Investment from foreign financiers at 10-year high: 99 projects were backed by overseas businesses during 2016
Foreign investment in British finance has hit a ten-year high – as the UK remains the top choice in Europe for overseas firms.
Despite concerns over Brexit, 99 financial projects were backed by overseas businesses last year, according to accountants Ernst & Young.
This is the highest level for more than a decade and up 5 per cent on the previous year. It is also the highest figure in Europe by some way.
Germany was a distant second with 39 foreign-backed financial projects, while France came in third place with 25.
John Longworth, former director-general of the British Chambers of Commerce who is now joint chairman of Eurosceptic group Leave Means Leave, said: ‘The UK is miles ahead in investment in financial services and will continue to be. It shows the confidence of markets in the British economy post-Brexit.’
The contrast is even starker if London is compared to Paris and Frankfurt. Both cities are seen as possible rivals to the City as EU politicians seek to punish Britain for Brexit.
The UK’s capital attracted 69 projects during the year compared to 19 in Paris and 12 in Frankfurt. In the last decade, London has beaten Paris for foreign-backed schemes by three to one.
Y’s financial services chief for the UK, Omar Ali, said: ‘Despite last year’s referendum, UK financial services continued to attract record levels of investment.
‘The UK remains a world-class place for financial services firms to do business. The talent, infrastructure, quality of life, plus deep capital markets and a robust regulatory system are hard to rival.’ Although the UK remains far ahead of its competitors, there are concerns the gap could narrow. While foreign investment in British financial services grew by 5 per cent last year, in Germany it was up by 18 per cent and in France it was up by 25 per cent.
Meanwhile, the City’s attractiveness as a place for international firms to do business fell from 74 per cent to 62 per cent. Investors cited concerns about access to markets and foreign talent after Brexit.
By contrast, Paris climbed from 39 per cent to 52 per cent and Frankfurt jumped from 24 per cent to 44 per cent.
Mr Ali said: ‘We have to be realistic. Our study of investor sentiment is showing they are concerned about the outcome of Brexit negotiations and their confidence will have been shaken further by recent political events.
‘It’s vital that the Government does all it can to articulate a clear strategy around skills, market access and future trading arrangements.’
The study is the latest to suggest that the impact of last year’s EU referendum has not been as severe as pro-Remain campaigners said it would be.
Despite warnings that there would be a crash after a vote for Brexit, the stock market is close to record highs and house prices are continuing to rise – albeit more slowly than in previous years.
Business investment has also held up better than expected and a string of forecasters have upgraded their outlook for the UK economy. The only fear of anti-Brexit campaigners to have come true so far is the fall in the pound, which is down nearly 13 per cent since the vote.
This has pushed up inflation to 2.7 per cent, meaning it is outstripping wage growth of 2.1 per cent. However, the devaluation has also been a boon for exporters by giving British goods sold abroad a price cut.
Manufacturing demand has jumped to a 30-year high as a result, according to the Confederation of British Industry.
– Britain’s borrowing binge gathered pace last month as lenders appeared to break promises to rein in lending.
Bank of England figures show the amount owed on credit cards and personal loans soared by £1.7billion – the biggest borrowing increase since November.
June 30th, 2017: Daily Mail