Boris Johnson has formed an intergovernmental group to attract foreign investment into strategic projects while Downing Street works to make the UK more attractive after Brexit.
The Investment Office will involve public and private sector experts whose job it will be to “unlock” complex systems that are seen as critical to broader government goals such as infrastructure development and renewable energy.
Economists fear that the end of the Brexit transition period towards the end of the year will affect the level of foreign investment in the UK. They fear UK-based foreign-owned manufacturers and service companies could cut their investments after losing access to key markets in the EU.
The ONS found that foreign-owned companies in the UK accounted for just over half of all goods exports between 2016 and 2018.
The pandemic is also expected to undermine global levels of foreign investment.
According to data from fDi Markets, the number of foreign greenfield investment projects in Great Britain fell by 35 percent in the twelve months to September 2020 compared to the same period last year.
The UK government wants the UK to be the world’s most attractive investment destination and sees the new body as a crucial bridge making it easier for foreign companies to get involved.
It will be overseen by Investment Secretary Gerry Grimstone, former chairman of Standard Life Aberdeen fund manager and based in the Department of International Trade (DIT).
Mr Grimstone said the UK “needs to realign and redouble our efforts to attract foreign investment, which will increase productivity and economic growth across the country, increase our exports and improve our research and development environment”.
According to a study by UCL and LSE economists, after the UK leaves the EU internal market and the customs union at the end of the transition period on December 31, foreign investment in the UK is expected to fall by more than a third.
As of 2018, the net value of FDI in the UK was £ 49.3 billion, down from £ 80.6 billion in 2017. Access to the EU’s single market was the ‘cornerstone’ for additional FDI. it said.
Allie Renison, Senior Policy Advisor at the Institute of Directors, said: “To open up further opportunities, government must do everything possible to create an environment that continues to provide a stable foundation for taxation, trade and regulation. If we get good business with the EU, we will stay on this path. “
A person close to the group said they could approve projects that stalled, for example, because of the need for planning permissions or when other departments are needed to speed up processes.
In 2019/20, UK direct investment projects created more than 39,000 jobs in England, while the ONS found that foreign-owned companies in the UK spent £ 13 billion more on research and development in 2018 than domestic companies in 2018.
Additional reporting by Valentina Romei