can demand to switch their business.

On the other hand, the eurozone can challenge their trade because with trade with the eurozone the UK’s economic performance can decrease and their relationship with different countries can close.

Some other challenges UK has faced to trade such as lack of leadership. In order to trade with regional trading, they need ability. In order to globalization, the UK has no definite process and leaders where they can reduce their trading issues. Another challenge is power distribution because China, the UK, India, Russia, USA are all are powerful nations however; they need support from other countries without this support synchronization can be lacking through them.

Section 3: Steps and initiatives UK has taken to overcome challenges and competition issues

UK can focus on traffic removal because it provides their consumers some advantages such as the low price that can overcome UK's trade issues. Through traffic removal, the UK's industry can create opportunities where they can easily create trade for their exporters. Moreover, in order to increased specialization, the UK can enhance their trade that can increase their economical profit. The UK can make an approach such as low average cost in their business trade that can increase their advantages in economics scale. Besides, that UK can be involved in the catch-up effects that help them to enhance their trade opportunity (Aragon-Correa et al. 2020). In addition their inward investment in their trade can help them to join in a rich trade block. The order to reduce challenges UK can choose a gravity theory that can help them to trade with close proximity.

Close proximity helps the UK along with many countries because their chance of lower transport can reduce that can makes them to trade easily with regional trading bloc. Through the use of gravity theory, UK can create similar culture such as other countries that can enhance their financial growth. In worldwide trade, the UK can trade with smaller countries. For their consumers, the UK can choose an approach such as removal of traffic that makes them enhance competition. In order to stay competitive UK government can reduce the cost that helps their domestic firms.

The UK can reduce their issue with the assist of fiscal policy because In order to impact their economy their government can help them to trade with regional trading blocs through taxation and spending. Their government can take a where they can promote their sustainable development to trade. In order to trade their negative impact can reduce through the bonding with European Union framework where they can deal with the best. Besides that, the UK's industry can improve its supply chain which can possible through its bottom-up approach. Through reducing, their transformation cost the UK can develop their infrastructure where they can make an agreement on trade. Through investment, norms they can increase their regional trade. Moreover, the country can able to reach good balance through exchange tares policy.


Throughout this study political government of the UK has impacted r foreign business. It has been observed that their country's economy is not only dependent on their increasing trade. Uk has faced challenges and the researcher has given solutions to reducing their issue. The building blocks have been helped through trade agreements. In this study, the researcher has discussed the positive and negative impacts on the UK's government. The UK has taken steps such as increased revenue, good risk management, export financing for reducing their issue to trading better with the regional trading bloc. Through trade, the UK can conduct goods and services with other countries to stay in the competition in the global.

 Reference list

Akpan, I. J., Udoh, E. A. P., & Adebisi, B. (2020). Small business awareness and adoption of state-of-the-art technologies in emerging and developing markets, and lessons from the COVID-19 pandemic. Journal of Small Business & Entrepreneurship, 1-18.

Åman, L., Sippel, A., & Heidenreich, P. L. (2021). Artificial Intelligence in Internal Business Processes: Mixed-Method Approach to Identify Use-Cases and Evaluate its Value Addition.

Aragon-Correa, J. A., Marcus, A. A., & Vogel, D. (2020). The effects of mandatory and voluntary regulatory pressures on firms’ environmental strategies: A review and recommendations for future research. Academy of Management Annals, 14(1), 339-365.

Buckley, P. J., Chen, L., Clegg, L. J., & Voss, H. (2018). Risk propensity in the foreign direct investment location decision of emerging multinationals. Journal of International Business Studies, 49(2), 153-171. DOI: https://doi.org/10.1057/s41267-017-0126-4.

Ghauri, P., Strange, R., & Cooke, F. L. (2021). Research on international business: The new realities. International Business Review, 30(2), 101794. https://doi.org/10.1016/j.ibusrev.2021.101794

Kim, D., Choi, K., Jean, R. “., & Cadogan, J. (2020). Ethno-national ties and international business opportunity exploitation: The role of environmental factors. International Business Review, 29(4), 101526.https://doi.org/10.1016/j.ibusrev.2018.08.001.

McKee, M., & Stuckler, D. (2018). Revisiting the corporate and commercial determinants of health. American journal of public health, 108(9), 1167-1170. DOI: https://doi.org/10.2105/AJPH.2018.304510.

Van Barneveld, K., Quinlan, M., Kriesler, P., Junor, A., Baum, F., Chowdhury, A., ... & Rainnie, A. (2020). The COVID-19 pandemic: Lessons on building more equal and sustainable societies. The economic and labour relations review, 31(2), 133-157. DOI: https://doi.org/10.1177%2F1035304620927107.

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