In fact, the 799 projects were the highest number ever secured by the UK, according to EY’s annual UK Attractiveness Survey.
The overall European market grew by just four per cent, meaning the UK secured one-fifth of all European projects, close to its record high over the past decade. Its performance saw the UK extend its lead over second-placed Germany as a Foreign Direct Investment (FDI) destination, as both countries pulled away from the remainder of Europe.
The UK has also moved from eighth to fifth in the worldwide ranking of countries investors regard as attractive for FDI over the next three years its highest ever position overtaking Germany for the first time. Only China, the United States, India and Brazil are ahead of the UK.
Steve Varley, EY UK&I chairman and managing partner, said: The UK’s performance was nothing short of stellar and was achieved against the backdrop of more modest increases across Europe. The message that the UK is open for business is being received loud and clear by international investors, but as the global economy evolves, the UK must continue to respond in order to stay ahead.
Major gains made in software, Europe’s largest FDI sector
The UK was the clear leader in attracting projects in the knowledge industries. Software investments surged by more than 50 per cent, meaning the UK secured more than a third of all projects in what is now Europe’s largest FDI sector.
It also attracted 52 research and development (R&D) projects.
Mark Gregory, EY’s chief economist, said: The UK’s success in attracting R&D and HQ investments reflects the positive impact of initiatives to reduce corporation tax and incentivise R&D investment via the Patent Box.
It would be sensible to consider approaches that have the potential to strengthen the UK’s appear for other types of project as we look to the future of UK FDI.
Manufacturing strategy required
The report suggests the UK is ‘punching below its weight’ when attracting manufacturing projects.
The benefits of manufacturing projects are three-fold; they create permanent skilled jobs, pay relatively good wages and are crucial in developing the next generation of British workers,” said Gregory.
Tax policy should play a central role in a more ambitious manufacturing strategy that also results in improvements to the transport and logistics infrastructure. The latter would open up the regions, where a sizeable portion of the labour force is located.
Leading light of London must cast positive glow on rest of UK
The number of projects secured in London (380) rose by more than one-fifth in 2013 and accounted for nearly half of all UK investments.
The pulling power of London for global FDI means it risks overshadowing the rest of the UK, particularly the English regions where total projects excluding London and the South East were 20 per cent lower in 2013 than 2010, the last year of the Regional Development Agencies (RDAs).
With just 23 FDI projects recorded in 2013, the North East of England recorded its worse year in the past decade.