In 2021, companies in the North Americas held a commanding position in the UK’s inward Foreign Direct Investment (FDI) stock, controlling a staggering £868.9 billion, which accounted for 43.4% of the total inward FDI in the country. This was a notable increase of £150.8 billion compared to the immediate position. In contrast, the ultimate FDI position with the European Union (EU) was £128.4 billion lower than the immediate position.
For the first time, the UK’s FDI earnings statistics were published based on the economy of the ultimate controlling parent company. North American companies emerged as the highest earners, with their direct investments in the UK generating £27.1 billion in profits, constituting 37.7% of the total FDI earnings.
Analysis of FDI positions revealed that Asian companies also had a strong influence, with the value ultimately controlled by Asia increasing by 12.4% in 2021, while the immediate value decreased by 14.5%. On the other hand, FDI with the EU saw a stable relationship, with the ultimate FDI position being 2.5% lower than in 2020, whereas the immediate position decreased by 2.9% over the same period.
The United States remained the dominant economy in terms of both immediate (£675.7 billion) and ultimate (£817.4 billion) FDI positions in the UK in 2021, accounting for 40.8% of the total inward FDI. Japan and France held the second and third-highest ultimate FDI positions with the UK, respectively.
Moreover, UK companies reinvesting back into the domestic economy through foreign affiliates, known as round-tripping, represented only 2.7% of total UK inward FDI positions and less than 0.5% of total UK inward FDI earnings in 2021. The earnings from round-tripping followed a downward trend, from £2.4 billion in 2014 to £0.3 billion in 2021.
The 2020 disruptions caused by the COVID-19 pandemic, global recession, and changes to FDI statistical populations and sampling methods, have affected the FDI statistics for 2020 and 2021. Hence, caution is advised when comparing results with earlier years.