Why are foreign investments in the UK rising?

Is it just the weather?

There is some good news for the UK taxman this summer. First, the country actually had a summer. It even fell on a Sunday, as a colleague pointed out. Second, according to the Office for National Statistics, this year Brits are happier. The Jubilee played its part, a report suggests.

And this is not all: while Jubileeing first and waiting for RB immediately afterwards, foreign investments have also increased, according to the Inward Investment Report 2012/2013 presented by government agency UK Trade & Investment (UKTI).

The UKTI says that while global Foreign Direct Investment inflows declined by 18 per cent, inflows into the UK experienced a 22 per cent year on year increase.

"The UK has received a major vote of confidence from foreign investors confirming that the UK remains a world leading business destination,” says Trade and Investment Minister Lord Green, adding that "attracting foreign investment is an important element of the UK Government’s economic and growth programme."

Between Olympic and Royal fever the UK reached the peak of its marketing capabilities in the past two years. But what supported this powerful business card?

The World Bank ranks the UK among the top countries for ease of doing business. It considers elements such as the 13 days on average to set up a business or the 24 hours necessary to register a company.

The UKTI claims that the removal and reduction of "red tape’" has already saved UK-based businesses approximately £1bn in the last two years. It also highlights the advantages of a flexible labour market and of a "highly competitive tax environment", with the main rate of corporation tax being reduced to 21 per cent in 2014 and 20 per cent in 2015 – the lowest rate in the G7 and the joint lowest in the G20.

A sunny picture to indulge in during the summer.

The strengths of this chapter of the UK economy are reflected in the identikit of its main investors: North America and Japan, but also India and China, across very different sectors. Altogether Britain has attracted 1,559 projects, 11 per cent more than the previous year and the UKTI estimates these investments have generated 170,000 jobs.

Foreigners are particularly keen in investing in software and computer services, which, with 17 per cent of projects, represent the largest slice of the cake. Financial and business services are the second most attractive, but the broad range of investments includes creative and media services, biotechnology and pharmaceuticals and renewable energy.

Emerging economies are investing from scratch and buying British companies, but it’s the comparison with other EU member states that can work as a litmus test of the real strengths of the Brits.

Investments from French and German companies have increased by 43 and 18 per cent respectively.

Despite a 5 per cent reduction, Italy is, together with France, the third foreign investor.

Italians are attracted by the political and economic stability. No wonder, as the waiting for the Royal Baby has been equalled only by the waiting in the past days for the outcome of the final sentence on former PM Berlusconi.

A legislation that encourages innovation is also considered a reason to invest in the UK, together with an open market that makes it easy to access talent.

"Italian companies increasingly see the UK as the ideal destination to grow, succeed and access international opportunities. The exceptional Italian results reflect the capacity for recovery of the country and of its profound entrepreneurial roots, as well as its industrial excellence," says British consul for Milan Vic Annels.

This sounds a bit as if we’ve got it all, apart from a couple of fundamental things, but as our governments are busy at the moment, we’ll come at yours.

Interestingly, the reasons given to support this choice highlight some historical weaknesses of other European countries (it is probably worth mentioning that the UK is in Europe as well) and some historical strengths of the British system more than a renewed economic epiphany.

So, after all this sun, let’s not forget the role of rain in growing awareness: the UK has been dynamic and successful in attracting foreign investors. But this is only a chapter of the economy and the Royal baby is going to cry a lot before becoming a king.

Photograph: Getty Images

Sara Perria is the Assistant Editor for Banking and Payments, VRL Financial News

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Air pollution: 5 steps to vanquishing an invisible killer

A new report looks at the economics of air pollution. 

110, 150, 520... These chilling statistics are the number of deaths attributable to particulate air pollution for the cities of Southampton, Nottingham and Birmingham in 2010 respectively. Or how about 40,000 - that is the total number of UK deaths per year that are attributable the combined effects of particulate matter (PM2.5) and Nitrogen Oxides (NOx).

