United Kingdom Market Opportunities
Britain is the most affected of the major European economies by the pandemic. It also recorded the worst decline of the G7 countries. UK GDP fell by 9.9% in 2020, the worst result since 1709. The services sector shrank by 8.9% in 2020, manufacturing by 8.6%, construction by 12.5% and agriculture by 9.4%.
The government deficit could be as high as £35billion in the 2020-21 financial year. The total national debt as of February 2021 reached a value of 2.131 billion. GBP (97.5% of GDP), the most since 1962.
Britain is suffering from an increase in unemployment due to covid-19, the young population is particularly affected. The government focuses on innovation, green technologies and infrastructure to support the economy. The pandemic has brought an emphasis on digitization, distance learning and work, which is also reflected in trends in retail and services.
Thanks to the massive vaccination campaign, a full return to normal economic activity is expected from June 2021. However, programs to support the population and businesses continue, the government has introduced state guarantees for business loans up to £10 million per loan, business premises taxes are waived, the state pays 80% of the salary for employees who had to stay at home due to the measures, etc.
The total cost of helping the economy with the consequences of the pandemic will rise to £407 billion in the period 2020-2022. Government programs to support jobs and investment will cost £65bn over the next two years. Government spending is now focused on mitigating the effects of covid-19 and supporting the economy.
The country’s recovery strategy is carried out in the spirit of investment instead of savings. The ambition is to transform Britain into a “scientific superpower”, where the main focus is on innovation, R&D and solving climate challenges.
Post-COVID-19 opportunities for foreign exporters
Transport industry and infrastructure
In autumn 2020, the government published both a ten-point Green Plan, which focuses on achieving Britain’s carbon neutrality by 2050, and a national infrastructure strategy.
The Green Plan includes a ban on the sale of cars with combustion engines from 2030 (some hybrids and vans will be sold until 2035), large cities across England are planning or already implementing low-emission zones where only the most environmentally friendly cars are allowed to enter.
According to allcountrylist, the National Infrastructure Strategy focuses on projects to build a modern and sustainable infrastructure that combines innovative technologies with an efficient transport network. Specifically, for this year and the following year 2022, investments in infrastructure in the amount of GBP 27 billion are set. Furthermore, over 1 billion GBP will be invested in the construction of the infrastructure of electric charging stations with an emphasis on the expansion of electromobility.
The restoration and construction of the road network and the restoration of the railway network will also continue. An investment of 17.5 billion GBP is intended for it within 5 years. The development of key transport arteries, such as the A66 motorway, and the construction of rural road networks and their further connectivity across the country, also remain a priority.
Britain’s main goal is to achieve carbon neutrality by 2050, which is to be achieved through two main routes – through renewables and nuclear and industrial decarbonisation. Climate protection and energy efficiency permeate all sectors. The strategy is outlined in the Energy White Paper. The material follows on from the government’s new £1bn industrial decarbonisation strategy and the government’s £12bn green industrial revolution plan.
By 2025, all lignite power plants must cease operation, and of the existing nuclear blocks, 7 should cease operation by 2030 and only one nuclear power plant will remain operational. By 2030, new sources will need to be found for a quarter of Britain’s energy, with nuclear and renewables playing a major role. The government expects renewable energy sources to produce 65% of electricity by 2030.
Opportunities for Czech companies can be found in the future decommissioning of decommissioned power plants, as well as in the construction of new facilities and in programs for the management of nuclear waste. The Nuclear Decommissioning Authority (NDA) currently lists 17 plants to be decommissioned by 2040.
The construction of the Hinkley Point C nuclear source continues and two more nuclear units (Sizewell C, Bradwell B) are planned. The government is investing £2 billion in developing a new generation of 16 small modular nuclear reactors (SMRs), led by a consortium led by Rolls-Royce, Laing O’Rourke and Atkins.
In addition to nuclear energy, Britain focuses mainly on wind energy (from off-shore wind farms). Britain wants to become a leader in green energy and wind farms to generate up to 40 GW by 2030. The government is investing £160 million to build the next generation of turbines, including floating wind farms capable of delivering 1 GW of power by 2030.
As part of the clean energy transition, the UK government is investing in energy storage technologies (battery storage, pumped storage) and carbon capture and storage. By 2030, it aims to capture up to 10 megatons of CO 2. For now, it has announced an investment of £1 billion with the possibility of future increases.
At the same time, the demand for centralized systems connecting power plants to factories and other technologies to maintain the stability of the power grid will also grow. As up to 30% of all carbon emissions in Britain come from heating buildings, the government also plans to ban the use of fossil fuels for heating new residential homes (ie including natural gas boilers) from 2025, creating opportunities for suppliers of alternative solutions.
The government is considering, for example, hydrogen for household heating. The UK market is also open to innovative and experimental waste-to-energy technologies (for example ORC-type technologies for low-temperature waste-to-fuel transformation). The government has also allocated £1bn for home insulation.
