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Foreign investors have increased their hold over share ownership in UK companies.

The proportion of shares held by investors from outside Britain rose from 36 per cent at the end of 2004 to 40 per cent two years later, figures from the Office for National Statistics (ONS) show.

As the net value of the UK stock market has risen by 26 per cent to its current estimated worth of £1,858 billion in the same period, this means foreign investors now hold UK shares worth £742 billion – up by £378 billion.

By contrast the proportion of UK individuals has slipped, down from 14 per cent to 13 per cent last year.

The ONS says FTSE 100 companies "continue to dominate the stock market".

"More generally the long-term trend shows that the percentage of shares held by foreign investors and 'other' financial institutions continues to increase while the percentage holdings of individuals, insurance companies and pension funds is decreasing," a statement accompanying the figures said.

Some have expressed concern that the increased foreign ownership of UK companies represents a dilution of Britons' power over the country's future.

But others say the increased ownership in UK shares reflects globalisation and the opening-up of the City to global competition since its 'big bang' of 1986.