UK economy and foreign trade. Main features of the British economy. Shopping in England: outlets, shopping centers, markets and shops in Great Britain British market

Figures 8.6-8.10 make it possible to visually compare the dynamics of the American and British stock markets from 1985 to the beginning of 1990. Although the graphs do not completely coincide, the strong correlation between them is beyond doubt. The need to monitor both markets is explained by the close historical ties between them. One of the benefits of cross-market analysis is that the outlook for one market can often be clarified by examining the charts of its related market. As mentioned above, the UK market usually peaks before the US market. Figure 8.6 shows three such cases: the peaks of early 1986, late 1987, and late 1989. (In relatively recent history, the US share market peaks of 1929, 1956, 1961, 1966, 1972 and 1976 were also preceded by UK share market peaks.)

Figure 8.7 compares the British and American markets throughout 1986. The peak in the British market in the spring of 1986 and the subsequent correction coincided with a period of consolidation in the American market. The breakthrough of an important downward trend line in the British market in December was a sure signal of the imminent resumption of the upward trend in the American market.

As Figure 8.8 shows, the UK market peaked in July 1987, a month before the US market topped. In the fourth quarter of the same year, the UK market formed a double bottom reversal pattern, which became an early signal of the end of the collapse of global equity markets. Figure 8.9 shows the consolidation of both markets ahead of the resumption of bull trends in January 1989.

Figure 8.10 demonstrates the value of cross-market comparisons and variance analysis. British Financial Times-London Stock Exchange 100-share index(Financial Times Stock Exchange 100 share index, FTSE) peaked in mid-September 1989 and began to fall rapidly. And American Dow Jones Industrial Average(DJIA) set a new high in early October. Any technical analyst who discovered such a serious discrepancy between these major indices would immediately suspect something was wrong, and the mini-crisis on the New York Stock Exchange on October 13, 1989 would not have come as a surprise to him. Figure 8.10 shows that the rise in the US market, which lasted until the end of 1989, also began with a break of the downward trend line in the British market. The end of the decade saw peaks in both markets.

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AMERICAN AND JAPANESE STOCK MARKETS

Figures 8.11-8.15 compare the American one (presented Dow Jones Industrial Average) and Japanese (represented by Nikkei index 2 2 5) markets. The correlation between these markets is not as strong as between the US and UK markets. However, their influence on each other is undeniable. Figure 8.11 illustrates the global bull run of 1985-89 using two of the world's largest equity markets as examples.

In August-October 1986, the Japanese market experienced a corrective decline, which coincided with the consolidation of the US market (Figure 8.12). In early November of the same year, the Nikkei 225 index broke through the downward trend line and continued to rise. An attentive US analyst might view this bullish signal in the Japanese market as an early warning of the impending strengthening of the US stock market.

We have already said that the American market has reached highest point in August 1987, that is, two months before the peak in the Japanese market. However, as Figure 8.13 shows, the real collapse of global equity markets began only in October, after a bearish reversal in the Japanese market. The same chart shows the Nikkei 225 index's double bottom ending with a bullish breakout in February

1988. This important buy signal in the Japanese market proved to be the first and surprisingly accurate sign of a resumption of the upward trend in world markets since the crash of late 1987. Figure 8.14 shows that the bullish breakout in the Japanese stock market in November 1988 preceded the similar breakout in the American market by almost two months.

Figure 8.15 compares the dynamics of the American and Japanese markets in

1989 Both markets peaked in October and then stabilized. This month's events demonstrate how much attention worldwide has become to global market connections. On Friday, October 13, the Dow Jones Industrial Average fell nearly 200 points. On Saturday and Sunday, the whole world waited tensely for the Japanese market to open on Monday morning (in New York it was Sunday evening). Everyone feared that if the weakening of the Japanese market continued, it could trigger panic selling in all other markets. Fortunately, the Japanese market has stabilized. The ensuing growth brought final calm and contributed to a rise in global markets that lasted until the end of the year.

In mid-November 1989, the Japanese market approached a major obstacle - the high set two months earlier. Failure to overcome this important resistance level would mean possible weakening of equity markets globally. Figure 8.15 shows that the Nikkei 225's bullish breakout to new highs in late November coincided exactly with the breakout higher at

American market, as a result of which the Dow Jones Industrial Average again reached the level of its October peak. Thus, the strength of the Japanese market, which successfully broke through the resistance level, enabled the global bullish trend to continue for some time.

While Japanese stocks resumed their rise, other Japanese market sectors were sending distress signals at the end of 1989. The yen continued to weaken, domestic inflation rose (mainly due to a surge in oil prices), interest rates rose, and Japanese bond prices fell. From the point of view of intermarket analysis, a very dangerous situation was developing for the Japanese stock market.

Figure 8.16 divides the Japanese markets into four sectors of interest for intermarket analysis: currencies, commodities, bonds, and stocks. The top left chart shows the fall in the value of the yen against the US dollar in early 1990. The weakness of the yen caused inflation to skyrocket in the country. The situation was further aggravated by the sharp rise in oil prices in late 1989 (bottom left chart), which increased Japanese inflation expectations. In order to curb inflation and stabilize the yen, interest rates were raised. (Japan's central bank raised its policy rate three times in succession in an attempt to trigger the three-step-and-fall mechanism described in Chapter 4). The bottom right chart shows the collapse in Japanese bond prices. This market crash

bonds in January 1990 began to exert bearish pressure on the Japanese stock market (top right chart).

During eight of the first eleven trading days of the new decade, the Japanese stock market fell a total of 5%. In just over two weeks, the Nikkei 225 index has lost about a third of last year's gains. The 10-year government bond yield reached its highest level since November 1985. Inflation rose to 3%, which is low by American standards but higher than the Japanese government's target. 2%. In addition, over the previous three months, the Japanese ye not only lost its position against the dollar, but also fell by 15% against the German mark. The combination of all these bearish intermarket factors weighed heavily on the Japanese market. On Friday, January 12, the Nikkei 225 index sank by 653 points, recording the eighth-largest drop in its history. A similar bearish performance in the Tokyo stock market, triggered mainly by the collapse of the Japanese bond market, caused bearish echoes in markets around the world (Figure 8.17).

On the same day in London, the FTSE -100 (pronounced footsie) fell by 37.8 points, its biggest drop in two months, and in New York, the Dow Jones Industrial Average fell 71 points. However, the problems of the New York market were not limited to the decline of foreign markets that Friday morning. The output price index for December was 0.7%, bringing wholesale price inflation for 1989 to 4.8%, the highest level since 1981. The main culprit for this surge in US inflation was the sharp increase in oil prices in the previous month. Thus, at the turn of the nineties, global markets faced two major challenges: rising inflation and rising interest rates - two potentially bearish factors for global equity markets.

INTRODUCTION

Securities exist as a special product that must have its own market with its own organization and rules for operating on it. However, goods sold on the securities market are a special kind of goods, since securities are only title to property, documents giving the right to income, but not real capital. The isolation of the securities market is determined precisely by this quality, and the market is characterized for the most part by the free and easily accessible transfer of securities from one owner to another.

The accumulation of monetary capital plays an important role in a market economy. The process of accumulation of monetary capital itself is immediately preceded by the stage of its production. After money capital has been created or produced, it must be divided into parts, one of which is again sent to production, and the other is temporarily released. The latter, as a rule, represents the consolidated funds of enterprises and corporations, accumulated in the loan capital market by financial institutions and the securities market. All this explains the relevance of the chosen topic.

The purpose of this work is to consider a share as a type of security.

To achieve this goal, it is necessary to solve the following tasks:

Study the foreign stock market using the example of the UK stock market;

Give the concept of a share;

Describe the types of shares;

Analyze the main directions of development of the securities market in the Russian Federation.

Research methods: comparison method, relative and average values, tabular and graphical presentation of data, grouping, heuristic methods.

The methodological basis of the research for writing this work was provided by regulatory documents, articles from periodicals, and educational literature.

The sources for writing this project were the works of Berdnikova T.B., Burenin A.N., Vavulsky I., Vidyapina V.I., Dobrynina A.I., Drobozina L.A. , Zhukova E.F., Kilyachkova A.A., Chaldaeva L.A. and etc.

