Investors flock to UK

24-08-2006

The UK attracted more inward investment than any other country last year, according to new figures released by the Organisation for Economic Co-operation and Development (OECD).

Foreign direct investment into Britain reached a record $165 billion (£91 billion) in 2005, up from $56.3 billion (£31 billion) a year earlier, the Paris-based organisation said.

A recent wave of mergers and acquisitions have fuelled the growth, with firms such as ports company Peninsular and Oriental Steam (P&O) and mobile phone operator O2 among those British companies that have been taken over by overseas groups.

Foreign investors have also benefited from more lenient government laws, which have helped to boost investment in the UK.

The figures also rank Britain as the third biggest outward investor, with France knocking the US off the top spot after pumping $115.6 billion (£64 billion) into overseas companies and projects, including the $17.8 billion (£9.8 billion) acquisition of British drinks group Allied Domecq, by Pernod Ricard.

Overall, foreign direct investment in OECD countries increased by 27 per cent to $622 billion (£342 billion) in 2005, up from $491 billion (£270 billion) in 2004.

"This is the highest level of inflows since the previous investment boom petered out in 2001," the OECD said.

But the organisation warned that although the outlook for foreign investment was good, there were signs that some governments were showing signs of wishing to clamp down on external takeovers, prompting fears of protectionism.

"The growing role of non-OECD countries as outward investors appears to have heightened concerns that all countries and their companies may not play by common rules or promote high standards of business conduct," a spokesman said.


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