With the news a few weeks ago that the UK is now ranked second in the world for foreign direct investment, ahead of the US and only just behind China, it is clear that businesses, industries, and investment are by no means abandoning the UK as we approach Brexit Day.
As City A.M. put it, “UK foreign investment hits record high as investors shun Brexit fears”.
The US continues to be our biggest destination for UK FDI, accounting for £241.0 billion (or 19.9 per cent) in 2016, as well as the largest investor in the UK with £308.1 billion (or 25.7 per cent) coming into the country.
There is a reason that we continue to see such enormous levels of investment on our shores: Britain is the best country in the world in which to do business, according to the recent analysis by Forbes. This is the second year in a row that we have come out on top – beating our European neighbours and other economies around the world. As the Chief Economist at Moody’s Analytics, Mark Zandi, said ‘To be open for business, you need a strong legal system, full adoption of property rights and clear rules and regulations.”
Our economy is continuing to steadily grow, and we have now seen 20+ quarters of successive growth. The latest figures show that in the three months to October, the economy grew by 0.4 per cent. This is to be welcomed and flies in the face of the forecasts put forward by some in the run-up to the referendum.
And recent figures released by IHS Markit have shown that growth in our manufacturing sector has risen further and faster than our European counterparts. Where a score of 50 is the break point between expansion and contraction, the UK has risen to 53.1 whereas the Eurozone has fallen to 51.8 (the lowest since summer 2016). Manufacturing in France is at a 26-month low, a 31-month low in Germany, and a 47-month low in Italy.
2018 also saw the UK once again beating every other country in Europe to retain its place as the best destination for venture capital investment in technology companies. Our tech sector attracted $7.9 billion in funding from investors during 2018, ahead of Germany ($4.6 billion) and France ($4.4 billion). We also achieved tech exits – including IPOs and acquisitions – worth $40 billion, ahead of every other country in Europe.
UK-based chipmaker Graphcore has recently raised $200 million in a new funding round from investors including Microsoft and BMW, valuing the company at $1.5 billion. The financing will accelerate Graphcore’s ambitions to challenge the likes of Nvidia, Intel and Google to become the silicon backbone of artificial intelligence applications. Its new valuation of $1.5 billion, before including the new capital raised, makes Graphcore the latest UK-based “unicorn” ($1 billion private companies) this year.
Research also showed that the UK produced more unicorns than any other in Europe, including mobile-only digital bank Monzo and cyber security software firm Darktrace.
As Eileen Burbidge, co-founder and partner at Passion Capital and chair of Tech Nation, said: "The fact that the UK is leading in Europe on exits will come as no surprise to those who have been watching UK companies grow in stature over the last few years, and particularly in fintech which the UK does genuinely lead the world.”
And we are well placed to maximise our fantastic space industry, as we set our sights on cornering 10 per cent of the global space market by 2030. Optimism and investment in the sector is booming: in 2017, nine companies in the UK received $32 million worth of funding from venture capitalists. This year, that figure has increased to $185 million invested into 20 companies. 44 per cent of the world’s small satellites are made in the UK and, as Angus Horner, director of the Harwell Space Cluster in Oxfordshire, gently pointed out, “we have a very interesting ability to do some things quite well.”
Our life sciences sector continues to go from strength to strength, with pharma giant UCB set to invest £1 billion in the UK as part of the Government’s second Life Sciences Sector Deal, along with industry names such as Roche and IQVIA also committing to investment projects. UCB already has a research & development base in Slough, Berkshire and the investment over the next five years will include £150-200 million to build a new research centre nearby which will support 650 highly-skilled jobs. Roche has announced a further £30 million investment in the UK, part of which is a £20 million investment in a precision cancer research partnership with the Christie NHS Foundation Trust in Manchester. There will also be more than £80 million investment from five cell and gene therapy companies.
My colleague Matt Hancock MP, the Secretary of State for Health & Social Care, had it absolutely right when he said: “I want the UK to have the most advanced health and care system on the planet. Technology and artificial intelligence have the potential to revolutionise healthcare by unlocking the next generation of treatments, diagnosing diseases before symptoms appear and helping patients take greater control of their own health”.
And there is also significant interest in the UK as a destination for holidaymakers and investors in the tourism industry, according to a recent report. Anna Friedrich, associate director at Christie & Co said: “There’s no lack of demand for the assets in the UK and I’m expecting that to continue.” Google searches are an expression of interest in a particular market, and the report shows that the UK remains the clear leader in terms of share of Google searches, accounting for 35 per cent of the total volume.
So, there is plenty of great news to celebrate that the UK continues – across lots of sectors and industries – to be a first choice for investors, and that interest in UK companies and businesses is growing. I continue to believe that we will thrive when we leave the EU.