UK SHARE MARKET

General characteristics of the UK share market

The British share market is the third largest in the world after the US and Japanese markets. Since the Industrial Revolution in Europe in the early 19th century, the UK has had a long history of developing joint stock companies. Despite this, only about 5° of adults are direct owners of securities, even after a series of government privatization programs in the 1980s and 90s. However, the amount of savings held by insurance companies, private pension funds and fund management groups has increased significantly as this conservative population has begun to use surplus personal income to secure their long-term future.

Companies wishing to issue shares for trading on the market must comply with the Companies Act and its requirements for financial statements which are the responsibility of the Department of Trade and Industry (DTI) rather than the main securities regulator, the Securities and Investments Board (SIB). In the UK market there is only one “Authorized Listing Authority” (in EU Directive terminology), namely the London Stock Exchange, which in turn sets strict initial and ongoing disclosure rules for such companies. As in the US, exchanges do not have a monopoly on trading, but the volume of trading in the over-the-counter market is not particularly large. As in many other countries, the UK has a second-tier market for shares that do not meet the strict listing requirements of the Stock Exchange; This market is called the Alternative Investment Market (AIM).

Most trading is done over the telephone between exchange members, but it should be noted that the UK system relies heavily on the participation of market makers and is therefore essentially a quote-based system. The new Tradepoint exchange, an electronic trading system backed by institutional investors, was created in the early 1990s but accounts for less than 1% of trading volume. Unlike the American market, brokers are not required to make trades at the “best” price of all exchanges, but only those exchanges of which the broker is a member.

Market regulation is based on so-called self-regulation; The introduction of new rules is preceded by a significant amount of consultation, although conditions are still almost as strict as in US markets. The most important aspects are the handling of client funds and the standards and quality of investment advice. Berdnikova T.B. Securities market and stock exchange business: Textbook. - M.:INFRA-M, 2010. - p. 174-175

The UK securities market has a long history. A civilized securities market has been formed in Great Britain. The transformations of recent decades also show that the UK government is seeking to create an increasingly strong legislative basis for the functioning of the securities market and a gradual transition from a situation where the stock market is regulated by tradition to a situation where all decisions are made on the basis of rigid legislation. The specificity of stock market regulation in the UK is that the state participates in it only through the publication of laws and the establishment of a regulatory framework.

History of development and features of the UK securities market

In the 16th century, a real economic basis for the emergence of a securities market began to emerge in England. With the expansion of navigation and trade during the reign of Elizabeth, trading companies began to be founded in England, which at first were only temporary partnerships of merchants. The growth of merchant capital in England caused the emergence of banks as lenders to various types of companies.

In 1694, the British government was forced to borrow 1.2 million pounds sterling from local financiers to cover the costs of the war with France. In return, the government gave creditors first right to open a bank, which later became the Bank of England.

The Bank of England began as a joint stock company committed to making loans to the government, but these loans each time had to be approved by Parliament. It was from these times that the tradition of subordinating central banks to representative authorities began. Following the example of England, the Scottish Joint Stock Bank was created in 1695. As the stock market developed, banks began to face a strong competitor on it - the stock exchange. The first of these was the London Stock Exchange. It was officially founded in July 1773 under the name Stock Exchange. The London Stock Exchange owes its existence to trading in shares, not government securities. Nevertheless, it is interesting to note the fact that in England the first exchange-traded securities were not only shares of overseas trading companies, but also shares of the Bank of England.

By the end of the 18th century, a developed securities market was being formed in England. The market is dominated by shares of private companies that have successfully withstood government competition. The stock exchange is finally separated from the banks.

The English securities market has traditionally been one of the main elements of the country's credit and financial system. Before the First World War, it was the leader in terms of monetary turnover, then losing to the United States. Japan is a powerful competitor to England. The denationalization of the public sector of the economy after the Second World War, especially in the 80s and 90s, contributed to the development of the modern stock market, in particular the stock market capitalization of the private sector of the country's economy.

The share of the English stock market in 2000 in the total volume of global securities turnover was 6%, i.e. third place in the world; USA - 46%, and in Japan - 15%. The country's share in the global total debt on debt securities reached 4%. Debt securities accounted for 32% of the total value turnover of the country's stock market, and equities accounted for 68%.

In terms of capitalization (the total market value of all issued shares of regularly quoted companies) and securities turnover, the UK stock market is firmly ranked third in the world after the USA and Japan, and in terms of the number of international transactions with securities it has no equal.

Unlike most continental European countries, the UK securities market is characterized by the independence of banking from the securities sector. The UK, as well as the USA, Canada, and Australia, is characterized by the Anglo-Saxon stock market model. This model has the following features: 1. The main source of investment is the stock market.

2. The stock market becomes the largest segment of the securities market; debt instruments begin to have a subordinate character - the equity character of the stock market.

3. Financial institutions are becoming more specialized.

4. In the ownership structure, the share of retail investors is higher than the share of state ownership. There is a high degree of fragmentation in ownership of share capital.

5. High degree of market openness, fewer restrictions on the movement of capital, on currency convertibility, freer access for foreign issuers, investors and financial intermediaries.

The structure of the UK securities market includes primary and secondary markets, as well as many markets for the types of stock instruments and transactions, which are much more diverse here than in other countries.

The primary placement of government bonds is carried out both through public subscription (auction method) and closed offer (tender). Corporate bonds are placed mainly in the form of a tender. Initial public offerings are regulated by the Companies Act. The placement of financial instruments is widely developed in the primary market.

A peculiarity of the issue of securities in the UK is the preferential issue of registered shares and bonds. Secondary trading of government bonds takes place on the London Stock Exchange, now merged with the Deutsche Bourse. Small investors can conduct minor transactions in these instruments through the country's postal system.

Shares are resold mainly on stock exchanges during forward transactions. Shares of foreign origin that are widely circulated in the country are stored in special depositories of authorized credit institutions. The turnover volume of corporate bonds is significantly lower here; transactions with corporate and government bonds are accompanied by cash transactions.

Exchange trading in derivatives and financial instruments is widely developed in the country. A significant number of foreign securities are traded on the London Stock Exchange. There is also an alternative stock market that is insignificant in terms of turnover. The exchange uses electronic automated system making transactions. Since 1996, the automated computer system Tradepoint, which has the status of a stock exchange, has been operating in London.

Financial instruments traded on the UK securities market

Bond market. In the last decade, the British bond market has been developing rapidly, successfully competing with the American market and the Eurobond market. Currently, the share of debt instruments issued by the UK Treasury accounts for 5% of the global market for representative bonds. Given that the UK has the highest AAA credit rating, British securities are highly trusted and in demand in international financial markets.

The origins of UK government debt go back a long way. In 1694, the British government was forced to borrow 1.2 million pounds sterling from local financiers to cover the costs of the war with France. In exchange, the government gave creditors first right to open a bank, which later became the Bank of England.

To regulate and cover debt, the Ministry of Finance issues two types of securities: bonds (gilts) and treasury bills (Treasury bills). Until 1998, the Bank of England dealt with issues of securities issue. In April 1998, by government decision, this function was transferred to the newly created Debt Management Office (DMO), which is part of the UK Treasury.

Bonds are the most common, accounting for 95% of all debt issued by DMOs. A distinctive feature of bonds is their very high reliability. This quality, in particular, is inherent in the official name of the bond - Guilt-edged stock (a security with a golden edge, i.e., first-class, guaranteed).

According to the terms of circulation, bonds in England are divided into short-term (less than 5 years to maturity), medium-term (from 5 to 15 years), long-term (more than 15 years to maturity). The last segment also includes perpetual government bonds.

Convertible bonds are also issued - short-term bonds that have the right to be converted into long-term ones. The assignment of bonds to a particular segment is carried out according to the time actually remaining until the maturity of this security. This is the peculiarity of the classification of UK government bonds on a temporary basis. In the past, this was important for differentiating appropriate taxation. According to their intended purpose, government loans are divided into treasury loans. Financial, military, conversion, consolidated, etc.

Conventional gilts. This is the simplest and most common form of debt. Conventional bonds account for 75% of the government's debt portfolio. The owner of such a bond receives interest payments every six months in the amount of the annual interest rate until the expiration of the security. When the payment is due, he is paid the principal amount. The interest rate is usually set in accordance with the market rate at the time the bond is first issued.

