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Top Sectors for Foreign Direct Investment in the UK, 2016-17

The newly released Gov report UK FDI Investment, Trends and Analysis: 2018 dictates growth in the value of foreign direct investment (FDI) positions held in the UK by overseas investors (FDI liabilities) exceeded that of UK FDI positions held abroad (FDI assets) in 2016.

In turn, the UK’s net FDI position falling from £50.8 billion in 2015 to £12.5 billion by 2016, the lowest net position since comparable records began in 1997.

In analysing the report, Turnerlittle.com took time to consider the projects and jobs created by FDI in the UK, identifying the 6 sectors benefitting from this type of investment the most.

To achieve this, the Inward Investment Results 2016-17 report released by the Department for International Trade was used as supplementary research, revealing total FDI projects in the UK rose by 2% in 2016-17, from 2,213 (2015-16) to 2,265. This comprises projects by “existing investors” in the UK (1,212) and projects by “new to the UK” investors (1,053.)

Image credit: panuwat phimpha/Shutterstock

New Investments (up by 9%), Expansions (down by -5%) and Mergers and Acquisitions (down by -6%) are the forms of foreign direct investment taking place in 2016-17. Further, the USA remains the UK’s largest source of inward investment – with 557 FDI projects. The rest of Europe, Middle East and Africa follows (261) as China and Hong Kong slide in third place, at 160.

Yet, the increase in total FDI projects is not mirrored in total jobs, with roles suffering a -7% fall; decreasing from 115,974 in 2015-16 to 107,898 in 2016-17. New roles fell from 82,650 in 2015-16 to 75,226 in 2016-17.

However, we can see where FDI projects are feeding a healthy workforce by comparing total projects and total new jobs in regions across the UK as noted in the table.

Turnerlittle.com found that excluding London, the South East (217), West Midlands (151) and the North West (147) hold the highest number of foreign direct investment projects. This equates to 5,432 new jobs in the South East, 6,570 new jobs in the West Midlands and 6,501 new roles in the North West, 2016-17. Evidencing FDI as an asset to the UK.

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Comparably, Turner Little also considered the sectors benefitting from FDI in the UK.

It was found the Software and Computer Services sector is number one for foreign direct investment, with 418 projects in 2016-17.

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This total is tailed by the Financial Services industry (217) and Business and Consumer Services (211.) Next, Environment, Infrastructure and Transportation, with 184 FDI projects in the UK, Creative Media (151) and Advanced Engineering and Supply Chain – with a total 146.

Lastly, the three sectors with the least FDI projects: Chemicals and Agriculture (50), Extraction Industries (49) and Aerospace (47.)

 

Feature image credit: g0d4ather/Shutterstock 

Turner Little and its affiliates do not provide tax, legal or accounting advice. Material on this page has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.