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Well, having the canonical can help you with other situations (people taking your content, you decide to do translations later, etc) so I would go with canonicals first as they're a more robust solution. Parameter solutions in SC only affect Google itself (not Bing, not any other search engine that comes along) as well. Canonicals would help all of them at once - so def the better choice if possible.
I understand client confidentiality - if you want to PM me the link to look at privately, I'd be happy to.
That being said, anchors finally get too high? Did losing 17k knock them WAY out of whack? (Anchor on the other links was 18%, now 35% or something?)
"links pointing to it are generated by a half dozen or so article based sister sites" = this could definitely be the issue as well. I have a few ideas but hard to tell without knowing just a bit more.
You're asking a slightly different question than what was answered but let me clear it up 100% for you:
Yes, you're on a subdomain. Yes, that's not generally ideal if you're trying to rank company.com and you also want blog.company.com You would instead want company.com/blog (in most cases.)
However, you're on a fresh subdomain, as your main URL. That will work just fine.
In fact, the last time I downloaded the Majestic Million there were over 170,000 of the top 1M on subdomains.
Some famous subdomains you may know:
Hope that helps! I wouldn't worry much about it if you're happy with the uk.com address.