Index-linked gilts. The main difference between indexed bonds and regular bonds is that semi-annual interest payments and the principal amount are indexed according to inflation, which is determined by the Retail Prices Index (RPI). RPI values ​​are published regularly by the UK Statistics Authority. Because indexed bonds eliminate inflation risk, interest rates for this type of security are lower compared to regular bonds. Semi-annual interest payments include two elements: a fixed rate, which depends on the maturity of the bond, and an adjusted rate, which takes into account changes in the Retail Price Index.

Double-dated gilts. For this type of bond, the government sets minimum and maximum maturity dates with two to five years between the dates. The Ministry of Finance can redeem bonds at any time within a specified period of time and must inform investors about this no later than three months before the appointed date. Given that there is uncertainty about the maturity dates, these debt obligations are less liquid compared to ordinary bonds and therefore are less in demand among investors. The volume of double maturity bonds on the market is less than 1%.

Bonds without a maturity date (undated gilts). These bonds do not have a specific maturity date. The date is set by the Ministry of Finance, and the public is informed about it. Bonds without a maturity date are the oldest debt obligations, some of them were issued back in the 19th century. Bonds have low interest rates and are not widely used. Currently, the issue of this type of securities has been discontinued, and only those bonds are in circulation that have not yet matured.

Bonds with tear-off coupons (gilt strips). Strips is an acronym for Separately Traded and Registered Interest and Principal Securities. In other words, a bond consists of two parts: the interest coupon and the bond itself, which contains the face value. This security may exist as a single unit with interest accruing or may be divided into two parts: an interest coupon and a bond. In the latter case, the coupon and the bond are registered as two separate securities that are traded on the stock exchange independently of one another. In this case, interest is not accrued on the bond itself.

British government bonds, like other securities, are actively traded on the stock exchange and their value constantly changes depending on the situation in the financial market. Debt quotes are published in the Financial Times. Bond price changes can also be found on the Department of Debt Management website www.dmo.gov.uk/gilts/f2gilts.htm. The daily reports show two bond prices: the “clean” price, which does not include accrued interest, and the “dirty” price, the market price of gilts that includes the amount of accrued interest. Purchases and sales of securities are usually carried out at a “net” price.

For all bonds, with the exception of perpetual bonds, interest is paid generally twice a year. Interest on perpetual bonds is paid 4 times a year.

In addition to long-term and medium-term bonds, there are several other types of bonds. First of all, these are treasury bills. Treasury bills are short-term marketable securities issued by the British government. The UK Treasury's Debt Management Department currently issues promissory notes with maturities of one, three and six months. They are issued to bearer by the Bank of England on behalf of the government, costing from £5 thousand. and above are intended for legal entities and individuals. Treasury bills do not pay interest. The notes are sold at a discount and the investor is paid the face value of the security upon maturity. Bills of exchange account for about 5% of the British government's debt obligations.

In addition, since 1988, the Bank of England has issued bonds in ECU (now in euros) in order to replenish foreign exchange reserves. These included treasury bills, medium-term treasury notes and bonds. ECU treasury bills were issued for maturities of 1, 3 and 6 months once a month. Treasury notes are for a period of three years, bonds are for 10 years.

Long- and medium-term UK government securities are traditionally called “gold-edged bonds” because they are surrounded by a gold border. Gold-cut bonds are issued in both documentary and paper form.

Local government bonds are not widely issued and are mostly issued for a 1-year term with a fixed interest rate and interest payments biannually. Government bonds are placed on the primary market either through public subscription or a closed offer (tender) by a market maker for gold-edged bonds. Public subscription, in turn, can be carried out through an auction (since 1987) and a tender.

Auction circulation is typical for large bond issues. It is preceded by media reports about the details of the upcoming issue. The auction organizer, the Central Office of Gold Bonds of the Bank of England, accepts competitive and non-competitive bids from participants. The minimum volume of the former is set at £500,000, and for the latter - in the range from 1 to £500,000. Satisfaction of competitive bids occurs at the prices of the applicants, so some of them may not be fully satisfied due to the insufficient number of bonds put up for auction.

Non-competitive bids are satisfied at the weighted average price of previously satisfied competitive bids. Unsold bonds remain in the Bank of England's portfolio. The country also practices reverse auctions, when the Bank of England buys government bonds (mainly from market makers for gold-edged bonds). When tendering, the Bank of England, based on received applications, sets a single selling price for bonds. In this case, some of the applications may also not be fully satisfied. The implementation of the next issues of government securities occurs using modern electronic payment and delivery systems.

Settlement is carried out on a T+1 basis. The Bank of England uses an electronic delivery and payment system called the Central Board of Gold Bonds, and in practice requires funds to arrive before delivery of securities can be made. However, it is still possible to physically deliver certificates in exchange for funds through the banking system. The next day after the completion of the next placement of government bonds, secondary trading in these securities begins. They take place on the London Stock Exchange.

Interest income received on government bonds is subject to income tax on a general basis, which is withheld when paying interest. The income of pension funds and charitable unions, as well as foreign investors, is legally exempt from income tax. In addition, all owners of gold-cut bonds are exempt from the country's capital gains tax.

Stock market. The British share market is the third largest in the world after the US and Japanese markets. Since the Industrial Revolution in Europe in the early 19th century, the UK has had a long history of developing joint stock companies. Despite this, only about 5% of the adult population are direct owners of securities, even after a series of government privatization programs in the 1980s and 90s. However, the amount of savings held by insurance companies, private pension funds and fund management groups has increased significantly as this conservative population has begun to use surplus personal income to secure their long-term future.

Companies wishing to issue shares on the market must comply with the Companies Act 1985/1989 and its financial reporting requirements, which are the responsibility of the Department of Trade and Industry and not the main securities regulator -- Financial Services Council. In the UK market there is only one “Authorized Listing Authority” (in EU Directive terminology), namely the London Stock Exchange, which in turn sets strict initial and ongoing disclosure rules for such companies. As in the US, exchanges do not have a monopoly on trading, but the volume of trading in the over-the-counter market is not particularly large. As in many other countries, the UK has a second-tier market for shares that do not meet the strict listing requirements of the Stock Exchange; such a market is called the Alternative Investment Market.

The market trades ordinary and preferred shares, equity derivatives, and collective investment instruments.

Ordinary shares, as a rule, are registered securities and are necessarily nominated. Their nominal value can be 25, 50, 100 pence, etc. (Rubtsov B.B. Foreign stock markets. - M.: INFRA, 1996. - P. 129.) Each ordinary share gives the owner the right to one vote at the meeting of shareholders; Some issuers establish a decrease in votes as the number of shares increases.

Issued “golden” shares provide certain advantages to their owners; they are intended for company founders and some other categories of holders.

Preferred shares provide certain advantages in terms of priority and stability in the amount of dividends and the right to a share of property upon liquidation of the company. However, with rare exceptions, they do not grant their owner voting rights.

There are 5 main types of preference shares traded on the UK stock market: cumulative, non-cumulative, redeemable or callable, participating and convertible. Unpaid dividends due to various reasons form the company's debt, which must be repaid as a matter of priority. Non-cumulative shares allow their owners to receive preferentially stable dividends only if the company receives net profit.

Redeemable (revocable) shares can be purchased by the issuer at face value with the payment of premiums, as a rule, within a predetermined period. Participating shares allow holders to earn additional profits. Convertible shares can be converted into common shares at a specified price and within a specified time frame. UK shares settle on the fifth day after trade day (T+5) on a daily execution basis, but there are plans to reduce this schedule to T+3 once the electronic accounting transfer system, CREST, is fully introduced.

Along with shares, English companies issue warrants, that is, medium-term (5-10 years) securities that give their holders the right to purchase shares of the company within a specified time frame and at a certain price; they are often issued simultaneously with corporate bonds to stimulate interest in the latter.

To stimulate the influx of foreign investment, covered warrants with a shortened circulation period have appeared on the country's stock market. They are issued by large investment banks and allow you to purchase shares of other companies. The UK also issues securities similar to shares for collective investment. They are issued by unit trusts and investment trusts. Both of them accumulate funds from a wide range of investors, issuing personalized certificates of contribution of shares. They form and manage portfolios of various types of securities, and distribute the income received among investors.

Unit trusts constantly and unlimitedly, depending on the market situation, carry out additional issue or redemption of their securities. They are managed by trustees (large banks and insurance companies) and are essentially similar to US open-end investment companies.

Investment trusts cannot carry out continuous and unlimited issue (redemption) of their shares, i.e. have a relatively constant amount of authorized capital. The common and preferred shares of such organizations are listed on the stock exchange. They may also issue bonds and other types of securities. Investment trusts are established and managed like other corporations in the country, but their resources are invested only in securities and real estate.

