1979 the former Conservative Government abolished foreign exchange controls
freeing up the movement of financial capital between the UK and the rest
of the world. This proved to be
a momentous decision for the long-term future of the economy. In its wake we
have seen a tremendous growth in UK investment overseas and foreign direct
investment into the domestic economy.
UK has proved particularly attractive to overseas investors particularly from
North America and Asia.
the UK, foreign investment has become an integral source of production,
employment and income in both manufacturing and service sectors. In UK
manufacturing alone, foreign capital accounts for over one fifth of
employment, a quarter of output and nearly half manufacturing exports.
are also seeing a fast growth of foreign investment in the service sector.
London for example has by far the largest foreign exchange dealing platform
in the world much of which is provided by foreign banking institutions
located within the City.
expansion of the European Single Market is
likely to generate further inward investment flows. European service sector
firms are making in roads into the UK banking and insurance sectors and in
food retailing and domestic utilities.
flow of investment is not all one way! UK firms invested a record amount
overseas last year adding to sterling assets held overseas which should
generate a flow of investment income back into the UK economy in future
substantial proportion of this investment has come via the global boom in
mergers and acquisitions. Vodafone hit the headlines last month when it
acquired US mobile phone giant Air Touch. This catapulted Vodafone into a
position as one of the UKs leading listed companies.
Are there regional spillovers from FDI in the UK
Head to head: Inward investment (bbc 3.7.2000)