By Daniel Hunter

Only 1% of registered businesses in the UK business economy in 2011 were foreign-owned but these businesses contributed 28% of value added.

This short story uses a snapshot of ONS’s Annual Business Survey (ABS) to look at the contribution that foreign-owned registered businesses (20.9 Kb Pdf) in the UK make to the UK Business Economy, and their country of ownership.

In 2011, only 1% of registered businesses in the UK Business Economy were foreign-owned (20.9 Kb Pdf) however these foreign-owned businesses contributed 28% of total UK approximate Gross Value Added (aGVA, or simply “value added”) (20.9 Kb Pdf) (see Figure 1).

One reason for this is that foreign-owned businesses are more likely to be large in terms of employment and, on average, larger businesses add more value to the UK Business Economy than smaller businesses.

Micro businesses (those with fewer than 10 in employment) were the least likely to be foreign-owned. Around 0.5% of micro registered businesses were foreign-owned and these businesses contributed 5% of value added.

This contrasts with large businesses (those with 250 or more in employment), where around 28% of registered businesses were foreign-owned and these businesses contributed 40% of value added.

Regardless of employment size, the contribution of foreign-owned businesses to value added remained larger than their contribution to the number of businesses.

This suggests that average value added per business was higher for foreign-owned businesses than for UK-owned businesses, although as employment increases, the relative gap between value added per business contributed by UK- and foreign-owned businesses decreases.

Regardless of industry sector, the contribution of foreign-owned registered businesses to value added was larger than their contribution to the number of businesses. This may be partly explained by the different types of activity being undertaken by UK- and foreign-owned businesses within the industry sectors.

The Construction sector (20.9 Kb Pdf) had the smallest proportion of foreign-owned businesses, where 0.3% of registered businesses were foreign-owned but these businesses contributed around 7% of value added. This contrasts with the Production sector, where around 3% of registered businesses were foreign-owned but these businesses contributed around 46% of value added.

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