Inner London’s thriving entrepreneurial scene, renowned universities, and world-class infrastructure make it the prime hotspot for foreign investors looking to pour billions into the UK, according to a new report by law firm Irwin Mitchell and Cebr.
The comprehensive study on Foreign Direct Investment (FDI) examined the 50 largest UK cities and ranked their investment appeal based on a unique index* comprising eight economic indicators across three categories: growth potential, local skills, and local infrastructure.
The UK economy has attracted a staggering £2,000 billion in FDI, which not only generates jobs but also bolsters productivity, competitiveness, and innovation. Inner London’s impressive FDI index score of 79.8 is driven by its exceptional local skills, a large economically active population, and numerous prestigious universities. Furthermore, Inner London ranks second among all cities for growth potential, thanks to its burgeoning number of new businesses.
While Outer London also fares well, it trails Inner London across all three pillars, only outpacing the latter in the major road length (relative to the population) indicator.
The report offers three recommendations to boost economic development and FDI in the UK at both national and regional levels. These include providing quality infrastructure for transport and digital connectivity, ensuring businesses have good access to credit through a supportive financial system, and promoting sustainable economic growth to create a stable environment that attracts foreign investors.
Bryan Bletso, director of strategic growth for Irwin Mitchell’s international team, commented on the findings: “Inward FDI is widely regarded as a critical factor in propelling the domestic economy, boosting productivity, and fostering technology transfer. Hence, promoting the UK as an FDI destination can stimulate growth.”
“To attract more foreign direct investment, the UK Government must prioritize quality infrastructure, facilitate business access to credit, and support sustainable economic growth. This approach will create an enticing environment for international investors and establish the UK as a global leader in FDI.”
Bletso also emphasised the increasing significance of the environmental sector, as nations and businesses progressively focus on a low-carbon economy and environmental sustainability.
In 2021, the UK’s inward FDI position reached £2,002 billion, a slight increase from the previous year’s £1,919 billion. The USA is the largest source of FDI inflows into the UK, with £676 billion in investments in 2021, accounting for 34% of the total UK inward FDI stock. French investment in the UK also rose in 2021, reaching £101 billion, making it the fourth largest country investor into the UK.
Irwin Mitchell offers comprehensive advice to foreign businesses and individuals seeking to invest in the UK, with experts across jurisdictions including the US, France, India, Germany, Singapore, Israel, and China – all countries mentioned as leading FDI sources into the UK.
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