Call for government to bolster investment zones as FDI declines

Government needs to boost support for investment zones and freeports if it is to stop investment into UK business stalling. That is the conclusion of a new report from Irwin Mitchell, which found that while the UK continues to drive significant interest from foreign buyers, the number of UK firms that were targeted in overseas deals fell to 610 last year compared with 711 in 2022. The research also shows that foreign investment in the UK is increasingly concentrated in London and the South East, with these areas accounting for 42% of deals in 2023, up from 35% in 2019. Over the past 12 months, the US has continued to be the most active investor in UK businesses with just over a third (34%) of completed overseas corporate deals initiated by US organisations. Bryan Bletso, partner at Irwin Mitchell, said: “Despite the dynamic nature of global investment patterns, this data underscores the enduring economic significance of London and the South East in attracting international business interest. Our research does, however, also highlight that investment activity in this traditional FDI hotbed has increased while in other regions, such as the North West, the North East, Yorkshire and the Midlands, deal volumes have started to fall.” Last November, Conservative peer Lord Harrington published a report which called for a change of approach by the government in terms of attracting FDI. The report made several recommendations, including more collaboration between central government, local government and public and private stakeholders. “Government initiatives such as freeports and investment zones could be a gamechanger for providing favourable conditions for UK-based businesses, attracting more interest and investment in the UK from abroad, and levelling up the economy,” added Bletso. “The ability of the UK to attract overseas investment in relation to creating new jobs and driving innovation cannot be overlooked. Making the UK the top investment destination in Europe, attracting new investment into communities and helping to level up the country is one of five key priorities for the Department of Business & Trade. Providing tailored support for each investment zone and promoting our offering in this area on an international stage is a crucial part of this.” Image © Simone Brandt/imageBROKER/Shutterstock