This situation sucks, to say the very least. But while there are no dramatic images to stir up action, these deaths are preventable and we know their cause. Road traffic is the worst culprit. Traffic is responsible for 80 per cent of NOx on high pollution roads, with diesel engines contributing the bulk of the problem.

Now a new report by ResPublica has compiled a list of ways that city councils around the UK can help. The report argues that: “The onus is on cities to create plans that can meet the health and economic challenge within a short time-frame, and identify what they need from national government to do so.”

This is a diplomatic way of saying that current government action on the subject does not go far enough – and that cities must help prod them into gear. That includes poking holes in the government’s proposed plans for new “Clean Air Zones”.

Here are just five of the ways the report suggests letting the light in and the pollution out:

1. Clean up the draft Clean Air Zones framework

Last October, the government set out its draft plans for new Clean Air Zones in the UK’s five most polluted cities, Birmingham, Derby, Leeds, Nottingham and Southampton (excluding London - where other plans are afoot). These zones will charge “polluting” vehicles to enter and can be implemented with varying levels of intensity, with three options that include cars and one that does not.

But the report argues that there is still too much potential for polluters to play dirty with the rules. Car-charging zones must be mandatory for all cities that breach the current EU standards, the report argues (not just the suggested five). Otherwise national operators who own fleets of vehicles could simply relocate outdated buses or taxis to places where they don’t have to pay.  

Different vehicles should fall under the same rules, the report added. Otherwise, taking your car rather than the bus could suddenly seem like the cost-saving option.

2. Vouchers to vouch-safe the project’s success

The government is exploring a scrappage scheme for diesel cars, to help get the worst and oldest polluting vehicles off the road. But as the report points out, blanket scrappage could simply put a whole load of new fossil-fuel cars on the road.

Instead, ResPublica suggests using the revenue from the Clean Air Zone charges, plus hiked vehicle registration fees, to create “Pollution Reduction Vouchers”.

Low-income households with older cars, that would be liable to charging, could then use the vouchers to help secure alternative transport, buy a new and compliant car, or retrofit their existing vehicle with new technology.

3. Extend Vehicle Excise Duty

Vehicle Excise Duty is currently only tiered by how much CO2 pollution a car creates for the first year. After that it becomes a flat rate for all cars under £40,000. The report suggests changing this so that the most polluting vehicles for CO2, NOx and PM2.5 continue to pay higher rates throughout their life span.

For ClientEarth CEO James Thornton, changes to vehicle excise duty are key to moving people onto cleaner modes of transport: “We need a network of clean air zones to keep the most polluting diesel vehicles from the most polluted parts of our towns and cities and incentives such as a targeted scrappage scheme and changes to vehicle excise duty to move people onto cleaner modes of transport.”

4. Repurposed car parks

You would think city bosses would want less cars in the centre of town. But while less cars is good news for oxygen-breathers, it is bad news for city budgets reliant on parking charges. But using car parks to tap into new revenue from property development and joint ventures could help cities reverse this thinking.

5. Prioritise public awareness

Charge zones can be understandably unpopular. In 2008, a referendum in Manchester defeated the idea of congestion charging. So a big effort is needed to raise public awareness of the health crisis our roads have caused. Metro mayors should outline pollution plans in their manifestos, the report suggests. And cities can take advantage of their existing assets. For example in London there are plans to use electronics in the Underground to update travellers on the air pollution levels.

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Change is already in the air. Southampton has used money from the Local Sustainable Travel Fund to run a successful messaging campaign. And in 2011 Nottingham City Council became the first city to implement a Workplace Parking levy – a scheme which has raised £35.3m to help extend its tram system, upgrade the station and purchase electric buses.

But many more “air necessities” are needed before we can forget about pollution’s worry and its strife.  

 

India Bourke is an environment writer and editorial assistant at the New Statesman.