I presume that you meant FedEx configuration page (not checkout process). As you may see here (demo site) it clearly says that state code should be 2 chars length.
Are you sure that you set country to UK? I've just looked at the FedEx plugin source code. Actually it doesn't pass state code (two chars) to FedEx if country is not set to US (USA) or CA (Canada). Try debugging it and you'll see.
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