UK still attractive for FDI

Posted on 15 Jun 2017 and read 501 times
UK still attractive for FDIAccording to Ernst & Young (EY) (www.ey.com), the UK’s ability to secure foreign direct investment (FDI) remained strong last year, having been boosted by the success of initiatives such as the Northern Powerhouse.

The firm’s latest UK Attractiveness Survey says that while it is difficult to make a clear assessment of the country’s performance in attracting FDI and maintaining its appeal, some clear pointers do emerge.

These include 2016’s performance being “strong” at a headline level, and the UK remaining Europe’s number-one recipient of projects (ahead of Germany), with a 7% rise to 1,144.

Domestically, the UK performed well in securing deals, with London remaining pre-eminent in 2016, having secured 39% of all projects (ahead of Scotland in second place).

EY also noted that the Northern Powerhouse and the Midlands Engine are now attracting roughly double the number of projects they secured at the beginning of the last decade, whereas the rest of England is attracting roughly the same number.

While positive on the face of it, EY warned that there is a risk that “only the strong regions are getting stronger”.

Meanwhile, a 2017 global survey of investors’ perceptions reveals a split between current plans and future expectations, with 24% planning to establish or expand their operations in the UK over the coming year. That said, some 31% of investors expect the UK’s FDI attractiveness to decline over the next three years.

Mark Gregory, chief economist for the UK and Ireland at EY, said: “Overall, our research points to a positive short-term outlook for UK FDI, but there are clear risks to performance in the medium to long term. A total of 9% of investors could leave the UK in the next three years, but provided it moves quickly, the UK can still maintain its attractiveness in a post-Brexit world.

“The FDI performance and perception findings underline the strengths that the UK has to build on — in sectors like software, financial services, business services and some manufacturing areas. Our study also identifies policy priorities around new trade agreements with the EU, the USA, China and India.”

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