2014 UK attractiveness survey

Challenges

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However, while these strengths have driven the UK’s FDI performance to record levels in the past year, they also bring challenges that the UK must address to sustain its lead.

While the UK remains unrivalled in Europe in attracting both North American investments and follow on projects from existing investors worldwide, it lags behind Germany in attracting new projects from first-time investors, and securing projects from some of the world’s fastest-growing FDI sources — notably China.

It is also still punching below its weight in attracting manufacturing projects, securing just 12% of manufacturing investments into Europe compared to its 20% share of overall FDI. More worryingly, it won only half as many new manufacturing projects as Germany, which is now beating even the lower-wage destinations of Central and Eastern Europe in the battle for first-time manufacturing investments.

Finally, the sheer pulling power of London for global FDI means it risks overshadowing the rest of the UK, especially the regions.

Excluding London and the South East, total projects in the regions were 20% lower in 2013 than in 2010.

Our study underlines these concerns by suggesting investors not yet in the UK have a relatively negative view of its regions, with 62% identifying London as the most attractive region, compared to 37% of existing UK investors.