As the world pivots from Russia and China even more so (well the biggest Western economies) we see India again being the only major game in Asia. Indeed the Middle East too see India a fair trading partner. Similarly the UK continues to rise (indeed too much for Russian and Chinese investors who are de facto persona non grata though not officially after dirty money of the former and spies of the latter).
Despite worries about Brexit and the COVID-19 pandemic, the UK has defied analysts and continues to cement its place as a premier investment destination. Foreign direct investment (FDI) is increasing despite challenging global conditions, with British infrastructure and companies reaping the rewards.
Shelter From The Storm
With productivity, GDP and unemployment levels on the decline worldwide due to the pandemic, politically stable regions with robust judicial frameworks become increasingly attractive.
KPMG have reported that VC investment into scale-ups doubled at the start of 2020, while foreign investment in London real estate performed strongly in 2020, according to estate agency Knight Frank. London outshined Paris and Manhattan for inward property investment, boosted by a series of eye-catching deals like the $380 purchase of The Cabot in Canary Wharf by Hong Kong-based firm Link.
The Benefits of the UK for Inward Investment
The UK has a long tradition of providing a stable base for domestic and international companies. When there is some level of uncertainty in the broader markets, investors look to mitigate risk by dealing in known and proven quantities. The UK’s educated and multi-cultural workforce, strong property market, reputation for innovation and opportunity, and a diverse set of well-positioned assets has ensured the attention of foreign direct investment.
Regulatory Commitments
Chancellor of the Exchequer, Rishi Sunak, has committed to improving the UK’s already strong position as an equities listing destination through public market reform. He believes that by reducing free float requirements and modernising listing rules, the UK can attract more inward equities investment when combined with its strong corporate governance standards.
Urban Regeneration
Government decentralisation programs over the past few decades have focused on regenerating the UKs urban centres outside London. Investment in infrastructure and housing in areas like Leeds, Manchester and Sheffield have seen property and business grown. Additionally, transport projects like the HS2 and the Crossrail stand to significantly benefit the commercial growth of Birmingham and Slough, respectively.
Resilience During the Pandemic
Ernst & Young's recent UK Attractiveness Survey continued to paint a rosy picture for UK financial services — which has been the most attractive European destination for decades. The recent report has allayed fears that Brexit and the pandemic will change this position by reporting that the country has attracted double the amount of financial services investment projects as Germany in recent years.
Modernising, Repositioning and Future Opportunities
The E&Y report provides more exciting news about investor sentiment about the UK as it modernises its economy and repositions itself globally. Indeed, the UK is regarded as more resilient by global investors, with only 3% suggesting that COVID has derailed investment plans.
While the economy offers plenty for the here and now, there is a strong worldwide sentiment about the UK’s ability to exploit future opportunities with cleantech, digital and health seen as areas that the country is well-positioned to embrace.
Another huge growth area is digital tech, with the UK attracting over 30% of the entire European investment market.
As fears about Brexit fade and the vaccine rollout brings some semblance of normalcy to the economy, the UK is in an excellent position as a global investment destination.
