2014 UK attractiveness survey
Over many years, the UK has demonstrated its ability to change to maintain its lead in European FDI.
However, as the world economy continues to evolve, it must respond again to stay ahead. Our findings highlight a number of priority actions:
- Protect and reinforce our strengths. Investors regard the UK business environment’s stability and predictability as a key attribute. At a time when political risk is increasingly prominent, the UK must continue to provide a clear and predictable policy environment, and in particular, preserve recent gains in areas like labour costs and taxation.
- Increase incentives for R&D and innovation. Investors in our survey identified this as critical for maintaining the UK’s global FDI attractiveness. To continue supporting research networks and business partnerships this will have to go beyond existing tax incentives.
- Raise awareness among investors not yet in the UK. Existing investors are well aware of the UK’s strengths, and it should consider using them as advocates. However, potential new investors still see the UK as an economy dominated by London and financial services, and it needs to demonstrate all its attributes.
- Exploit London’s strength more widely. London is one of the UK’s strongest assets, and we should leverage it more effectively to benefit regions across the country by, for example, putting together combined bids for multi-site or multifunction opportunities.
- Clarify the UK’s approach to Europe. Intra-European FDI grew in 2013, accounting for half all European projects, and 63% of all investors (and 78% of Asian investors) say the UK has an important role as a European gateway. The UK cannot neglect intra-European FDI, and needs to clarify its relationship with Europe as soon as possible.
- Develop a more ambitious manufacturing strategy, drawing on lessons from the UK’s success attracting R&D and HQs. The discussion on manufacturing has concentrated on the potential for future “reshoring” of production from lower-cost economies to developed markets, but EIM figures show the manufacturing opportunity already exists: of the 3,955 FDI projects in Europe in 2013, over half – 2,005 – were from manufacturing. Manufacturing projects create 160 jobs on average, and these tend to be suitable for young people and potentially located in the UK regions.
Our survey of investors and analysis of Germany’s performance suggests the UK should prioritise the following in order to successfully compete and secure manufacturing FDI:
- Ensure the availability of people with the level and range of skills needed by the sectors identified as priorities, with business and government agencies working together to develop the right capabilities
- Improve transport and logistics infrastructure, opening up the regions
- Ensure sufficient supply of competitively-priced real estate suitable for manufacturing projects.