Despite worries about Brexit and the COVID-19 pandemic, the UK has defied analysts . It continues to cement its place as a premier investment destination. Alpesh Patel explains why.
Foreign direct investment (FDI) increases despite challenging global conditions, with British infrastructure and companies reaping the rewards.
Shelter From the Storm
With productivity, GDP, and unemployment levels on the decline worldwide due to the pandemic. Politically stable regions with robust judicial frameworks become increasingly attractive.
KPMG has reported that VC investment into scale-ups doubled at the start of 2020. While foreign investment in London real estate performed strongly in 2020, according to the estate agency Knight Frank.
London outshined Paris and Manhattan for inward property investment, boosted by a series of eye-catching deals. Like the $380 purchase of The Cabot in Canary Wharf by Hong Kong-based firm Link.
The Benefits of the UK for Inward Investment
The UK has a long tradition of providing a stable base for domestic and international companies. When there is some level of uncertainty in the broader markets. Investors look to mitigate risk by dealing in known and proven quantities.
The UK’s educated and multi-cultural workforce, strong property market, reputation for innovation and opportunity. And a diverse set of well-positioned assets have ensured the attention of foreign direct investment.
Chancellor of the Exchequer, Rishi Sunak, has committed to improving the UK’s already strong position as an equities listing destination through public market reform.
He believes that by reducing free float requirements and modernising listing rules, the UK can attract more inward equities investment. This will be combined with its strong corporate governance standards.
Government decentralisation programs over the past few decades have focused on regenerating the UKs urban centres outside London.
Investment in infrastructure and housing in Leeds, Manchester, and Sheffield has seen property and business growing.
Additionally, transport projects like the HS2 and the Crossrail stand significantly to benefit Birmingham and Slough’s commercial growth.
Resilience During the Pandemic
Ernst & Young’s recent UK Attractiveness Survey continued to paint a rosy picture for UK financial services. Which has been the most attractive European destination for decades.
The recent report has allayed fears that Brexit and the pandemic will change this position. By reporting that the country has attracted double the amount of financial services investment projects as Germany in recent years.
Modernising, Repositioning, and Future Opportunities
The E&Y report provides more exciting news about investor sentiment about the UK. As it modernises its economy and repositions itself globally.
Indeed, the UK is regarded as more resilient by global investors. Only 3% is suggesting that COVID has derailed investment plans.
While the economy offers plenty now, there is a strong worldwide sentiment about the UK’s ability to exploit future opportunities. Cleantech, digital, and health are seen as areas that the country is well-positioned to embrace.
Another huge growth area is digital tech, with the UK attracting over 30% of the entire European investment market.
As fears about Brexit fade and the vaccine rollout brings some semblance of normalcy to the economy. The UK is in an excellent position as a global investment destination.
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Alpesh Patel OBE