UK levels of foreign direct investment (FDI)

Foreign direct investment involves the transfer of funds to be involved in capital investment in a foreign company. For example, if a Japanese firm, like Toyota builds a factory in the UK, this counts as inward investment into the UK.

Foreign direct investment does not include portfolio investment, e.g. Chinese saving money in UK banks or buying bonds

FDI and balance of payments

  • Inflows of inward investment count as a credit on the capital (financial) account of the balance of payments.
  • However, if profit from the investment goes back to the country of origin, then this will be a debit item on the current account.

FDI Inward position

This is the total accumulated level of foreign direct investment. For example, in 2014, the value of accumulated FDI in the UK – exceeded £1 trillion. (Gov.uk)

FDI-inward-position-uk
Source: OECD. Note  these figures are in US $ millions

 

Top 10 countries for inward investment

In 2015, the UK ranked third for total levels of inward investment

top-10-inward-investment
Source: Gov.uk

Which countries invest in the UK?

top 11 countries investing in UK

Net direct foreign investment

 

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total net FDI flows in the UK 96,803 84,885 93,148 48,875 48,986 32,106 28,883 44,596 33,016 27,801
Total net FDI flows abroad 44,458 46,887 159,129 99,322 25,094 25,486 60,130 27,392 28,424 -79,936
(inflows – outflows) 52,345 37,998 -65,981 -50,447 23,892 6,620 -31,247 17,204 4,592 107,737

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