Weak economy makes UK firms invest overseas

Tim Wallace
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BRITAIN is slipping down the rankings of the most desirable investment locations, according to a global study of businesses out today from professional services firm BDO.

And mid-sized British firms are increasingly being forced to look abroad for investment opportunities thanks to the weak economic outlook domestically.

The UK is now the seventh biggest investment destination, the study found, down two places from fifth in 2011, as Brazil and Russia race up the leaderboard ahead of Britain.

That leaves 45 per cent of chief finance officers outside Britain looking to invest in the country, largely favouring it as a safe haven relative to the turmoil elsewhere in Europe.

And one third of UK firms said they had no choice but to look to invest abroad, rather than at home, as the domestic economy is so weak.

The study found 82 per cent of British firms surveyed are optimistic about investing abroad – even though many fear the new challenges international expansion brings.

Currency fluctuations are a worry for 33 per cent, while 38 per cent of those who are concerned worry about foreign regulations, and 31 per cent fear weak economies abroad.

As a result, they are keen to avoid weak areas like Greece and Spain, with 45 per cent looking to invest in the BRIC economies, 27 per cent in the US, 21 per cent in Germany and 15 per cent in France.

“UK mid-caps find themselves in a challenging situation. Pushed abroad by conditions at home, they are pursuing growth overseas but in some instances are lacking in awareness as to how to address the real challenges involved,” said BDO’s Kim Hayward.

“To give their firm a competitive edge overseas, it is crucial to do thorough research into target markets, choose the right local adviser or partner and take things one step at a time.”