The British government has gone back to the drawing room, after years of Brexit stillness, to design a new Office for Investment (OFI) at the heart of government. Its aim is to reinforce the role of the UK as a major investment destination after the end of the transition period. 

In his Linkedin debut, British prime minister Boris Johnson, cut to the chase. While governments are scrambling to design a compelling investment proposition as global investment shrinks and competition intensifies, he stated: “The question is not so much ‘why would you choose the UK’ as “why wouldn’t you?”


The man tasked with leading the OFI as ‘a single front door for high-potential investors’ shares the prime minister’s vision. 

“Frankly, there’s no better front door to go through than the front door at 10 Downing street,” Lord Gerry Grimstone, a former investment banker named Minister for Investment in March and now head the OFI, tells fDi

Drawing in the power of the centre 

The UK has traditionally been the largest recipient of foreign direct investment in Europe, figures from investment monitor fDi Markets show. The country offers one of the world’s best business environments, second only to Denmark for ease of doing business in Europe, according to the World Bank. And before Covid-19 struck, it typically outperformed the other major European economies. 

Not even Brexit jeopardised its leadership, although it somewhat questioned it. Foreign investors announced 4975 projects in the UK between July 2016 and September 2020, according to figures from fDi Markets. In the same period, Germany came close with 4183 projects, followed by France (2718) and Spain (2119). 

However, a closer look at the data shows a partitioning country as London and the South East increased its share of total FDI projects to more than 51% since then prime minister Theresa May triggered Article 50 and officially set Brexit in motion.

The UK economy has decoupled — it has effectively become two different countries,” Philip McCann, chair of urban and regional economics at the University of Sheffield and the father of the geography of discontent theory, tells fDi.

Levelling up the country has been a recurring promise of Conservative Party governments in the past 10 years, and Lord Grimstone believes the OFI will be functional to this objective. 

"Investment is really rooted somewhere, but sometimes to get routed across you have to draw in the power of the centre,” he says. 

“The convening power of the centre, and the power of the prime minister, the ability — by using the power of number 10 and the chancellor — to remove barriers to investment to formulate investment opportunities, is very, very powerful.”

The new OFI will be based in the Department of Trade and Investment (DIT), where the investment promotion mandate lies, and will be ‘sponsored’ by the prime minister and the chancellor of the exchequer. 

Working with the regions

The UK already has local agencies across England and the devolved nations, tasked with promoting their territories to foreign investors. They welcomed the establishment of OFI, although they called for the establishment of a board representing the regions within the office. 

“I don't think it would be part of our [office],” Lord Grimstone says. 

“Sometimes you do these things through structures such as boards, sometimes you do it through day-to-day contact when there’s no single way — but ... the structures that I like are those which have short lines of command. Get the right people around the table ... and use that to you know to drive forward investments.”

The government centralisation of investment promotion within the OFI stands in contrast with an emerging narrative across Europe that empowered local investment promotion agencies (IPAs) move the needle. As a research paper published by the London School of Economics in 2019 concludes: “Regional attractiveness to FDI is not fostered by national IPAs, but can respond to sub-national IPAs strategies”. 

In the UK, the devolved nations have been more successful than the rest of England (excluding London and the South East) when it comes to attracting a large number of high-quality FDI projects. 

“We are working very closely with metropolitan mayors and [local enterprise partnerships]. What we are doing is using the power of 10 Downing Street to bring investment to the regions,” says Lord Grimstone. 

National security

The government sent the National Security and Investment (NSI) bill to parliament two days after announcing the OFI. The bill overhauls the country’s foreign investment screening mechanism to protect against ‘malicious’ investment. 

“If we’re trying to massively boost the amount of overseas investment coming into the UK, it makes perfect sense to make sure that the investment that is coming in is investment that we want to attract,” Lord Grimstone says. 

The NSI outlines 17 strategic sectors that will mandate foreign investors to notify of any proposed transactions. Although, at first glance, they embrace the whole realm of technology and data based industries, “their definition is very tight ... and we expect the majority of notifications to be cleared”, Lord Grimstone emphasises. 

The bill also gives the government a five-year retrospective power to call in transactions in the wider economy which were not notified, but may raise national security concerns. 

While China has been the main concern of policy makers across the globe when drafting such legislations, Lord Grimstone says the UK’s is “actor agnostic” and, rather than deter foreign investors, “it makes it almost easier for them ... because anything outside those [sector] definitions is not subject to mandatory notifications”.

At such a critical juncture, as the UK gears up for the end of the transition period, Lord Grimstone sees the OFI as the ‘tip of the spear’ of the country’s broader investment promotion strategy. The future of FDI into the UK will also hinge on his ability to leverage 10 Downing Street’s convening power.