Foreign direct investment (FDI) is a surefire sign that the business class is banking on a particular country’s success. In defiance of the IMF’s gloomy outlook, the UK is an increasingly tempting attraction for money from overseas – more so than anywhere else in Europe. The latest data lays bare which countries’ investors have embraced cooperation as the world reemerged from the pandemic last year. See for yourself in Express.co.uk’s interactive map below.
FDI is a large injection of cash in a domestic company made by an investor, firm or government from another country.
Most often a substantial and lasting stake, their scale provides a strong signal as to the economic prospects of a country in the eyes of the international community.
According to the latest data by the Office for National Statistics (ONS), overseas investment in the UK of this kind breached £2trillion for the first time in 2021. In the post-Brexit era, that year’s increases were mainly driven by US interests – now responsible for roughly a quarter of all inward FDI – and those from non-EU European countries.
This influx created a record 85,000 jobs in the UK between 2021 and 2022, the Department for International Trade (DIT) claim, as foreign entities expand and relocate offices and factories here rather than just buying shares in British companies.
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Although the stirring interest in the UK is significant, it is not unique – the country likely buoyed by the rising tide of FDI globally. A recent OECD report shows it surged by 20 percent in the first half of 2022 as the world rebounded and reconnected after a period of pandemic isolation.
In light of this, researchers at UK-based financial services outfit City Index compiled the FDI inflows for 44 major economies to determine where investors thought their money would guarantee them the best returns.
In terms of the sum invested as a share of the recipient country’s GDP, Chile came out on top during the first half of 2022 with 3.60 percent.
Fiona Cincotta, financial market expert at City Index, attributed Chile’s success to its attractive and thriving wholesale trade and the manufacturing industry. She said: “This stems from the prospect of new changes brought in by the new president, Gustavo Petro, who is leading the country in the direction of sustainability, by opting to replace environmentally damaging processes that use oil and gas. This is a big attraction for any country looking to invest overseas.”
Chile was followed by Sweden (3.55 percent), Brazil (3.46 percent) and Colombia (3.14 percent). Many of the largest economies in the world fall outside of the top ten in this regard – the UK included – owing to the overriding strength of their domestic markets.
In net terms, however, the picture changes significantly. Just over £120billion worth of FDI found its way to the US between January and June last year – more than any other country but just narrowly ahead of China on £119billion.
The UK received more foreign injections of cash than anywhere else in Europe at £19.6billion, putting the country eighth overall in front of Sweden in ninth with £18.3billion. Distantly trailing these sums were the likes of Germany (£14.3billion), France (£9billion) and Italy (£7.6billion).
British companies also increased their outward position in 2021 – the amount they spent abroad climbing by £16billion on the previous year to just under £1.8trillion. The fruits of these foreign investments were more plentiful than anyother year on record – earnings abroad almost tripling from £49.6billion in 2020 to £134.7billion in 2021.
