New statistics show that foreign investors are 'looking beyond London and the South East'

Foreign direct investment (FDI) is a key driver of employment, creating jobs across different regions of Britain in a variety of sectors. New statistics published yesterday by the Department for Business and Trade (DBT) reveal trends in FDI throughout the British economy.

From the 2022 to 2023 financial year, 1,654 FDI projects were landed in the British economy, creating 79,549 new jobs and safeguarding 6,646 existing jobs. Of the 1654 projects, 711 were from new investors and the remaining 943 were from existing investors.

Which sectors of the British economy have been backed by FDI?

The software and computer services sector has seen the most FDI projects launched in the 2022 to 2023 financial year. In total, 382 FDI projects have created 19,584 jobs in this sector. The financial services sector is the next largest, with 236 FDI projects creating 8722 jobs.

Furthermore, the environment, infrastructure and transportation sector has seen 150 FDI projects create 7710 jobs, and the advanced engineering and supply chain sector has seen 141 FDI projects create 3,327 jobs.

Commenting on the new statistics, the DBT refer to the objective of making Britain a science and tech and science superpower by 2030. Relating to this topic, a report published this year by PwC and the UK Space Agency has shown that Britain is the second most attractive economy for space investment.

In terms of the new data, the sectors relevant to the objective of making Britain a science and tech and science superpower include life sciences, biotech and pharmaceuticals. In 2022 to 2023 financial year, the life sciences sector has seen 93 FDI projects create 3,546 jobs, whereas the biotech and pharmaceuticals sector has seen 57 FDI projects create 2,089 jobs.

Moreover, according to the DBT, the statistics show economic activity is going in the right direction to meet the objective of making Britain a global leader in science and tech.

Regional UK trends

Which regions of Britain have been most attractive to foreign investors?

DBT explain that FDI is key to ensuring the economy grows and that levelling-up takes place across the whole of the country.

As you might expect, London was the hottest area for FDI, with 528 projects creating 20,647 jobs in the 2022 to 2023 financial year. However, the DBT highlight the gains made in Northern England. For example, in the Yorkshire and the Humber region, 103 FDI projects have created 7,378 jobs. That is a big increase from previous years – 97 per cent from 2021 to 2022 and 423 per cent from 2020 to 2021, according to the DBT.

Furthermore, across the West and East Midlands, 265 FDI projects have created a total of 11,091 jobs. Across the North West and North East, 198 projects have created 8,867 jobs. Moreover, Lord Johnson, the British government's Minister for Investment, has stated that the new "figures confirm investors are looking beyond London and the South East".

Global trends

Which countries have been the biggest source of FDI in Britain?

Britain's biggest source market in 2022 to 2023 financial year was the United States, which sourced 418 FDI projects that created 20,434 jobs. Britain's next two largest source markets were India and Germany. Indeed, research by Grant Thornton has identified a record number of Indian-owned companies operating in Britain.

Whilst more FDI projects came from India compared to Germany (118 vs 105), German FDI projects created 10,201 jobs, significantly more than Indian FDI projects which created just 8,384 jobs.

Lastly, looking to the future, Lord Johnson has referred to the Global Investment Summit (GIS) scheduled to be held this October in his comments. The summit will bring together the leaders of more than 200 multinational companies and investment corporations to demonstrate Britain's credentials as "a world-leading investment destination".

The aim of GIS 2023 is to encourage investment worth billions of pounds into Britain to fuel job creation, especially in "high-tech sectors". The government will be hoping that the success of the 2021 GIS can be replicated. The 2021 GIS "secured £9.7 billion of new foreign investment on the day".