Why the UK is still an attractive place to invest

Islamabad: According to EY’s latest ‘UK Attractiveness Survey’, total foreign direct investment (FDI) projects into the UK fell by 6.4 per cent in 2022. Even worse, the UK has slipped into third place in Europe for perceived attractiveness, behind Germany and France.

Think back to the economic turmoil that hit the country last year, and this all seems to stack up. As we cycled through chancellors and prime ministers, inflation surged and markets baulked. The EY report refers rather euphemistically to the “UK-specific” challenges of 2022, while adding that Brexit has “no question” reduced UK attractiveness for some investors.

Yet, surprisingly given that context, the survey found that longer-term perceptions of the UK’s attractiveness have held firm. In fact, an unprecedented 65 per cent of investors surveyed said they were planning to make an investment in the UK in 2023 – the highest proportion on record. How can this be?

Firstly, although the UK has battled its own storms, the economic climate has hardly been inviting elsewhere. Professional services firm TMF Group is far from alone in noticing that over the past year, economies worldwide have suffered disrupted supply chains, increased energy prices and barriers to international trade. As group chief executive Mark Weil sums up, while world trade was recovering from the pandemic “challenges of course remain including the ongoing war in Ukraine, associated sanctions and geopolitical tensions”.

Yet the UK economy also has a lot going for it. As the table below shows, it comfortably ranks within the 10 least complex places to do business (France is at the bottom of the pile) according to TMF Group’s Global Business Complexity Index. The report said that “the political environment has settled somewhat and over the next 12 months the UK is expected to remain a simple place to do business”. It added that “in the wake of Brexit, there is a stable environment and favourable industry support from advisers and industry groups, making the jurisdiction an attractive place to do business”.