The UK has slipped out of favour as a top choice for foreign investment, as overseas firms hesitate over Brexit uncertainty, a study out today warns.
The report by accountancy giant KPMG revealed the UK had slipped from first place to fifth, in the 2016 survey of 60 companies from other G7 states, of their pick of the country with the most competitive tax regime. Many cited worries over trade disruption and tariffs and concerns over access to the Single Market.
"In many respects this year's survey suggests that it’s business as usual," said Robin Walduck, tax partner at KPMG. "Companies, regardless of where they are located, continue to make investment decisions based on a variety of factors that include political and economic stability, market size, the cost and availability of a skilled labour force as well as the national tax regime.
"The material change this year is that finance executives are now grappling with the question of how Brexit might impact current and future investment in the UK. It's in this area we see a striking divergence between the views of UK companies and their G7 peers, providing some insight as to why the UK has started to fall out of favour."
The UK's position in KPMG's overall ranking of competitive tax regimes, which took into account not only the answers from the 60 overseas firms but also the views of 100 of the largest UK listed companies and foreign-owned subsidiaries, remained steady in 2016 at second.
Ireland also retained its number one slot for the country with the most competitive tax offering.
However, KPMG warned the gap between the two nations was widened. In 2015, the UK and Ireland were almost neck and neck, with 70 per cent and 71 per cent of UK firms picking them as a top three nation for tax competitiveness respectively. In 2016, Ireland had risen to 74 per cent while the UK slumped to 65 per cent.
Despite the results, a number of high-profile firms have announced they are investing in the UK since the Brexit vote.
In November, Google confirmed it would be going ahead with plans for £1bn headquarters in King's Cross, allowing the tech giant to double its headcount in the country in the coming years.
Meanwhile, in July, Japanese telecoms group Softbank put in a £24.3bn takeover bid for chip designer Arm Holdings.