The UK corporate bond market consists of three main categories of equity instruments: secured, unsecured and guaranteed bonds. The emission of the former is ensured by specific types and quantities of company property, the sale of which is prohibited. The issue can also be provided by all assets, the disposal of which has no restrictions. The issue of bonds of the second and third categories is not secured by the assets of the issuers; the reliability of guaranteed bonds is supported by the obligations of third parties.

Corporate bonds have a fixed or floating rate of return and can be converted into shares of the same company. Convertible bonds denominated in US dollars are traded on the European instruments market. Their exchange for shares is possible, as a rule, immediately after issue. Corporate bonds can be coupon (with income paid twice a year), zero-coupon (with a one-time income payment) and discount (sold at a discount to par value). The issue of all bonds is subject to mandatory registration.

English companies issue financial instruments: certificates of deposit, promissory notes and discount bills, etc. The English market is also known as one of the world's leading centers for trading derivatives, namely options and futures contracts. These contracts can be concluded regarding securities quotes, stock index values, exchange rates, as well as for various types of goods. Depending on the subject of the transaction, transactions can be carried out on the London Financial Futures Exchange, on a number of commodity exchanges, etc. The London Clearing House carries out accounting and settlement of these transactions; it can also act as a seller and buyer of derivatives.

UK securities market participants

The trading structure of the government bond market has many similarities with the American market, as many features of the American market were adopted by the UK during the introduction of the Financial Services Act 1986, and changes were also made to the operation of the market in terms of allowing brokers to perform dual functions . Operations with government securities are carried out by the Depository and Clearing Center of the Bank of England. Most trades are done over the phone and through electronic trading systems using market makers called GEMMs (Gold Bond Market Makers).

GEMMs must be authorized by the Bank of England to operate and they are equity divisions and must operate independently of divisions of the same company that deal in other securities. The Bank of England monitors market makers' compliance with capital requirements on a daily basis via a direct computer network. The Bank of England provides them with the advantage that they can buy and sell securities directly to the Bank of England, acting as buyers of last resort. As in the US, interdealer brokers provide anonymous intermediation services, allowing GEMMs to not have to worry about liquidity without having to publicly report large risk positions; although all transactions must be reported to the London Stock Exchange, which still oversees transactions in the government bond market.

Operations on the government securities market are controlled by the London Stock Exchange.

The main participants in secondary trading on the government bond market are market makers for gold-edged bonds, more than half of whom are representatives of foreign financial institutions.

Participants in the secondary market for government bonds include broker-dealer institutions that purchase and sell bonds for their clients through market makers, and can also conduct transactions at their own expense.

The Bank of England records the results of the transactions discussed above in the register.

A small proportion of participants in the secondary market are small investors, mainly individuals. They can buy (including on the primary market) and sell government bonds through the country's postal system for a small fee. These transactions are usually recorded by the Department of National Savings.

Most share trades are done over the telephone between exchange members, but it should be noted that the UK system relies heavily on the participation of market makers and is therefore essentially a quote-based system. The new Trade point exchange, an electronic trading system backed by institutional investors, was created in the early 1990s but accounts for less than 1% of trading volume. Unlike the American market, brokers are not required to make trades at the “best” price of all exchanges, but only those exchanges of which the broker is a member.

Regulation of equity markets is based on so-called self-regulation; The introduction of new rules is preceded by a significant amount of consultation, although conditions are still almost as strict as in US markets. The most important aspects are the handling of client funds and the standards and quality of investment advice. Denmark, Holland and Ireland were the only countries that, together with the UK, fully complied with the requirements of the EU Investment Services and Capital Adequacy Directives by the original deadline of 1 January 1996.

Stock trading makes up a significant proportion of the total UK stock market. The modern UK stock exchange network consists of six stock exchanges, or more precisely (since 1973) regional divisions of the London Stock Exchange, located in London, Birmingham, Manchester, Leeds, Belfast and Glasgow. The leader of stock trading is the London Stock Exchange, which concentrates more than 60% of the value turnover of securities.

Securities of public companies in England are traded inclusive on the stock exchange. Moreover, if in the USA the secondary turnover of securities takes place on the stock exchange, then in the UK the stock exchange is the most important element of the primary market. A significant part of new issues is carried out through the stock exchange. Securities that are not quoted on a stock exchange will not be offered to the public, so the issue of securities is always accompanied by their admission to the stock exchange.

LONDON STOCK EXCHANGE (London Stock Exchange, LSE). One of the largest stock exchanges in Europe and one of the world's most famous securities markets. It was officially founded in July 1773 under the name Stock Exchange, after for a certain period since the reign of King William III it functioned informally in the coffee houses of Jonathan's and Garraway's, in the Royal Exchange building, in the premises of the East India Company , `Hudson Bay Company` and in `New Jonathan`. The "New Jonathan" building eventually turned out to be cramped, and a new building was built near the Bank of England, opened in March 1802. In 1853 it was rebuilt, and the number of members of the exchange increased to two thousand. The increase in the exchange's activities required further expansion, and in 1881 the building was again renovated to accommodate another 1,500 exchange members. The reorganization plan adopted in 1947 provided for a new reconstruction of the exchange premises and its re-equipment.

On 9 February 1970 the Exchange moved from the old building on Throgmorton Street, where it had been located since 1853, to temporary premises pending the late 1972 completion of the 26-storey Exchange Tower, located to the west of the site of the old Exchange .

On February 9, 1970, the Market Information Service began operation: a 22-channel indoor television system transmitting data on the prices of approximately 700 different securities and the activities of more than 200 brokerage and banking houses. An internal telephone communication system between member firms of the exchange was also put into operation. Gone is the old practice, when messengers on a call from a brokerage office rushed to look for a representative of this office in the hall, who in turn sent a “blue button” (messengers who had blue badges) to find out the quotes of the securities the office was interested in to the jobber directly involved in their retail implementation.

Exchange members are divided into brokers and jobbers. According to existing rules, no one can act in both capacities at the same time. They also cannot act as partners. It is not allowed to change one status to another except with at least a month’s notice. A member of the exchange or his spouse cannot simultaneously be a manager or employee of another enterprise. Brokers deal with clients outside of the exchange and fulfill their orders to buy and sell securities through jobbers. The latter are very close in their functions to dealers. They are dealers. They operate in the securities markets for their own account and, unlike the New York Stock Exchange, are not required to prioritize the interests of clients or the public interest. Brokers receive payment for their work in the form of commissions, while jobbers' profit lies in the difference between the purchase and sale prices of securities. They are prohibited from dealing directly with clients.

Business activity on the stock exchange is divided into various markets, each of which has a number of brokers and jobbers specializing in securities of a certain, fairly broad category or class. Each market has its own place on the trading floor of the exchange. A broker intending to buy or sell securities goes to that part of the floor where the relevant market is located and where many jobbers compete with each other, trading certain shares. There is no standard transaction size other than the generally accepted sizes in the market as a whole. Having received an order from his client, the broker, depending on its content, purchases securities from the jobber or sells them to him. The order cannot be executed until the limit price specified by the client, LIMIT, is reached. Upon execution of the order, the broker notifies the client, informing him of the amount due and the payment date.

On the London Stock Exchange, settlements are not made daily, but on so-called settlement days. One of these days occurs in the middle of the month, the second at the end. All operations on transactions concluded in the previous period must be completed on the next settlement day. As on the New York Stock Exchange, some transactions are carried out on a `spot` basis (cash transactions) for immediate delivery. If the client does not intend to complete the transaction on the next settlement day, his broker can arrange for payments to be deferred to the next settlement day. However, for such a delay the client will be charged a price premium.

In May 2000, the London Stock Exchange and the German Stock Exchange (Frankfurt am Main) merged and the international Anglo-German Exchange “IX” was formed with the status of a public corporation. The basis for transactions here is the German computer system XETRA.

