The UK is struggling to attract foreign direct investment (FDI). The number of FDI projects has decreased by nearly 30% since 2016-17, especially in key sectors after the Brexit referendum. However, there is uncertainty around the performance of FDI due to a lack of comprehensive data. The UK secured 1,654 FDI projects in the year ending in March 2023, down 27% from 2016-17. The US and EU have launched programmes to attract more investment, which could negatively impact the UK. The UK’s financial services sector continues to attract strong investment, but overall, the UK’s appeal to foreign investors has decreased. The government is now focusing more on the value of FDI projects rather than just the number. However, estimates of foreign companies’ investment and job creation are based on incomplete information. FDI data is reported in terms of flows, which can be distorted by single large mergers and acquisitions, and in terms of stocks, subject to changes in company valuations and exchange rate fluctuations. Despite an increase in FDI stock, the UK’s FDI flows have decreased over the past seven years.
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