Investment into UK lags behind top EU countries

THE UK is straggling behind other advanced economies in the competition for foreign direct investment (FDI), which makes up only 13.5 per cent of the economy.

A study released today by accounting firm UHY Hacker Young shows that the average proportion of GDP made up by foreign investment is 17.1 per cent, across 33 countries surveyed. In the EU states, the average is even higher, with FDI typically making up a fifth of GDP.

Though the UK takes $329.4bn (£200.6bn) in FDI, the fourth largest sum in the world, Belgium and Ireland bring in much larger proportions when accounting for their smaller economies, making up 91.4 and 44.1 per cent of their GDP respectively.

“Foreign investors may be put off by excessive costs to doing business in the UK, such as high labour costs, in addition to overinflated energy and fuel prices,” said UHY Hacker Young’s Ladislav Hornan.

Despite a middling ranking, the UK performs more impressively than the US: only 6.6 per cent of US GDP is accounted for by foreign investment. In Japan, which comes last in the list of countries, the figure is only 0.6 per cent.