UK Inward Investment At All Time High

The UK's International Investment Positions (IIP) were published recently by the ONS. Inward investment reached a record high of £936bn in 2012 and outward investment stood at £1,088bn, similar to the levels of 2011. Inward investment means investment in the UK by foreign companies and outward investment means investment abroad by UK companies.

UK companies net investment flows overseas decreased from £60.1bn in 2011 to 26.5bn in 2012. Investment flows to Europe show a disinvestment of £0.7bn in 2012, quite a decrease from the £27.3bn in the previous year. Net earnings from overseas investments by UK companies decreased from £100bn in 2011 to £80.2bn in 2012.

Foreign companies continued to increase their investment in the UK during 2012. Net investment flows increased from £28.9bn in 2011 to £35.4bn in 2012. Net earnings by foreign companies investments in the UK decreased slightly from £44.4bn in 2011 to £42.7bn in 2012.

UK FDI statistics are produced in accordance with international standards set by OECD and IMF and their definitions of FDI and balance of payments respectively. FDI estimates are important for measuring the UK balance of payments and they are used by a number of Government departments for briefing and policy purposes. International organisations like Eurostat, UNCTAD, OECD and the IMF also use the FDI figures for policy, analysis and negotiations and the estimates are also widely utilised by commercial companies, academics and independent researchers.

Slight Increase In M&A Transactions

There were, in total, 116 domestic and cross-border transactions involving UK companies during the third quarter of 2013 according to the ONS statistical release on mergers and acquisitions. The number remains level when compared with the second quarter and there is a slight increase when compared with the 112 of same period last year.

There were 60 domestic acquisitions involving a change in majority share ownership between UK domestic companies. While the number remained similar to Q2 2013 (64) the value fell from £2.1bn in Q2 to £0.8bn in Q3.

There were 46 acquisitions of foreign companies by UK companies involving a change of majority share ownership, an increase of 39% compared with the previous quarter. The value of inward acquisitions fell considerable from £23.7bn in Q2 to £2.1bn in Q3. One significant transaction was however responsible for the spike in Q2 2013.

There were also 7 inward disposals and 3 outward disposals.

UK FDI Continues To Increase

Companies from the UK have continued to increase their net investment overseas to give the highest figure since 2008 for 2011. Inward investment flows to the UK however continued to fall to reach £31.9bn the smallest since 2004. Outward and inward investment positions increased to reach record highs of £1098.2bn and £766.2bn respectively in 2001. Net earnings from outward investment reached £101.6bn the highest since records began (1958). Net earnings from direct investment are recovering from the falls of 2008. Earnings reached £37.6bn in 2010 and £43.6bn in 2011. Net investment overseas is possibly a reflection of strong growth in emerging markets like China and India.