Emphasis will also be placed on energy-saving/heat/cooling solutions, for example cogeneration units, heat pumps, heat exchangers or energy-saving cooling technology. Opportunities for supplies of Czech systems and components therefore represent, for example, both specialized engineering supplies and comprehensive solutions, batteries, cells, converters, inverters and cables; furthermore, especially components for the energy dimension of so-called smart energy, including smart homes and smart cities. There could also be an opportunity for pumped hydroelectric power plants used to cover energy peaks.
Already in the acute phase of the pandemic, there was a huge demand for digital and online solutions enabling services to be provided while maintaining physical distances, but also, for example, remote functioning of work teams (home offices) or distance learning. And this trend will continue, many companies have already announced a permanent or hybrid model of working from home.
Online shopping experienced a dramatic increase in 2020, a return to the pre-crisis format of shopping is only partially expected. Demand will continue to grow for platforms and solutions for e-commerce, the gaming industry, augmented and virtual reality, digital marketing, educational technology, as well as healthcare technology, where digital platforms directly connect doctors and patients.
The opportunities will therefore be, among other things, in innovative, interactive, personalized, artificial intelligence-based solutions for e-commerce. The use of blockchain technologies or the almost full automation of some industries is also expected to grow. The development of innovations and technologies will thus lead to the development of other sectors and further innovations within them. Great Britain has the ambition to become the innovation center of Europe.
In terms of physical infrastructure for connectivity, the government intends to ensure that the infrastructure is developed so that every household has the option of wired gigabit broadband by 2025. Currently, 4 million households have such an option and a further 26 million still need to upgrade their connections.
Emphasis is also placed on the construction of 5G networks, which will serve as the basis for the connectivity of autonomous vehicles or the Internet of Things (IoT). The Government has currently pledged £5bn to bring fast fiber connections to rural areas.
Innovation will also play a vital role in the financial sector, especially in the areas of financial inclusion, financing of small and medium-sized enterprises and the digital transformation of the financial services sector. Innovations in this sector will also be able to benefit from government support, for example a fund of £1.25 billion has already been created.
The construction industry is slowly recovering after the first wave of the covid-19 pandemic in the UK. It offers opportunities to Czech construction companies and suppliers of building materials. The demand for modern building solutions, for example modular construction, is growing. At the same time, the demand for companies that focus on innovative and environmentally sustainable materials and constructions from them is growing.
By 2021, £1bn will be set aside to insulate homes and public buildings, using existing ‘green home’ subsidies and the public sector decarbonisation scheme.
The demand for solutions supporting physical distancing (social distancing) in public spaces, in means of transport, but also in workplaces and restaurants is still current. The government has promised a £5 billion package to support cycling and walking, which will now be “at the heart of the government’s transport policy”.
City councils make modifications to public space in order to maintain physical distances, including widening sidewalks and promoting cycling or expanding the capacity of restaurant gardens. Beyond the support of cycling, however, the largest infrastructure projects will also continue, from which the government promises help in restarting the economy – already during the covid-19 crisis, for example, the government decided to continue preparations and start the construction of the long-awaited high-speed railway to the north of England, the so-called HS2 project.
Healthcare and pharmaceutical industry
The health sector (National Health Service, NHS) has long been one of the government’s declared priorities. The NHS urgently needs, first of all, to implement projects for the renewal of a number of hospitals (both construction and, above all, equipment), the deficit of maintenance work at hospitals amounts to approximately billion GBP. However, the strategy also includes the construction of up to 40 new hospitals (£billion), hospital wards, intensive care units and operating theatres, to improve inadequate psychiatric clinic equipment.
As part of the modernization, the outdated computer infrastructure should be renewed and the equipment modernized and supplemented. British hospitals have less equipment per capita compared to OECD countries, for example 3x less equipment for magnetic resonance or computed tomography than Germany. Already in 2019, the British government announced the allocation of £billion for the construction, maintenance and purchase of new equipment for the NHS in England, in particular magnetic resonance imaging, computed tomography and mammography.
There is also a plan to modernize cancer diagnostics in the form of funding for 300 new diagnostic equipment in 78 hospitals across England. Digitalization of health care is also a trend, there is a demand for platforms that connect doctors with patients.
The healthcare sector, just like in the Czech Republic, in Britain suffers from a long-term shortage of medical personnel. Scotland, Wales and Northern Ireland have their own health systems to receive their own budgets, but the trend is similar.
Agricultural and food industry
The trend is an ever-increasing demand for healthy foods, bio-quality foods, plant-based/vegan products and alternatives to animal products, or for fitness products such as protein supplements. Already in March 2019, sales of vegan products rose by 90% year-on-year. Sales of bio-quality goods rose by 12.6% year-on-year. Online sales, which are divided among a number of e-shops without clear leaders, are growing significantly.