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UK premier foreign direct investment destination but needs reforms

  • May 1, 2024
  • 2 min read
UK premier foreign direct investment destination but needs reforms

New figures from the City of London Corporation showed the UK attracted over £1bn of foreign direct investment (FDI) into its financial and professional services sector over 2023, with this investment being spent on 222 projects and creating nearly 7000 jobs. While the capital investment witnessed a drop compared to the preceding year’s exceptional £2 billion FDI FPS influx – attributed to a range of factors including global market correction, high interest rates and challenging global economic landscape – the UK continued to cement itself as attractive place to invest.

Notably, London retained its position as a top global financial centre in attracting FDI in the financial and professional services sector across five years, attracting 697 projects – well ahead of Singapore (590 projects), Paris (420), New York (321) and Hong Kong (258).

Manchester and Birmingham emerged as notable recipients of FPS FDI outside London, collectively centres outside the capital accounted for around 40% of total investment by projects.

Highlighting the strength of UK-US transatlantic partnership, the United States was the largest source market, contributing a substantial 40% share of FPS FDI over the last five years, reaffirming the UK’s enduring appeal to American investors. Other leading sources include the Netherlands, Canada, France, and Germany.

In 2023, the UK’s thriving fintech and technology sector received a significant portion of FS projects, attracting more than a 1/4 of all FS projects – underlining the UK’s position as a global innovation hub. Investment management firms emerged as the primary drivers of FS FDI projects, comprising a third of all investments, underscoring the UK’s stature as a preferred destination for global investment.

Recognising FDI as a catalyst for job creation and economic growth, the City Corporation flagship Vision for Economic Growth report calls for a more strategic approach to further enhance FDI inflow. It has several recommendations to sustain investor confidence, unlock growth opportunities, and foster job creation, building on recent works such as the Lord Harrington Review.

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