Inward Foreign Direct Investment in 2013 – The UK Leads the Way in Europe

Inward Foreign Direct Investment in 2013 – The UK Leads the Way in Europe

Good GDP growth of 1.8 per cent, a low rate of corporation tax and a large number of highly skilled workers were three reasons why the UK had a larger inflow of inward foreign direct investment than any other European country in 2013.

A total of US$37.1 billion was invested in the UK by overseas companies in 2013, according to the World Investment Report 2014 from the United Nations Conference on Trade and Development (UNCTAD).

Growth in Projects

The UK was also ranked first in Europe in terms of the total number of foreign direct investment projects, with 799 projects in 2013, according to Ernst & Young’s European Investment Monitor (EIM).

The UK government reported a higher number of 1,773 projects in 2013/14 in its Inward Investment Report 2013/14. This represented growth of 14 per cent when compared with 2012/13.

New Jobs Created

Almost twice as many jobs were created by inward foreign direct investment in the UK than in France, which was the second-ranking European country in 2013, according to the EIM. The EIM attributed the creation of 27,953 jobs to overseas investment in the UK, while government figures put the number of new jobs at 66,390 in 2013/14.

Regional Growth

All regions of the UK attracted more foreign investment projects in 2013/14, with the number of foreign direct investment projects increasing by at least 10 per cent in each region, according to government figures.

Northern Ireland achieved the highest growth, with the number of projects increasing by 32 per cent to 50. Wales showed strong growth of 18 per cent to 79 projects, including the establishment of a 76-turbine onshore wind farm in South Wales by Vattenfall, a Swedish energy company.

The Largest Inward Investors

The largest source of inward investment remained the USA, which invested in 501 projects in 2013/14, according to government figures. Canadian investors showed renewed confidence in the UK with involvement in 89 projects, an increase of 41 per cent.

Key European investors were French and German companies with respective growth rates of 18 per cent and 31 per cent. An example of French investment is the construction of a nuclear power plant at Hinkley Point in Somerset by EDF Energy.

From the Asia-Pacific region, Japanese companies continued to favour the UK by investing in 116 projects in 2013/14, while investment by Chinese companies grew strongly by 25 per cent to 88 projects. One of the Chinese investors is Beijing Construction Engineering Group (BCEG) through its involvement in a large-scale construction project near Manchester Airport.

Australian companies also increasingly looked to the UK for opportunities with the number of projects undertaken rising by 13 per cent. One project concerned the re-opening of a Tungsten mine in Devon by the Australian company, Wolf Minerals.

The Most Popular Industry Sectors

Advanced manufacturing, which includes the automotive and aerospace industries, was the most popular industry sector amongst overseas investors in the UK with 418 projects in 2013/14, according to government figures. It was closely followed by 400 projects in the creative and ICT industries and 385 in the financial and professional services sectors.

Future Outlook for Investors

Continued real GDP growth, forecast at 3.1 per cent for 2014 by the Economist Intelligence Unit (EIU), is expected to increase interest in the UK as a venue for investment. The reduction of corporation tax to 20 per cent from April 2015 is likely to provide a further incentive for inward investment.

A stable business environment and the ease of exporting to EU markets are other factors that are likely to fuel the further growth of inward foreign direct investment in the UK in the foreseeable future.

 

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