Review of foreign direct investment

Last updated: 23/09/2024

On 30 March 2023, the Treasury published the terms of a review of foreign direct investment (FDI), focusing on how the UK can better attract FDI into key growth sectors (digital technology, creative industries, life sciences, advanced manufacturing and green industries). In November 2022, the results of the review and the government’s response were published.
The report highlights that while the fundamentals of investment into Britain are strong, the requirements for FDI over the next decade are substantial and the competition for global capital is increasing.
The report suggests six key recommendations, including greater clarity and certainty from government to businesses, an increased profile for investment within government, more regional growth initiatives, a significant role for the Office for Investment (OFI), listening more to business feedback, and strategically targeted incentives.
Tax was explicitly out of the review scope, however, it is still relevant for incentives more generally as part of the wider government’s drive to increase the UK’s investment attractiveness.
The latest round of UK statistics on FDI were released in June 2023 by the Department for Business and Trade. The statistics show that 1,600 FDI projects will create nearly 80,000 jobs across the UK.
The previous Chancellor announced at Spring Budget 2024 that pension funds will be required to disclose how much they invest in British companies, whilst savers will be able to save an additional £5,000 a year in a new British ISA.
The new government has announced plans for a National Wealth Fund (NWF). The fund is backed by £7.3bn of new funding and is designed to consolidate the work of the UK Infrastructure Bank and the British Business Bank. The government hope that the NFW will drive billions of pounds of private investment into green technologies.
Timing: the review produced its findings in November 2023. The previous government accepted most of the report’s recommendations in principle. The current government is yet to set out its position in detail.