New research has revealed that the UK kept its position last year as Europe’s top destination for international investors and is now the fifth most attractive target for business investment globally.
According to the study, the UK attracted 799 inward investment projects in 2013, 15 per cent up on 2012 and its highest-ever figure, against the backdrop of more modest increases across Europe.
Meanwhile, UK firms secured more than a third of all software projects, an increase of 50 per cent, in what is now Europe’s largest foreign direct investment (FDI) sector.
Looking forward, the UK also moved from eighth to fifth in the world ranking of countries that investors regard as attractive for FDI over the next three years, with only China, the US, India and Brazil ahead of it.
London was revealed as Europe’s leading city for investment, securing 380 projects, a fifth higher than in 2012. However, this could mean that the capital risks overshadowing the rest of the UK for ‘pulling power’.
This risk was borne out by the fact that many of the English regions were 20 per cent below their 2010 figure for projects, with the North East of England, securing only 23 projects, having its worst year for a decade. Scotland was the second best region for projects, with 82 last year and Manchester, Edinburgh and Belfast also stood out as far as cities go.
However, the UK is not performing as well in attracting manufacturing projects, having secured just 12 per cent of such investments into Europe, compared with its 20 per cent share of overall FDI projects, and attracting half as many new manufacturing projects as Germany.
According to the researchers, the UK’s success in attracting research and development (R&D) and headquarters’ investments reflects the positive impact of government initiatives to reduce corporation tax and incentivise R&D investment via the Patent Box.