Foreign investment in Britain falls to record low under Labour
Foreign investment into Britain plunged to a record low last year, despite a drive by ministers including Rachel Reeves and Jonathan Reynolds to drum up cash overseas.
The number of inbound foreign direct investment (FDI) projects dropped to 1,375 last year, down 12pc from the 1,555 in 2023-24, according to data from the Department for Business and Trade.
It represents the lowest level on records dating back to 2008. The investments created 69,355 jobs last year, the department said, the smallest number since the pandemic year of 2020-21.
The figures underline the challenges faced by the Government as it seeks to attract international cash to Britian.
Ministers have tried to present the UK as a prime location for business, including by hosting a high-profile International Investment Summit in October that featured a speech from Sir Keir Starmer and a performance by Sir Elton John.
Other efforts include the Chancellor's trip to China in January, intended to revive economic links, and the Business Secretary's tour of the Gulf states to try to improve relations with nations with significant sovereign wealth funds.
Relations with the Gulf states were harmed in September when then-transport secretary Louise Haigh called P&O Ferries a ' rogue operator ', an accusation that risked £1bn of investment in Britain by the company's owner, Dubai's DP World.
The political and legal wrangling over the UAE's bid to become a partial owner of Telegraph Media Group has also affected Britain's reputation in the region.
Joe Marshall, the chief executive of the National Central for Universities and Business, said the quality of the FDI coming into Britain was also deteriorating.
'The latest data is particularly concerning in high-value, strategically important sectors,' he said. 'The UK saw a 43pc drop in creative and media projects, a 20pc fall in life sciences, biotechnology and pharmaceuticals, and a 5pc decline in ICT investments – all vital to driving productivity, digital transformation and industrial modernisation. FDI into research and development also fell by 26pc.
'FDI is not just capital – it brings global talent, international partnerships, and long-term confidence in the UK economy. Strengthening investment will be essential to deliver the Industrial Strategy and realise the UK's ambition for innovation-led growth.'
American investors accounted for the largest share of FDI in Britain last year, accounting for 329 of the projects. Another 106 came from India, 83 from Germany and 68 from France.
Some major global investors have praised the UK in recent months, boosting Labour's efforts to improve Britain's standing on the global stage.
Larry Fink of BlackRock called the UK 'undervalued' and said his company was investing 'across the board'. Jamie Dimon, the chief executive of JP Morgan, praised the Government's 'pro-growth agenda', while Jon Gray, the president of Blackstone, said there were 'encouraging' signs.
The Government said it is focused on bringing investment into the country. A spokesman said ministers were 'laser-focused on targeting the highest-impact, job-creating wins across the UK, which is why the value of our FDI projects has gone up over the past year as we seek quality over volume.
'Our modern Industrial Strategy has introduced ambitious plans to drive growth and investment across every nation and region of the UK, ensuring our country is the best place to invest and do business.
'We've secured well over £100bn of investment over the past year, showing our Plan for Change is already delivering, and we'll continue to work with business to ensure we're making working people better off.'
The FDI figures were published alongside separate data showing that British businesses were struggling as the economy weakens. Some 17pc have no cash reserves to rely on, the highest share since the Office for National Statistics began this quarterly survey in 2020.
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