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.