- Oops!Something went wrong.Please try again later.
The International Trade Committee has said the UK government needs to improve on its plan to “level up” foreign investment across the country.
The group said that current inward foreign direct investment (FDI) is dominant in London and the South East, and called for moves to “maximise the benefits for all parts of the UK.”
Inward FDI is where overseas investors acquire ownership of, or a controlling stake in, British businesses. FDI occurs where an investor acquires a stake of at least 10% in an overseas company.
As well as enhancing business turnover, the creation of jobs, and exports, inward investment brings other indirect benefits such as employment, skills, technology, and managerial practices, the Committee said.
It comes as prime minister Boris Johnson is aiming to raise the level of income across UK regions. The Conservative party’s manifesto includes a commitment to “levelling up every part of the UK," including rural and coastal areas, and giving them far more control of how investment is made.
Watch: 'Level up' the country by scrapping benefits cut and backing pay rises, Boris Johnson told
“Inward foreign direct investment can benefit local economies, generating new jobs and bringing new skills,” Angus Brendan MacNeil, chair of the International Trade Committee, said.
“If the government is serious about its levelling-up agenda, it needs to show it has a plan to maximise the benefits of inward investment in all parts of the UK.”
Last year, the government launched a new Office for Investment (OfI) to “support the landing of high value investment opportunities into the UK.”
The Office is based in the Department for International Trade (DIT), with minister for investment Gerry Grimstone leading its work in close partnership with Downing Street. It also ensures that the UK is well positioned to maximise the benefits that flow from free trade agreements with international partners.
Although the International Trade Committee welcomed the creation of the department, it warned that such initiatives must be integral parts of an overall investment strategy, and not just be ad hoc.
It urged for greater transparency about progress, quicker implementation of changes, and a broader engagement of users.
Read more: UK economic recovery slows as spending falls
Before the pandemic, some 39,000 jobs were created in England thanks to foreign direct investment projects. However, foreign direct investment in the UK fell by 57% in 2020 to $19.7bn (£14.4bn), down from $45.4bn the previous year.
The data, compiled by MoneyTransfers.com using figures from the Organisation for Economic Co-operation and Development (OECD), revealed that Britain came in as the 12th most popular nation for foreign investors behind Germany, Mexico, India, Sweden, Canada, and Brazil.
Last week, Boris Johnson said: “This government is committed to uniting and levelling up every part of the UK and I am determined that as we build back better from the pandemic we are geared up with the teams and expertise to deliver on that promise.”
It came as former Bank of England (BoE) chief economist Andy Haldane was appointed as the new head of the government’s Levelling Up Taskforce.
Watch: Treasury tells Michael Gove not to expect lots of new cash for levelling up