UNCTAD reports landmark UK inward investment

This year’s World Investment Report shows that the UK again attracted more inward investment than any other European country.

The UK attracted US$1,135 billion in foreign direct investment (FDI) stocks.

This landmark figure highlights that the UK environment which offers commercial stability, fair and efficient regulation and support for innovation is working.

Lord Jones of Birmingham

Minister for Trade and Investment

Globally, the UK ranked second only to the USA in the report produced by UNCTAD.

Comparing UK to other countries?

“This landmark figure highlights that the UK environment which offers commercial stability, fair and efficient regulation and support for innovation is working,” said Minister for Trade & Investment, Digby, Lord Jones of Birmingham.

The UK was US$353 billion ahead of France, which ranked second in Europe in the UNCTAD report.

Third was Belgium (US$603 billion) and fourth Germany (US$502 billion).

Among the high-growth economies, China attracted US$292 billion followed by Brazil with US$ 221 billion and Russia with US$197 billlion.

Limitation of ‘flow’ measurement

As well as FDI stocks, UNCTAD also measures FDI ‘flows’.

The flow of inward investment is the value of cross-border funds that finance inward investment.

However, this measure does not account for firms that set up overseas and fund expansion from their new location.

For this reason flows are not as appropriate a measure of inward investment for developed economies like the UK.

Flow figures skewed in 2005

In 2006 FDI flows into the UK were still the second highest in the last 10 years.

While this marked a decrease on the previous year’s figure it was not an accurate reflection of actual performance.

The 2005 figures had been abnormally high owing to the reclassification of Royal Dutch Shell as a Dutch-owned company and its UK assets measured as inward investment flows.