Although they will always bicker amongst themselves over most subjects, the one thing that the UK’s political parties are all agreed upon is the need to maximise economic growth, without which the country can’t afford all the social and other pet programmes that they aspire to. A vital component of growth is, of course, inward investment by foreign companies. Just within the last few days, Chancellor Osborne has announced Chinese involvement in a new business park at Manchester airport and possibly in future nuclear power generation.
The importance of direct foreign investment in the UK cannot be underestimated, particularly in a country like ours where the manufacturing base has been run down by the demise of heavy industries like shipbuilding and coal mining. Cross border investment works so well because each country has particular strengths that it can spread around the world while taking in expertise that might be lacking at home.
Large scale car manufacturing is a prime example of something that the UK has always struggled with. The country has traditionally been very successful at small scale production of handcrafted vehicles like Morgan, McClaren and Bentley but has spectacularly failed to maintain profitable mass market production for a global market- Austin Morris anyone? Contrast this with the relentless advance of foreign owned brands which have invested heavily in the UK in recent decades – Nissan at Sunderland, Toyota at Burnaston and BMW at Cowley to name just 3 examples.
While there are some who bemoan the fact that we have to rely on overseas companies to make a go of certain domestic industries, they tend to forget that the UK, in turn, is a major investor overseas in sectors in which we have a technical edge such as oil & gas, pharmaceuticals, insurance and aerospace. In the two–way traffic in overseas investment, everybody wins.
Successive UK governments have been particularly keen to encourage companies with labour intensive plans, car manufacturing being a prime example. This is because of the need to generate new employment in depressed areas of the country which have suffered from the demise of industries such as coal, shipbuilding and textiles where so much production has moved to cheaper wage economies in the Far East. Foreign investors do not view such unfashionable areas with preconceived ideas and are much more focused on the availability of labour and any government grants on offer. This partly explains why Northern Ireland, with around 800 projects, is currently the largest recipient of new inward investment outside of London.
It seems that Britain is, in fact, doing rather well at the moment when it comes to attracting new inward investment from overseas as evidenced by a report from UK Trade & Investment which shows that it rose by a remarkable 22% in 2012/2013 compared with the previous year. The fact that English is now the undisputed world language obviously helps, but so does the fact that the UK has managed to avoid the worst excesses of the EU when it comes to employment legislation and social taxes.
Labour flexibility is far better in the UK than on the continent and the coalition government has pledged a continuing assault on business red tape. It is no coincidence that there are now more French people living in London than there are in Bordeaux. Far from encouraging inward investment into France, Monsieur Hollande’s socialist regime would seem more intent on exporting it, especially to the UK.