Foreign Direct Investment Flow in the UK: Insights for 2021

In 2021, the dynamics of foreign direct investment (FDI) into the UK revealed interesting patterns, with London standing out as a key recipient. According to experimental statistics released by the Office for National Statistics, 93.8% of FDI into London came directly from foreign entities. In contrast, more than 65% of FDI into Scotland, Wales, and Northern Ireland arrived via another location within the UK.

Common Investment Routes

London dominated the landscape of FDI routes within the UK. Of the top 10 investment routes in 2021, eight involved London. Over 40% of investment into Wales, Scotland, and Northern Ireland passed through the capital. The report emphasized that the investment network analysis showed London’s pivotal role in distributing FDI across the country.

Retained Investment Percentages

The study found that most UK regions retained over half of the inward FDI values, with Wales (86.1%), Northern Ireland (86.0%), and the East Midlands (76.0%) leading in retention. However, the North East, South East, and West Midlands saw more substantial portions of their inward FDI (57.6%, 55.5%, and 50.7%, respectively) moving onwards to other destinations.

Onward Links and Global Connections

The onward links of FDI revealed insights into the destinations of investments leaving regions. In 2021, the North East, South East, and West Midlands were the only regions where less than half of the inward FDI value remained in the region. The South East had the highest percentage (61.3%) of inward FDI going to non-UK locations, underlining its role in global ownership chains.

Comparison with Subnational Statistics

Comparisons between the inward network results and traditional subnational FDI statistics demonstrated consistent investment patterns. Similar percentages were retained in most regions when comparing the two sets of data. The findings suggest the importance of considering the full investment network to understand how FDI moves within the UK.