Reading the headlines, it's easy to think that Britain has lost its appeal as an investment destination but, according to the ONS, the number of foreign owned businesses actually increased in 2017, albeit marginally.
Its latest Annual Business Survey estimates that there were 2.4 million registered non-financial* firms in the UK in 2017. Of these, 26,077 (1.1 per cent) were foreign owned, up from 24,236 in 2016.
These global firms punched far above their weight in economic terms, contributing £331.3bn in added GVA, or 27 per cent of the to the UK’s non-financial business economy, up by £16.2bn.
Europeans formed the majority of owners, at 56 per cent, with investors from the Americas holding 29.8 per cent and Asian investors holding 13 per cent.
Reasons for optimism?
The rise in foreign ownership could be down to two things, depending on which way you want to look at it.
Either it’s a stirring sign that investors still have faith in the UK as a place to do business (at least up to 2017), or, they’ve opportunistically been jumping at the chance to snap up British firms on the cheap thanks to a weak pound. The ONS data doesn't give any insight into which, but it's likely a product of both.
The results of the 2018 survey, which won’t be released until next year, may paint a clearer picture of how that sentiment has changed. In the meantime, other recent data sources suggest that foreign investors are beginning to hold back.
Foreign direct investment into the UK is its lowest for six years, according to the FT. There were 1,782 open FDI projects during the fiscal year ending March 2019, a 14 per cent fall on the previous year.
Whether Brexit has made, is making or will make the UK less attractive as a place to do business or not, there is little doubt that the continued uncertainty around Britain’s position in Europe and the world is delaying decisions to invest here. We may just have to wait a few years before the statistics bear that out.