Billions will only flood in to buy our crown jewels

by Hugo Dixon | 07.11.2019

The Prime Minister’s latest boast is that “hundreds of billions of pounds of investment” are “waiting to flood into” the UK post-Brexit. The only way to hit that target is to flog our companies to foreigners. That’s something to be ashamed of, not crow about. 

The normal definition of investment coming into the country is “foreign direct investment” (FDI). That covers buying capital equipment and entire companies – rather than purchasing shares or bonds or just buying the pound, something that is called “portfolio investment”.

The latest data relates to 2017, when FDI was £92 billion, according to the ONS. That was a drop from £192 billion in 2016.

A casual glance at these statistics might suggest we could at a stretch get hundreds of billions of pounds of foreign investment in a single year. But the 2016 figure was distorted by several very large acquisitions – including the sale of ARM Holdings, one of our top technology companies, to Japan’s Softbank.

In total, deals worth £10 billion or more accounted for a full £154 billion of that year’s FDI. If you look at 2015 or 2014, when foreign acquisitions were much smaller, FDI was only £25 billion and £15 billion respectively. 

So the only way to get foreign investment into the hundreds of billions of pounds is if overseas investors snap up our companies. That’s selling off our crown jewels not adding to our productive capacity.

Research by Sam Ashworth-Hayes

Edited by James Earley