Pace of foreign investment into UK to slow in next 12 months
Fewer companies are planning to invest in the UK in the next 12 months than were planning to do so back in April, new data has revealed.
Accountant EY’s UK Attractiveness Survey shows that the proportion of companies planning such investment has fallen from 10-year highs of 31 per cent in the spring to 25 per cent now.
A survey of 220 non-UK investment decision makers also showed that 43 per cent of respondents are continuing with the UK investments they planned before the pandemic, down from 72 per cent in April.
As a result, EY estimates that there will be 30-45 per cent fewer foreign direct investment (FDI) projects in the UK in 2020 than the 1,109 projects recorded last year– equivalent to a fall of between 333 and 499 projects.
The new figures are the latest indication of the damage that the coronavirus pandemic has done to the UK’s attractiveness as an business destination.
The prospect of the UK leaving the EU without a trade deal, as well as stringent new laws scrutinising foreign investment, could well put off investors further.
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However, the survey shows that the country is still the second most popular destination for foreign investment in Europe, behind only Germany.
And despite the fall from April’s decade-long highs, the UK remains considerably more resilient than its European counterparts.
While 43 per cent of investors have left intact their plans for this country, the figure shrinks to 17 per cent for Europe.
Alison Kay, EY UK and Ireland managing partner, says: “The UK’s attractiveness as a destination for FDI remains comparatively strong despite Covid-19. Overall, the outlook for the UK looks stronger than that for Europe.
“However, the UK will need to keep pace with the changing drivers of investment. Since the start of the year, Covid-19 has seen investors put an increasing premium on a country having measures in place to prevent a future crisis and its level of success in dealing with the pandemic.”