Great Britain Shares

Economy and politics

The United Kingdom (UK) consists of several islands divided into four parts: England, Wales, Scotland and Northern Ireland. England, and especially the capital London, is the economically largest region.

The UK is the second largest economy in Europe with a GDP of around $2,700 billion in 2020, but the national currency of the UK is the British pound, abbreviated as GBP. The United Kingdom is considered one of the most economically free countries in the world. We investors benefit from the low level of regulation in the UK.

Companies in the UK pay low taxes on their profits and you don't have to pay withholding tax on dividends either. As an investor, you therefore only pay 25% tax in Germany on your dividends. With such great corporate conditions, it is little wonder that many companies have relocated their headquarters to the UK and that there are very many shareholders among the population here. Around one in four British people hold shares.

However, there are also challenges in the United Kingdom. In 2020, the United Kingdom left the European Union to become more independent of EU economic decisions. For investors, this can be an opportunity, but also a risk. After all, the UK's most important trading partner is the EU.

As the UK is an island, they are also significantly dependent on imports from the EU. Here, investors must hope for a fair trade agreement between the two economic areas. This will be very interesting in the coming years and investors should always keep an eye on the "island".

The largest companies and the most important sectors

The economy of the United Kingdom is broadly diversified. The most important sector for the UK economy is the financial sector. However, everything is represented from the sectors of finance, raw materials to health and consumer goods.

Another British speciality is companies focused on basic materials and energy. The major oil producers BP and Royal Dutch Shell as well as the mining companies Rio Tinto and BHP are based in the UK. They thus contribute significantly to economic output.

Headquarters of the largest companies

The largest companies, led by HSBC, Royal Dutch Shell, BP and GlaxoSmithKline (GSK), through AstraZeneca, Unilever and Diageo, as well as British American Tobacco (BAT), are known throughout the world, and especially in Europe.

These companies are headquartered in Cambridge (AstraZeneca), Brentford (GSK) and London. The non-cyclical consumer sector is also quite dominant in the UK. The companies Unilever, Diageo and British American Tobacco are also headquartered in London.

Many financial companies are also headquartered in London and are active throughout Europe from there. The low regulation of the British financial market helps companies like HSBC or Barclays. It can be seen that London is very popular as a company headquarters.

The largest and most important trading centers

The most important index in the United Kingdom is the FTSE (Financial Times Stock Exchange) 100 benchmark index, which is launched by the London Stock Exchange (LSE). This index measures the returns of the 100 largest companies in the United Kingdom. It is widely recognized as the benchmark index of the UK stock market.

The FTSE is calculated from the shares of the 100 largest companies by market capitalization on the London Stock Exchange and is a capitalization-weighted index in which larger companies are weighted more heavily in the index. It accounts for around 70% of the total market capitalization of companies listed on the LSE.

Price development of the indices

The FTSE 100 Index was published for the first time on January 3, 1984 with a base value of 1,000 points and calculated back to 1969. On March 4, 1987, the index closed above the 2,000-point mark for the first time. Currently, the index stands at over 7,500 points.