The UK referendum on June 23, 2016, that signalled that the country would leave the EU has, for a few years, created some reservations within the investment world. While in the early stages foreign investors seemed hesitant to invest due to the uncertainty around what will happen to the UK economy and trading platforms once the country leaves the EU, data from fDi Intelligence suggests this lull in 2016 and 2017 has been slowly stabilising in 2018.

The number of FDI projects into the UK in 2018 increased by 19% to 1278, according to figures published in The fDi Report 2019. However, despite a 38% increase in 2018 in capital investment to $35bn, it is still significantly lower than the $51.3bn in capital investment recorded in 2015, before the vote to leave the EU. The number of jobs created tells a similar story, with a 34% increase in 2018 to 71,098 jobs created, still falling short of the 79,075 jobs created in 2015. However, this still represents a significant increase on 2016 and 2017 numbers.


In 2015, new FDI projects accounted for 69% with expansions accounting for 29%. In 2018, new FDI accounted for 64% and expansions 35%, highlighting a shift in the type of FDI into the UK. In 2015, the average size of an FDI project in the UK was $44.9m, but this has decreased to $27.4m in 2018.

fDi Intelligence recorded an increase in FDI projects globally in 2018, and while the UK benefited from increased investor activity with the number of projects peaking in 2018, it is clear that neighbouring countries are beginning to reap the benefits of the uncertainty being caused by Brexit. FDI into France, Spain, the Netherlands and Ireland increased at a faster rate than that of the UK when comparing 2015 with 2018, while Germany is expected to show similar growth.

Relocations up

Despite the number of FDI projects into the UK rising in 2017 and 2018, the number of companies announcing the relocation of their presence from the UK has increased to 30 in 2018, according to the report. This is double the relocations recorded in 2016 and 2017 and a 650% increase from the four relocations recorded in 2015.

Major auto companies including Nissan announced plans to move manufacturing from Sunderland to Japan and Honda plans to close its factory in Swindon in 2021. Japan’s Panasonic announced it will be relocating its European headquarters from London to Amsterdam citing concerns about the UK tax landscape following Brexit. Local company Dyson also recently announced plans to move its headquarters to Singapore, although the company denied this was related to Brexit.

Financial services companies are among the big players considering a move from the UK, with American Express and Wells Fargo already announcing planned reolcations of their European operations to Spain and France, respectively.

On the other hand, companies such as Amazon and Toyota have remained committed to the UK market, announcing plans over the past few years to increase operations in the country.

Software and IT services, business services and financial services remain the top three sectors for FDI by number of projects in the UK in 2018. Together they account for 48% of FDI in the country. Real estate FDI increased in the UK in 2018, accounting for 7% of FDI projects in the UK in 2018 compared with 4% in 2015. The number of food and tobacco projects has also increased since 2015, with 29 projects recorded in 2015, 36 in 2016, 35 in 2017 and 49 in 2018. Automotive FDI has been declining and with further factories to close this looks set to be a continuing trend.

Based on new FDI, only construction FDI in the UK by capital investment increased in 2018 with a fall in the value of the pound proving attractive. FDI in business services has increased after showing a decline in 2016 and 2017; however, the average size of business services projects in 2015 was $5.5m, and this has declined to $3.8m in 2018. Smaller local offices are being established to help combat the effects of Brexit for financial services and business services companies who need a presence in the UK market to operate efficiently. Capital investment in manufacturing in the UK has been declining year on year since 2015 and capital investment from companies setting up headquarters operations in the country has halved since 2015.

However, the country has performed well across R&D and design, development and testing.

The US remained the leading investor in the UK in 2018. Notably, all of the top 10 countries, bar France and the US, recorded the highest level of investment in 2018 across the period from 2015 to 2018. Brexit has prompted some companies to set up in the UK ahead of the deal, in order to act quickly once a deal has been agreed and remain a key player in the UK market.

While the outlook remains uncertain, it appears the initial hesitation from investors first witnessed in 2016 following the referendum has to some extent dissipated, and the Brexit deal itself remains in limbo. While some companies are moving away from the UK as a result of Brexit, there are also those who are continuing to invest in the country. Until an agreement is reached and the UK leaves the EU, it is difficult to predict the impact Brexit will have; however, as the wave of uncertainty continues, greenfield FDI could face a more pronounced impact.

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