4 minute read 28 Mar 2019
Cityscape london skyline people foreground sunset

What global investors should look for in a post-Brexit UK economy


Steve Varley

EY UK&I Chairman

Passionate about UK business, diversity and entrepreneurship. Husband and father of two. Triathlete.

4 minute read 28 Mar 2019

Show resources

Notwithstanding the current uncertainty, the UK is still a great place to do business.

In the UK it may feel like the only geo-political issue is Brexit, but stepping back and looking at the considerations for the world’s largest multinationals, it’s clear there are other challenges that may be as big if not bigger. These include US/China trade relations, global regulation and the evolving world of technology. Indeed, these pressures can be seen in the contraction of global M&A activity in the second half of 2018.

Against this backdrop the UK has a good story to tell and should provide the UK with a high level of confidence. Despite the current uncertainty, the UK has many long-term attractive qualities. These include all forms of infrastructure (transport, telecommunications, energy, hospitals, schools etc.), a sound legal system, language skills, a good standard of living and a diverse society with many opportunities to prosper.

Rising confidence


GDP annual growth rates at the end of 3rd quarter in 2018 were 1.7% for the Euro area and 1.5% for the UK. Despite Brexit concerns, growth is in line with Europe.

Foreign direct investment (FDI) into the UK


The UK remained the number one destination in Europe in 2017 ahead of Germany and France (EY’s UK Attractiveness survey).

EY’s latest UK Attractiveness survey also highlights that, amidst a 10% growth in the European market for FDI, the UK attracted 1,205 FDI projects in 2017, a 6% increase when compared to 2016 (1,138). Germany also saw a 6% rise in 2017 – constrained in part by a tight labour market - compared to the 31% surge in projects (from 779 in 2016 to 1,019 in 2017) experienced by France, supporting claims of the emergence of ‘The Macron effect’. It will be fascinating to see what the numbers will look like for 2018 when we release them later in the year.

UK regional economic growth

It was also great to see that some of the regions in the UK: Scotland, the North West, the East, and South East had strong FDI performances in 2017.  This was driven in part by an increase in the number of digital projects locating there.



digital projects located in Edinburgh in 2017, which contributed to regional FDI growth

North West England


digital projects located in Manchester in 2017, which contributed to regional FDI growth

East England


digital projects located in Cambridge in 2017, which contributed to regional FDI growth

South East England


digital projects located in Reading in 2017, which contributed to regional FDI growth

While the report was positive in many areas, for example a 22% increase in digital investments in the UK, it is undeniable there were concerns expressed by some of the investors surveyed surrounding Brexit. These concerns contributed to others catching up with the UK in their own countries’ FDI and resulted in a decline in FDI projects in certain sectors, including Financial Services, Business Services and Logistics. At the same time, France overtook the UK to be named the second most attractive place for future location decisions by investors, behind Germany in first place.

Although the UK experienced a growth in the number of FDI projects locating in the UK, its market share of European FDI fell for the second year running – from 21% in 2015, to 19% in 2016 and 18% in 2017. In addition, the number of headquarters locating in the UK – a significant FDI performance indicator – were also down by 25%.

It can’t be ignored that this FDI performance shows an economy in transition, with forces such as Brexit and technological change impacting the mix of investment across sectors, project types and size.

Opportunities in digital investment

For me the data on the growth in digital investments highlights the significant opportunities in this area and why the UK needs to lean into these through a focus on skills, overall infrastructure and research and development that supports this drive. The choices made by international investors provide a strong indication of where the UK can further build competitive advantage. The digital economy will be a dominant driver of growth in years to come and it is important that developing the right skills to support this is a top priority for organisations across the world.

As the World Economic Forum (WEF) focuses on ‘Shaping a Global Architecture in the Age of the Fourth Industrial Revolution’ it’s also important that the UK continues to look at ways to support the inclusive growth agenda – a big focus for society, business and politicians over the last few years which is essential for the long-term economic success of our country.

What’s possible in the Transformative Age? Join EY to discuss this and all the pressing economic and social issues as we look to the World Economic Forum Annual Meeting 2019 – from 22-25 January. Join the debate via ey.com/wef and using #WEF19 and #BetterWorkingWorld.


Over the next few months international investors will be watching the UK closely to see how events play out. It’s important that they don’t lose sight of the fundamentals that have made, and continue to make, the UK an attractive destination to do business.

About this article


Steve Varley

EY UK&I Chairman

Passionate about UK business, diversity and entrepreneurship. Husband and father of two. Triathlete.