Since 1996, the Tradepoint electronic system has also been operating, which has the status of a stock exchange. It lists the same shares as the London Stock Exchange, but accounts for less than 1% of its turnover. Today, the London Stock Exchange is firmly ranked third in the world in terms of capitalization, i.e. by the size of the market value of the shares that are quoted on it, and by the amount of turnover. Compared to stock exchanges in other countries, the London Stock Exchange (LSE) carries out the largest number of transactions with shares of foreign issuers; more than 40% of its turnover falls on such shares. About 500 foreign issuers are listed on it. A significant part of LSE agreements is carried out within the framework of the Stock Exchange Automated Quotation System (SEAQ). In total, SEAQ trades about 3,000 securities; the system allows you to enter up to 70 thousand orders per hour. For securities that are not included in SEAQ, there is an Alternative Trading System on the stock exchange (The Stock Exchange Alternative Trading Service, SEATS).

At the same time, London ranks second after the United States in trading securities - options and futures. Options trading on securities, stock indices and currencies is carried out on two English exchanges:

London International Financial Futures Exchange (LIFFE).

The London Securities and Derivatives Exchange (OMLX). Commodity options and futures are traded on three commodity exchanges: the London Metal Exchange Ltd (LME), the International Petroleum Exchange of London Ltd (IPE) and the London Commodity Exchange (LCE).

UK securities market regulation

The UK is the first country in the EU to reform its market and its regulatory system. Historically, English capital markets have been governed by a combination of law and (to a large extent) custom. However, the UK Stock Exchange has always been regarded as a highly professional body operating on the principle of “my word is my duty”. This structure was considered adequate until mid-1970. However, a number of investment scams of that time led to the conclusion that a system based on legislation was necessary, especially since in January 1981 a stock market emerged in London (a bond market already existed by that time) and certificates of deposit denominated in special drawing rights ( SDR) as a popular means of insurance against currency risks.

Passed by Parliament in 1986, the Financial Services Act, which came into force in 1988, changed the regulatory structure of the UK market away from self-regulation and towards a strong statutory framework. The securities market has traditionally been regulated primarily by its participants themselves.

The main norms of state regulation in recent times have been: The Law on Companies as amended in 1986/88, which defines the rules for disclosing information about shareholders and manipulations with the shares they own, establishes the timing and procedure for convening general meetings, as well as the appointment of proxies for shareholders, etc. The Companies Securities Act (Insider Act) of 1985. It provides for criminal prosecution for dishonest use of proprietary information regarding the company's securities by persons who have access to it due to their official position, as well as those who own more than 10% of its shares.

The Financial Services Act, adopted in 1988, establishes the obligation to license professional activities in the securities, financial and derivatives markets, including the provision of advisory services, responsibility for concealing objective information and disseminating information that could mislead investors.

Monitoring compliance with the provisions of these standards is the prerogative of self-regulatory organizations. The main regulatory body in the country until 1997 was the Securities and Investment Council, which has now been renamed the Financial Services Council. It consists of representatives of various organizations - professional market participants. The Council is a non-profit organization with broad powers and is formally subordinate to the State Treasury (Ministry of Finance). The main regulators also include the Bank of England and the London Mergers and Acquisitions Council.

The Bank of England, relying on its authority, regulates the government bond market, licenses and controls the activities of market makers, provides recommendations to members of the London Stock Exchange, takes part in the activities of professional financial market organizations, etc.

Other authorities can be divided into self-regulatory organizations and recognized exchanges. They perform certain functions delegated by the Financial Services Council. Today the UK has five self-regulatory bodies (SROs), the most significant of which are:

1. Securities and Futures Council (SFA), which regulates the activities of about 1.3 thousand licensed firms that carry out investment activities in securities, Eurobonds, financial and commodity futures. In addition, the scope of regulation of the SFA includes issues of corporate finance, as well as over-the-counter trading of securities. Approximately half of the firms regulated by the SFA are foreign-owned. The SFA has fairly broad powers in the stock market and performs most of the functions that in other countries are assigned to government bodies.

These functions also include licensing companies with securities. A company that has become a member of the SFA is required to adhere to all its requirements and rules and provide a variety of information about its activities. The SFA periodically inspects securities companies, checking directors and officers and requiring adherence to any accounting documents.

As a rule, when violations of securities legislation are identified, the SFA issues an order to eliminate them. The most serious punishment used by the SFA is fines and the exclusion of a company from membership of this organization, which automatically blocks its access to the market, since operating without a license is a crime. The SFA also administers a compensation fund under the Financial Services Act, which compensates investors for losses in the event of an investment institution's failure.

2. The Investment Managers Organization (IMRO), which regulates the activities of collective investment institutions that manage various funds, including the work of investment fund managers, pension funds, and managers of unregulated mutual investment schemes.

3. The Personal Investment Authority (PIA), which regulates more than 4 thousand firms, including independent financial advisers, that advise or act on behalf of small investors. PIA is the main body for monitoring the activities of companies that operate in the insurance and investment markets, including mutual insurance companies, general unit trusts and investment companies.

The London Mergers and Acquisitions Council includes representatives from a number of influential organisations. It is located in the building of the London Stock Exchange and monitors compliance with the provisions of the documents developed by it: the Code on Mergers and Acquisitions and the Rules for the Acquisition of Large Blocks of Shares. Failure to comply with these provisions does not entail legal liability, but may have serious negative consequences for professional market participants, since they are necessarily members of at least one of the self-regulatory organizations.

The further development of the financial market governance reform was predetermined by the emergence of a new Financial Services and Markets Act in 200, according to which the Financial Services Council will gradually become a single body regulating the country's stock market, endowed with relevant functions that were previously the prerogative of the Bank of England and other bodies.

The UK securities market today is one of the most developed and best organized in the world. Currently, its internationalization is actively taking place: centuries-old traditions, which for a long time had a noticeable influence on its activities, are now increasingly giving way to modern development trends.

The UK, a global trade leader and financial centre, is the third largest economy in Europe after Germany and France. Over the past two decades, the government has greatly reduced the share of state ownership in the country's economy and implemented social welfare programs. Agriculture is intensive, highly mechanized and meets European standards, providing approximately 60% of the country's food needs while employing less than 2% of the labor force. The UK has large reserves of coal, natural gas and petroleum resources, but oil and natural gas reserves are declining and the UK became an importer of oil and gas in 2005.

The services sector, especially banking, insurance and business services, ranks as the largest contributor to UK GDP, while the share of industry continues to decline. Since recovering from the crisis in 1992, the British economy has grown for the longest period in history and has largely outpaced much of Western Europe. In 2008, however, the global financial crisis hit the country's economy particularly hard due to the importance of the country's financial sector. Sharply falling domestic prices, high consumer debt and the global economic crisis are the main British economic problems that caused the UK to fall into recession in the second half of 2008.

The crisis prompted Brun's then government to implement many measures to stimulate the economy and stabilize financial markets; these included partial nationalization of the banking sector, tax cuts, and increased government spending and capital projects. Faced with widening budget deficits and high debt levels, Cameron's government began implementing a five-year spending reduction program in 2010, which aims to reduce the country's budget deficit from 10% of GDP in 2010 to 1% by 2015. The Bank of England periodically coordinates interest rate moves with the ECB, but the UK remains outside the European Economic and Monetary Union (EMU).

Currently, the leading sector of the British economy is the services sector (74% of GDP), the growth rate of which in 2006 (3.6%) exceeded the growth rate of GDP as a whole (2.8%). The leading position in it is occupied by its financial component (27.7% of GDP), which determines the country’s specialization in the system of international economic relations. In transport (7.8% of GDP) growth was 2.9%. The second most important sector of the British economy is industry (18.6% of GDP, a decrease in output in 2006 by 0.1%) and is represented by two sub-sectors: mining (2.2% of GDP, a decrease of 9.2%) and manufacturing industry (14.7% of GDP, an increase of 1.4%). Agriculture, which satisfies about two-thirds of domestic food needs, accounts for only 1% of GDP (production volume decreased by 1.8%), construction (6.1%, growth by 1.1%).

UK Natural Resources

Great Britain - considered the world's second-largest exporter of kaolin (the white clay from which porcelain is made); Other types of clay are also mined on a large scale for the ceramic industry. There are prospects for the extraction of tungsten, copper and gold from newly explored deposits.

Iron ore mining occurs in a relatively narrow belt that begins at Scunthorpe in Yorkshire in the north and stretches across the East Midlands to Banbury in the south. The ore here is of low quality, siliceous and contains only 33% metal. The need for iron ore is met by imports from Canada, Liberia and Mauritania.

In the British sector of the North Sea, there are 133 known oil fields with proven reserves of 2 billion tons and recoverable reserves of 0.7 billion tons, which is about 1/3 of the shelf reserves. More than 80 gas fields have been discovered in the British North Sea with proven reserves of 2 trillion m3 and recoverable reserves of 0.8 trillion m3.

