By Daniel Hunter
The UK is Europe’s number one destination for inward investment, according to EY’s UK Attractiveness Report released today (Wednesday).
The report said the UK retained its leading position in Europe, recording 887 foreign direct investment projects (FDI) in 2014 - the largest number ever secured in more than a decade - representing an increase of 11% on 2013 figures.
This record performance by the UK was achieved against a 10% rise in the total number of projects across Europe, which attracted 4,341 investments, another personal best. The UK increased its market share of all European projects last year to 20.4%, its highest level since 2009, pulling away from Germany — the second most attractive destination for FDI in Europe.
Steve Varley, EY Chairman and Managing Partner in UK & Ireland, said: “Global investors have a strong perception of the UK as an attractive place to do business. The relatively positive economic news from the UK, compared with other European countries, the Government’s efforts to foster FDI, and the UK’s dynamic labour market are likely contributors.
“The message that Britain is ‘open for business’ is getting across loud and clear to many existing and potential investors worldwide, but new strategies need to be developed to stay ahead in such a competitive market.”
Early signs that devolution could be a ‘game changer’
Although London remains the single most important location for FDI in the UK, attracting 381 projects last year, 2014 saw a resurgence of the English regions as FDI destinations.
The regional winners in 2014 were Yorkshire with a 140% increase in projects, South East England (up 49%) and the West Midlands (up 38%). Scotland was the second most attractive location in the UK for global investors to London, recording 80 projects.
Mr Gregory said: “In the midst of glory, London’s share of inward investment stagnated in 2014, whilst English regions made large gains — a trend starkly represented when comparing the market share of ‘new’ projects, which surged in the English regions and devolved administrations, but fell significantly in London.
“There are signs that the UK economy is rebalancing with global investors favouring locations outside of the capital, which is good news for the UK’s overall future performance. To maintain its position as Europe’s number one destination for inward investment, the UK must broaden its appeal outside of London.”
The UK has global appeal
The UK was the leading FDI destination for US investors in Europe in 2014. 36% of all investment projects locating in the UK last year were from the US. The next nine most important origins of UK investment — including France, Germany, Japan and China — collectively accounted for 42%, demonstrating the UK’s heavy reliance on US FDI.
In 2014 the number of investment projects secured from the BRIC economies by the UK stalled, namely due to a fall in Indian investment levels across Europe, of which the UK is the largest recipient. However, the UK attracted more projects from China than ever before, a sign that the UK’s efforts to build Chinese relationships are starting to bear fruit.