In the past few weeks, reports from both the United Nations Conference on Trade and Investment (Unctad) and management consultancy firm AT Kearney ranked the UK as Europe’s top inward investment location.

The World Investment Report, released by Unctad at the end of September, showed that the UK increased its inward investment stock by $104bn last year to a total of $672bn, placing it well ahead of Germany in second place with $545bn and France in third with $433bn.


The underlying figures revealed that the UK accounted for 20% of the total investment stock in Europe.

In October, AT Kearney ranked the UK as the most attractive destination for FDI in Europe, as it moved up from seventh worldwide to fourth behind China, the US and India.

According to the firm’s FDI Confidence Index 2004, US investors put more cumulative investment into the country than any other.

AT Kearney said the result was partly due to stronger economic growth expectations in the UK than in the rest of western Europe and partly because the UK’s innovative and technology-driven companies had made attractive M&A targets.

The positive perception of the UK as Europe’s pre-eminent international business location was reinforced by Cushman & Wakefield Healey & Baker’s September announcement that London ranked as Europe’s best city for business for the 15th year running in its annual European Cities Monitor report.

The survey of 500 of Europe’s largest companies rated London number one for easy access to markets, availability of qualified staff, external transport links, quality of telecoms, languages spoken, availability of office space and internal transport.

Together with Barcelona – which won fDi’s European Cities of the Future competition – London was named as the city that promoted itself most effectively.

Only 18% of respondents thought that Frankfurt would be the financial capital of Europe in five years’ time, compared with 63% for London.

Other recent positive indicators have included the UK’s climb of four places to 11th overall in the World Economic Forum’s annual Global Competitiveness Report, based on a poll of 8700 business leaders worldwide. This put it comfortably ahead of its main European rivals Germany (13th), France (27th) and Italy (47th).

The UK also ranked seventh in the World Bank’s Doing Business in 2005 report of 145 countries, and fourth in an Economist Intelligence Unit report on the attractiveness for research and development (R&D) spending over the next three years. About 24% of senior executives identified the UK as their top R&D destination, which put it behind China (39%), the US (29%) and India (28%), but ahead of Germany (19%), France (9%), Italy (9%) and Czech Republic (8%).

Whether any effects of recent interest rate hikes and a strong pound might dampen investor enthusiasm for the UK remains to be seen. For the moment, its reputation is unblemished.


Charles Piggott