UK industry

UK industry (18.6% of GDP, a decrease in output in 2006 by 0.1%) is represented by two sub-sectors: mining (2.2% of GDP, a decrease of 9.2%) and manufacturing (14, 7% of GDP, an increase of 1.4%).

The extractive industry includes ferrous and non-ferrous metallurgy, oil and natural gas production. Oil production in the UK is carried out at fifty fields, of which the largest are Brent and Fortis. In 2003, it amounted to 106 million tons, of which over half was exported - mainly to the USA, Germany, and the Netherlands. Large imports of oil also remain (up to 50 million tons), which is due to the predominance of light fractions in North Sea oil and the technological features of British refineries designed for heavier oil.

Growth rate of industrial production in the UK, % compared to the previous year

As for the British oil refining industry, it is still dependent on imports of crude oil and petroleum products. There are 9 oil refineries in the country with a total capacity of about 90 million tons per year (the Shell refinery in Shell Haven with a capacity of 4.3 million tons per year closed in 1999). They are located in the Thames Estuary, at Foley near Southampton, in south Wales, on the Manchester Canal, in Teesside, Humberside and in Scotland (Grangemouth).

Gas production from them began in the mid-1960s; now 37 fields are in operation, 7 of them provide 1/2 of the production, among them Leman Bank, Brent, Morekham. Production volume for 1990-2003 increased to 103 billion m3. Foreign gas trade is insignificant; in 2003, its exports amounted to 15 and imports - 8 billion m3. Through a gas pipeline laid at the bottom of the North Sea, gas reaches the east coast of the island of Great Britain in the area of ​​Easington and Yorkshire.

Ferrous metallurgy has developed greatly. By the beginning of the 70s, the volume of steel production amounted to about 30 million tons; later, with the introduction of quotas on ferrous metals in the EU, it decreased by more than 2 times - to 13.5 million tons in 2001 (Great Britain is not among the ten largest steel producers.) In the second half of the 80s, the industry underwent technical modernization, and currently 75% of steel is smelted using the basic oxygen method.

Today, Great Britain ranks eighth in the world in iron and steel smelting. The state-owned British Steel Corporation produces almost all the country's steel. It should be noted that the UK metallurgy developed in favorable conditions. The country is rich in coal. Iron ore was often contained in the coal seams themselves, or was mined nearby. The third component necessary for metallurgy - limestone is found almost everywhere in the British Isles. The coal basins, near which metallurgical centers developed, are located relatively close to each other and from the country's largest seaports, which facilitates the delivery of missing raw materials from other parts of the country and from foreign countries and the export of finished products. There are 4 metallurgical districts preserved, of which only one is located in the center of the country (Sheffield-Rotherham with its specialization in high-quality steel and electric steel), the rest are on the coast in ports (in South Wales - Port Talbot, Llanwern, in Humberside - Scunthorpe , in Teesside - Redcar).

The UK steel industry increasingly relies on scrap metal as a raw material, so modern steelworks are typically linked to major industrial centers as sources of raw materials and markets for finished products.

In turn, the British non-ferrous metallurgy is one of the largest in Europe. It operates almost entirely on imported raw materials, so the smelting of non-ferrous metals gravitates towards port cities. With an almost complete absence of a resource base, the industry developed due to the high demand for non-ferrous metals and is represented mainly by the production of secondary metals. The only primary metals produced are aluminum and nickel. The country's needs for tin, lead, and aluminum are met almost entirely through its own production; for copper and zinc by 1/2.

Exports of non-ferrous metals in value far exceeded exports of cast iron and steel. The UK is also one of the main suppliers of metals such as uranium, zirconium, beryllium, niobium, germanium, etc., which are used in the nuclear industry, aircraft manufacturing and electronics. The main buyers of British non-ferrous metals are the USA and Germany.

The West Midlands is the main region of the non-ferrous metallurgy, with many small enterprises specializing in the production, rolling, casting and processing of non-ferrous metals. Other centers are south Wales, London and Tyneside. The three largest aluminum smelters are located on the island of England, near the city of Invengordon (Scotland) and in the northeast of England. They provide more than half of the industry's demand for primary aluminum. Aluminum production centers in the Midlands and south Wales are closely linked to American and Canadian aluminum companies.

In the structure of the manufacturing industry, the paper and printing industries (13.9%), food and tobacco (13.8%) have the largest share. Over the past half century, the food industry has become one of the main areas of concentration of British capital: of the 40 corporations in the country included in the “Club 500” of the largest companies in the world, this industry is represented by a dozen, led by Unilever, Diageo and Cadbury Schweppes. Food concentrates, confectionery products, drinks (including tea, Scotch whiskey and London gin), and tobacco products are highly competitive on the world market. The placement of the largest enterprises is focused on markets, including foreign ones.

Mechanical engineering, the largest branch of British industry, employs 1/4 of all those employed in manufacturing. The industry accounts for 40% of the conventionally pure production of the manufacturing industry. If in the past it was characterized by the production of products of high quality, but of an average level of complexity, then at present, technically complex, knowledge-intensive products are acquiring an increasing share. Transport engineering predominates. About 1/3 of the capital spent on the production of means of transport belongs to American companies that gained a foothold in the British Isles after the Second World War. There are enterprises in this industry in almost all areas and most cities of Great Britain.

The UK occupies a leading position in the world as an exporter of trucks. For example, the Land Rover series of off-road vehicles is widely known. The main buyers of English cars are the USA, New Zealand, Iran and South Africa.

Several major automobile companies produce almost all production cars and trucks. Such as British Leyland, factories of the international American company Chrysler U.K. and American subsidiaries Vauxhall and Ford. Rolls-Royce (controlled by BMW) and Bentley, controlled by Volkswagen, maintain their positions as world leaders in the production of high-class cars. In 2002, 1.8 million cars were produced, including 1.5 million cars. Imports still exceed exports, but the latter is also very significant (about 1 million units). The first major automotive manufacturing area in the British Isles was the West Midlands, centered in Birmingham. The second region for automobile manufacturing was the southeast of England (with centers in Oxford, Luton and Dagenham), where there was an abundance of labor.

General mechanical engineering is currently inferior in growth rates to other sectors of the industry. In recent years, the position of the machine tool industry has again strengthened (the country ranks sixth in the world in terms of production volume, but fourth in exports). The industry of international specialization is tractor manufacturing (the first place in the world in the production of wheeled tractors).

More than 2/3 of the cost of products in instrumentation is accounted for by scientific and industrial instruments, including a number of the latest types of instrumentation and diagnostic equipment. The production of watches and cameras is also developed.

Aircraft manufacturing is one of the fastest growing branches of engineering in the UK. This industry is dominated by the largest state-owned company, British Airspace. It specializes in producing a wide range of different aircraft, helicopters, spacecraft, rockets. The helicopters are manufactured by another large company, Westland Aircraft. Almost all aircraft engine production in the country is concentrated in the hands of the nationalized Rolls-Royce company, which has factories in Derby, Bristol, Coventry, and also in Scotland. Cooperation with Western European and American companies in the production of civilian and military equipment is widely developed.

The latest chemical industry production is also one of the fastest growing industries. About 1/3 of the products of basic chemistry are inorganic chemicals - sulfuric acid, metal and non-metal oxides. Among the many chemical industries, the production of synthetic fibers, various types of plastics, new dyes, pharmaceutical products and detergents began to stand out on a large scale. British chemistry is based on oil and gas raw materials and specializes in a fairly limited number of chemical products that are highly science-intensive: these are pharmaceuticals, agrochemicals, engineering plastics used in aircraft rocket production, and microelectronics. The main areas of the chemical industry were formed on the basis of refineries near sales markets. The main areas for the chemical industry are as follows: South-East England, Lancshire and Cheshire.

Traditional sectors of the British economy, such as the textile industry, are also developing. Among the branches of light industry, it plays a special role in the industrial development of the country, in the spread of the machine method of production throughout the world. Woolen fabrics are produced mainly in West Yorkshire, rayon production predominates in the Yorkshire town of Silsden, and cotton fabrics are produced in Lancashire, in the small textile towns north-east of Manchester. The production of woolen fabrics, products, and yarn is the oldest in the British Isles. Woolen products from British textile manufacturers are still highly valued in foreign markets.

