Britain stood out as the sole major European economy to witness an increase in foreign direct investment (FDI) projects last year, propelled by the thriving tech sector.
According to EY, the professional services firm, the latest survey on the UK's attractiveness revealed a 6 per cent increase in FDI projects in 2023. Meanwhile, Germany and France experienced year-on-year declines as the eurozone's economy stagnated amid high energy and borrowing expenses. Overall, European FDI saw a 4 per cent decrease compared to the previous year.
The UK remains Europe’s second-largest destination for foreign investment behind France but has not yet exceeded its pre-pandemic investment levels three years after Covid-19.
Over the past year, Britain's portion of foreign investment in Europe has increased from 15.6 per cent to 17.3 per cent. In 2023, digital services and technology accounted for over a quarter of overseas capital, marking a 9 per cent rise. Tech emerged as the leading recipient of FDI in the UK, surpassing financial services, and capitalising on a relatively slower pace of interest rate hikes last year.
“The UK owes much of its FDI growth this year to a resurgence in digital investment, making the UK something of an outlier in comparison to the Europe-wide trend for declining tech projects,” Peter Arnold, chief UK economist at EY, said.
