Current Investment in the United Kingdom: Part One of The Investors' Guide to the United Kingdom 2015/16

By Jonathan Reuvid

The first section of the extensively updated eighth edition of Investors’ Guide to the United Kingdom provides a background to the buoyant investment climate of the United Kingdom together with briefings on the grants and incentives available to UK registered businesses and the many support services which UK Trade & Investment offers incoming investors. Individual chapters profile the UK’s Local Enterprise Partnerships with whom investors can work and the science parks and business incubators where foreign-owned businesses can locate.

• Language: English
• Publisher: Legend Press
• Release date: Dec 4, 2015
• ISBN: 9781785079375

Book preview

Investment

Part One

Investment in the United Kingdom: The Current Environment

1.1 THE UK ECONOMY AND INVESTMENT ENVIRONMENT

Jonathan Reuvid Legend Business

During the past year the UK economy has consolidated its recovery from the last decade’s recession. With a new majority government pledged to continue the previous coalition government’s policies of deficit reduction, a firm control of public spending, infrastructure investment and a fresh commitment to growth, stability is assured through to 2020.

Nevertheless, there are challenges ahead both from the possible impact of the downturn in China’s economy and more sluggish recovery of some of the UK’s major EU trading partners. At home, productivity improvement is recognized as a prerequisite for sustained economic strength and the government is applying fiscal adjustments and further incentives to assist businesses in achieving this goal.

Securing a broad base from which foreign investments are generated is critical to the UK retaining its position as the leading destination for FDI in Europe. During 2014/15 investments were received from a record number of countries and territories, notably emerging markets of which India became the third largest source of all investments. The effectiveness of the UK offering is being enhanced through UK Trade & Investment (UKTI) joint trade and investment sector teams in order to create more export-led inward investment opportunities.

MACRO-ECONOMIC INDICATORS

Forecasts for 2015/16

Composite forecasts for the basics of the UK economy published by HM Treasury are highlighted in Table 1.1.1.

Table 1.1.1 Macro-economic indicators August 2015

The highest and lowest and forecasts are extracted and the averages calculated from the forecasts made during the previous month by 22 city banks and investment firms, and 17 non-City research institutions and forecasters including the OECD, IMF, EC, Economist Intelligence Unit (EIU) and Confederation of British Industry (CBI).

Prospects for the UK are compared with those of other major advanced economies and the emerging and developing economies in Table 1.1.2 by reference to recent IMF growth forecasts, indicating a steadily improving outlook for the UK in the near-term, second only to the US among the developed economies.

Table 1.1.2 2016 forecast GDP growth vs 2015

Source: IMF forecasts June/July 2015

The growth prospects for Asian economies, notably China and India exceed the UK GDP forecasts and underline the renewed focus on these markets for trade and investment.

The UK Population

The population stands at an estimated 64.6 million, with a growth of 491,000 over the previous year and a forecast annual growth rate of 0.7% through to 2021. The population has aged since 2004 with the proportion of those aged 16-64 decreasing marginally from 65% to 64% and those aged 65 and over increasing from 16% to 18% (Source: Office of National Statistics, June 2015).

As of May 2015, 30.98 million were in work, 265,000 more than a year earlier. As of July the jobless rate stands at 5.6% (www.tradingeonomics.com) Applying the international standardised measurement, the UK’s rate of unemployment compares favourably with the EU average of 9.7% (source: Eurostat, 2015) although higher than the US (5.3%) and Germany (4.7%).

According to the 2011 census, 83.9% of the population are resident in England, 8.4% in Scotland, 4.9% in Wales and 2.8 % in Northern Ireland. Of those living in England and Wales, 7.5 million (13%) were born abroad of which almost half (3.4 million) held a UK passport.

Some of those born abroad have since become British citizens. Of the 694,000 born in India, 379,000 had taken British citizenship. By contrast, of the 579,000 residents born in Poland, 558,000 remained Polish nationals having acquired the right to live and work in the UK since Poland joined the EU in 2004. The other top 10 countries of birth of UK residents were: Pakistan, Republic of Ireland, Bangladesh, Nigeria, South Africa, US and Jamaica and China. Immigration has risen sharply and continues to rise since the millennium.

UK INWARD INVESTMENT

The UK stock of inward foreign investment is valued at US$1.7