UK Agriculture

The UK stands out among European countries in agriculture in that it employs less than two percent of its population in this sector of the economy. With commercial intensification of harvests and a high level of mechanization in some areas, the volumes of agro-industrial production exceeded the level of demand in the country. The level of employment in this area is gradually decreasing. To create alternative employment for people in rural areas, the government is trying to shift labor to other sectors. The area of ​​land used for agriculture (about three quarters of the total area) is also decreasing, while land suitable for growing cereals is given over to pastures.

Government policy towards agriculture involves increasing the level of productivity and living standards of people employed in the agricultural sector, while at the same time maintaining reasonable prices for goods. To achieve this, a system of minimum prices for domestic goods and import duties was created. Beef and lamb producers are paid extra to make their product competitive in the European market. Recent measures include restrictions on milk production and compensation to farmers for unused land.

The most important grains are wheat, oats, and rye. A significant part of the grains is used to feed livestock, but the rest is used to produce bread, cereals, etc. In livestock farming, the most important are cattle. In agriculture, they try to maintain a high level of self-sufficiency, with the exception of sugar and cheese production; which are imported.

Currently, the UK ranks sixth among EU member states in terms of agricultural production. On average, per full-time employee, products worth 25.7 thousand euros are produced here (in gross terms). Agricultural land in the UK amounts to 18.5 million hectares, which is about 77% of the country's territory.

UK agriculture is currently one of the most productive and mechanized in the world. The industry's employment share is 2% of total employment in the country. The total area of ​​agricultural land is 58.3 million hectares (76% of all land in the country). The structure of agricultural production is dominated by livestock farming. Dairy and meat and dairy cattle breeding, pig breeding (bacon fattening), meat sheep breeding and poultry farming are also developed.

The general dynamics of the development of UK agriculture in 2006 in terms of the cost of production of the main types of agricultural products in market prices had the following indicators: wheat production increased by 16% and amounted to 1.2 billion pounds sterling; barley - by 9.8% to 412 million pounds sterling; rapeseed for the production of vegetable oil - by 17% to 307 million pounds sterling; sugar beets decreased by 37% to 168 million pounds sterling; fresh vegetables increased by 9.1% and reached £986 million; plants and flowers decreased by 4.4% to £744 million; potatoes increased by 24% to £625 million; fresh fruit decreased by 1.2% to £377 million; pork increased by 1.3% to 687 million pounds sterling; beef - by 13% to 1.6 billion pounds; lamb - by 2.7% to 702 million pounds; poultry meat - by 1% to 1.3 million pounds sterling; milk decreased by 3.6% to 2.5 million pounds; eggs increased by 2.0% to £357 million.

UK service industry

The most remarkable phenomenon characterizing the UK economy has been the growth of the service sector. It reflects an increase in real incomes of the population, as well as the ratio between spending on goods and services. Representatives of the financial and entertainment and tourism sectors especially benefited. Although some services, such as public transport, laundries and cinemas, have seen their unit incomes decline due to a shift towards proprietary goods such as cars, washing machines and televisions, this has helped develop service sectors that sell and repair these goods. Other service sectors that have seen increased demand include hotels, tourism, retail, finance and leisure. Many other sectors that previously had little or no market share have become much more significant. They include the production of computers and software, advertising, market research, holding exhibitions, presentations and conferences. Recently, the UK has also been actively developing the training sector foreign languages, especially English, intermediate and higher education, attracting foreign students.

Currently, the services sector in the UK accounts for about 2/3 of the country's GDP. The main share (about 40%) is occupied by business and financial services. The share of government services accounts for 35%, trade - 19%. Hotel services occupy 5% of the total services market. Trade turnover in the UK service sector in 2006 amounted to 221.5 billion pounds sterling, its growth compared to the previous year was 8.4%. Great Britain's foreign trade in services has a positive balance (17.2 billion pounds sterling). In 2006, total exports of services amounted to £125.6 billion. and increased relative to 2005 by 9.8%. Financial services took the leading position in exports.

UK currency, finance and banking

While the UK has traditionally maintained its position as the world's financial leader, the 1980s saw significant changes in the structure and regulation of financial institutions. They affected the banking system, the insurance system, building societies, the stock exchange, as well as the consumer goods market. Some previously clearly defined lines of activity have become more blurred, for example, while loans for home construction used to be the exclusive prerogative of building societies, these loans are now issued by both banks and insurance companies. Two related changes occurred: the transformation of building society branches into actual banks with their own cash reserves and the expansion of the activities of all three types of organizations into the property market. Building societies are also involved to some extent in capital services, insurance and land services.

London continued to grow as a center for international financial transactions. Capital inflows increased, as did foreign exchange and securities trading, so that a large number of foreign banks were represented in London - Increased competition and technological developments accelerated the process of exchange and trading - The Stock Exchange was reorganized and the traditional system of brokers and jobbers was abolished. As a result, a number of companies were formed that became an intermediate link between British and foreign banks and former brokers and jobbers. In the late 1980s, laws were passed to regulate these new financial institutions. It was even necessary to create new regulatory bodies that monitored compliance with the letter of the law in this area of ​​activity.

All commercial banks are supervised by the Bank of England, which has the right to issue banknotes in England and Wales (banks in Scotland and Northern Ireland have limited rights to issue money in their territories). The Bank of England licenses banks that primarily work with the public (like Sberbank), investment, mortgage and other British or foreign banks. The dividing lines in this sector have also become less distinguishable, with banks serving individuals divided into mortgage banks, insurance banks; banks for dealing with securities, etc. The Bank of England also controls the refinancing rate, which affects the structure and level of interest rates. He actively intervenes in foreign exchange markets, protecting the stability of the pound. The pound sterling is one of the world's major currencies, and London is one of the most important shopping centers peace.

Savings of the population are invested in economic development through a network of financial organizations. Examples include insurance companies, pension funds and investment funds. Other organizations specialize in specific areas of funding; Thus, financial institutions provide money against real estate. There are also companies that finance equipment leasing and medium- and long-term capital markets, which also finance banks or the stock market, including the market for innovative technologies.

In the UK there are several organized financial markets. The securities markets consist of the International Stock Exchange, which deals with listed securities and shares (including government securities and options), the Unlisted Securities Market, for smaller companies, and the Third Market, for smaller companies whose securities are not listed. Activities in the foreign exchange market include trading in certificates of deposit, short-term deposits, etc. Other markets deal in Euros, foreign exchange, futures, etc.

The share of invisible trade (fees and fees for financial services, interest on deposits, profits and dividends) is constantly increasing from one third to half of all external income of the state. As of the end of 2006, the UK's gold and foreign exchange reserves (gross) amounted to $84.0 billion. (end 2005 - $79.2 billion), including government funds - $51.8 billion. ($48.1 billion), Bank of England - $32.2 billion. ($31.1 billion).

Fluctuations in the exchange rate of the British pound during 2006 varied markedly against major currencies. If the relative stability of the pound sterling exchange rate relative to the common European currency reflects, first of all, the synchronization of economic processes in the UK and countries included in the euro area, then the significant strengthening against the dollar is partly due to the Bank of England maintaining its discount rate at a fairly high level, and partly - the acceleration of the rate of national economic growth.

Foreign relations and foreign trade of Great Britain

The UK retains an important role in the global economy. The country is one of the five most developed countries in the world and produces about 3% (2000 - 3.2%) of global GDP (at purchasing power parity national currency). In the export of goods and services, its share is 4.6% (2000 - 5.2%), in their import - 5.1% (5.6%). At the same time, there is a reduction in the country’s share in world trade. The macroeconomic situation in the UK has remained stable over the past decade. Real GDP growth per capita was on average higher than in other G7 countries, unemployment and inflation were lower.

In 2006, UK GDP growth increased to 2.8%, which corresponds to the level of economic growth in the G7 countries. At the same time, the inflation rate in the UK was lower (2.3% versus 2.5%). Since the 2001/2002 financial year in the UK, the situation with the size of the government budget deficit has worsened, and in the 2004/2005 financial year its value reached 3.3% of GDP. However, in the 2006/2007 financial year, this figure dropped to 2.8% of GDP.

