The UK must push through a package of reforms or risk losing its status as a top destination for financial services investment, the City of London Corporation has warned.
In a new survey of foreign direct investment levels into financial and professional services, the City of London Corporation said the UK had attracted over £1bn of foreign direct investment through 2023, placing it at the top of the pile for Europe.
Some 222 projects in the financial and professional services sector received backing from overseas investors last year with nearly 7,000 jobs created, the research found. The figures count investment in areas like international expansion and new office space, rather than deals activity.
However, the overall investment level marks a sharp slide from the previous year’s near-£2bn and place the UK below a list of international competitors, including Singapore and the US.
In a statement alongside the research, the City of London Corporation’s policy chief Chris Hayward said the UK remained a “premier” destination for investment but risked sliding down the rankings without reform.
“As this data shows, the UK continues to attract high levels of FDI in financial and professional services even as we see the heat of activity in the post-pandemic recovery begin to cool,” he said.
“However, we can’t rest on our laurels, in order to turn the dial on investment levels, we have to take a more strategic approach, with government and investors working together to build up our vital infrastructure, high-growth firms and our competitive sectors.”
Hayward pointed to a recent review by Tory peer Lord Harrington which outlined recommendations to boost foreign investment in the UK, including a ‘concierge’ service to court international financiers.
In his review, published in autumn, Harrington warned that the UK “faces a critical decade in terms of attracting investment” and told the government to “set out a clear Business Investment Strategy by spring 2024”.
Investment should also “be prioritised across central government with clear accountability distributed through the system”, he added.
According to the latest official figures, total investment into the UK has been sliding in recent years. The value of foreign direct investment into the UK into the UK was worth -£51.7bn, including outflows, in 2021, down from £34.8bn in 2020.
According to the City of London Corporation’s figures today, the US has been the largest source of cash for UK financial services and professional services investment over the past five years, contributing 40 per cent of the UK’s total investment over the last five years.