Experts blame France pipping UK to EU investment crown for second straight year on Brexit
Experts have today partially blamed post-Brexit uncertainty for helping France pip the UK to Europe’s investment hub crown for the second year in a row.
The UK was home to 15.6 per cent, or 929, of all European foreign direct investment (FDI) projects last year, down from 16.9 per cent in 2021, according to consultancy EY.
Last year’s relatively weaker investment figures are down from the UK bagging more than one in every five European foreign investment projects in 2015 – the year before the Brexit referendum.
“Political uncertainty and the ongoing impact of Brexit on trade and investment will likely have played a part in the UK’s performance,” EY’s report said.
Investment projects in France climbed from 1,222 to 1,259 in 2022, breaking the European record for the second straight year.
Soaring energy prices and higher interest rates to tame inflation would have also knocked investor appetite for risky bets over the last year, EY added.
A near 25 per cent drop in the number of UK tech projects financed by foreign investors helped drive overall project volumes lower.
Despite Britain losing a chunk of Europe’s capital flows, it is becoming an increasingly attractive prospect for international investors to park their cash.
Nearly a quarter of all UK foreign projects are funded by US investors, compared to around a fifth in Europe.
Peter Arnold, chief economist at EY UK, said: “The UK’s FDI origins are evidence of the country’s global approach, which has been particularly important since its departure from the EU.”
“Places like India, Canada and Australia have risen up the list of the UK’s top investors in recent years, with the UK able to leverage strong cultural links to attract investment that isn’t as accessible for European competitors,” he added.
Britain is suffering from a dire productivity problem that has held back economic growth since the 2008 financial crisis. Economists often identify lifting foreign direct investment as a means to stimulate productivity improvement.
EY said the quality of investment the UK attracts is better than its European peers.
Jobs created per project hit 59 in Britain, compared to 58 and 33 in Germany and France respectively.