The country continues to maintain a dominant position in the global financial services market. The UK is home to three-fifths of global trading in international bonds (1st place in the world, primary market), two-fifths of foreign assets (1st place) and derivatives (1st place, so-called “over-the-counter trading”) , slightly less than a third of foreign exchange transactions (2nd place after the United States), a fifth of international borrowings are carried out (1st place). The UK accounts for two-fifths of the global aviation insurance market (1st place) and one fifth of marine insurance (2nd place). oh place). London also leads the way in wealth management for the world's wealthy.

The most important commodity and stock exchanges in the world are located in the UK: London Stock Exchange, London Metal Exchange, International Petroleum Exchange, Baltic Exchange.

The UK trade deficit in December 2010 set a record since 1980, when measurements of the corresponding indicator began. The negative trade balance amounted to 14.5 billion dollars, 1.9 billion more than in November, when an anti-record was also set.

Experts say the main reason for the sharp increase in the deficit was the heavy snowfall that hit the country in the last month of last year. December 2010 was the coldest December in 100 years, resulting in many UK airports being closed. While imports grew by 3.5 percent in December, exports grew by only one and a half percent.

In general, for the entire 2010 the deficit amounted to 140.9 billion dollars - 14.8 billion more than a year earlier. The export volume amounted to $405.6 billion, and the import volume amounted to $546.5 billion.

While the state and support institutions invest considerable resources in increasing the number of exporters among Russian small and medium-sized businesses, according to the Ministry of Economic Development, the share of SMEs in the total volume of Russian exports does not exceed 1%. In foreign countries this figure reaches 20-30%. If you analyze it by location, the figure will seem even sadder - the basis of Russian export statistics is made up of companies working with the CIS countries, and less often - Asia.

Such competitive markets as the American and British remain an unattainable dream for Russian small businesses. This is partly facilitated by the regulatory environment and the difficult foreign policy situation, and partly by the unpreparedness of business itself for foreign markets.

Thus, the British, who have experience working with Russian companies, note the frivolity of export ambitions that entrepreneurs in our country traditionally demonstrate. Examples include the desire to “save” on certification and licensing, unwillingness to invest in foreign market research and spend a lot of time on the process of searching for a foreign business partner, as well as the lack of even a minimal desire to adapt to a different business environment.

A partner of a British company specializing in working with Russian businesses told the story of a manufacturer of healthy snacks for diabetics who was trying to establish supplies to the United Kingdom. The head of the Russian company insisted on immediate meetings with potential buyers, not agreeing to invest in certification until the first contracts were signed. Based on the results of product trials initiated by the British partner, it turned out that according to national standards, the snacks and bars produced are exactly the same thing that British doctors categorically prohibit British diabetics from consuming.

Cultural differences in doing business are also a serious barrier to which Russian entrepreneurs are not inclined to pay enough attention, thereby confirming the most ridiculous stereotypical ideas of foreigners about “crazy Russians.” So, in the presence of foreign partners, it is better not to voice your plans regarding the use of informal ways to solve the problems facing your joint business.

What to do

Meanwhile, despite the apparent complexity of exporting for small businesses that do not have serious budgets, the process of initially entering the foreign market can be reduced to a few simple steps.

In order to assess a company’s ability to operate in the market of a particular country, as well as build a strategy for conquering it, it is important to understand the features of this market, so a future exporter cannot do without research. At the same time, among representatives of small and medium-sized businesses demonstrating export potential, there are many who sincerely believe that in order to research the market that the company is trying to enter, it is enough to simply “Google”. The particular absurdity of using this method becomes obvious when a small business begins to “Google” some inside information, for example, about the British medical equipment market in Russian. Obviously, in such a situation, the company is unlikely to receive relevant information for making decisions about starting foreign economic activity with a particular country.

If you want to understand the market, then you need to find out who the main players are - sellers and buyers. Depending on the industry and the specifics of the product/service, this could be corporations, small businesses, online companies or the government. Manufacturing companies also need an understanding of the assortment - what proportion of the market which product occupies. This will make it possible to predict demand and open up new niches (sometimes these niches are obvious and banal, for example, it is still difficult to find buckwheat on the shelves of British chains, so why not a business opportunity for Russian exporters?).

In order to predict the costs of implementing export ambitions, it is also important for a company at the research stage to estimate the cost of logistics, warehouse services, as well as licensing and certification costs.

If the main sellers in your industry are represented by distributors, then certification issues can be resolved by them - which is more reliable, more convenient and usually cheaper. Indicators such as price segment, income level of the population and average bill will help you generally understand the feasibility of trying to start selling to a particular country if you work in the B2C segment. Understanding the average check and price segment is important for correct pricing and calculation of payback.

When starting to work in developed and competitive markets, do not forget about the brand. It is also better to check whether you have the right to use the brand you are planning to go with at the research stage. Penalties for violation are severe and supervision is strict - which can result in serious costs later.

Step 2. Support institutions

Russian entrepreneurs are lucky - support institutions in our country pay serious attention to the export topic. In most regions, export support centers have been created and continue to open, where you can get both general information on issues of conducting foreign economic activity, as well as specific assistance in organizing business meetings and negotiations.

In addition, trade missions continue to exist in most countries, the main current task of which is to increase trade turnover with other countries.

Traditionally, trade missions actively communicate with foreign businesses, so at a minimum they can be useful in finding suppliers. They can also talk about the markets and priority industries of the country where they are represented.

At the research stage, this is where small businesses should turn to in order to receive the information you are interested in in Russian without extra costs. Not long ago, Dmitry Medvedev voiced the idea of ​​reforming the system of trade missions. It is planned to transfer them under the wing of the Ministry of Industry and Trade, as well as to establish closer cooperation with the Russian Export Center (REC). For SMEs, this will mean that the focus of trade missions on supporting existing and potential exporters will be even more serious.

Step 3. Participation in business missions and exhibitions

Participation in industry-specific exhibitions and conferences remains one of the most effective ways to find first buyers and assess demand in a new country. Inspiring stories of Russian manufacturers who conquered international markets, most often happened due to the active exhibition activities of companies.

Such flagships of Russian business as SPLAT, a manufacturer of oral care products, and Natura Siberica, a manufacturer of organic cosmetics, supply their products to dozens of countries around the world. Regular participation in the key European trade fair Natural Organic Products Europe, held in London, has played a huge role in their success in the UK market.

Depending on the industry, exhibition costs may be subsidized by support institutions, even in the case of difficult countries such as the UK. Thus, the Skolkovo innovation center, together with the REC, is already helping the first Russian technology companies enter the British market by subsidizing participation in TechWeek in London.

In addition, embassies of other countries in Russia also strive to help companies enter the national markets of their countries. Thus, the British Embassy has a division of the Department of International Trade, which not only organizes business visits to the country, but also generally helps with consultations and contacts.

Step 4. Support programs of foreign countries for foreign businesses

Each state (at least in words, and most often in deeds) cares about becoming an attractive place for doing business. In this regard, special support programs are being launched for foreign companies entering the national market. They can be either very targeted - for example, with a focus on attracting innovative businesses, or quite general - the main thing is that the foreign company creates jobs.

For example, Great Britain, which positions itself as one of the most best countries for doing business (in fact, it is one - 7th place in the Doing Business ranking), has developed a state marketing program Britain is GREAT, where serious attention is paid to attracting foreign capital. All opportunities available to foreign businesses require visa support.

So, in this regard, small businesses may find three options interesting.

• The first of these is Solo Representative - visa support for foreign companies seeking to try their hand at the British market. A foreign business with plans to expand into the UK market has the opportunity to send a representative to the country to assess the prospects and chances of success. It is important that the posted employee will not have the right to remain in the country in the event of his dismissal.
• Another opportunity to access UK opportunities is the Global Entrepreneur program. According to the conditions, by raising an investment of 50 thousand pounds from one of the incubators or venture funds, an entrepreneur can register a company in the UK, attract financing (including bank financing) and obtain visas for employees, as well as have access to a team of 19 mentors.
• The third opportunity to scale your business to the UK is a startup visa, which will be introduced in the spring of 2019. Aspiring entrepreneurs developing companies in the field of high technology will be able to obtain a visa.

Finishing the conversation about how to become an exporter, we cannot help but mention the need to think globally. Thinking globally in the case of a small business means not only a certain attitude of the owner and his team, but also business processes that are configured in a certain way, reflecting the company’s readiness for constant scaling. As well as meeting the highest standards and the ability to exceed expectations - if the British entrepreneur complains, it is about great competition. I’m grateful to her, because it motivates even small companies to be the best version of themselves.