UK's inward & outward FDI increases in 2021

The increase in the inward FDI position mainly reflects higher positions with the Americas (by £89.7 billion) and non-EU Europe (by £37.3 billion); the increase in the Americas was primarily from professional, scientific, and technical services with the United States.

The value of outward FDI earnings (profits) was almost three times higher in 2021 compared with 2020, rising by £85.1 billion from £49.6 billion, to £134.7 billion; this partly reflects the much lower outward FDI earnings reported in 2020, during the coronavirus (COVID-19) pandemic.

The increase in outward FDI earnings was seen across all continents; particularly, the Americas was more than four times higher in 2021 than in 2020; this mainly reflects higher earnings reported by a few companies, compared with the low earnings values in 2020.

Net FDI earnings (outward less inward) were much higher in 2021 (£62.9 billion) than in 2020 (negative £6.5 billion). FDI made a positive contribution to the UK's current account in 2021, having been slightly negative in 2020, according to the ONS.

The UK's inward FDI position with Asia and the EU decreased by £26.3 billion and £20.3 billion respectively, between 2020 and 2021. The difference for Asia reflects lower values with Japan (by £17.8 billion). Regarding the EU, the UK's inward FDI position with Belgium was £42.2 billion lower in 2021 compared with 2020, which was higher than the decrease for the EU total overall. For both Japan and Belgium, these positions resulted from much lower inward FDI positions reported by a few companies. As in 2020, the UK's inward FDI position value with the Americas was higher than with the EU in 2021.

The United States contributed the most to the increase in outward FDI earnings for the Americas. Earnings increased by £14.6 billion in 2021, double the value reported in 2020. Outward FDI earnings with the Netherlands accounted for £7.5 billion (41.9 per cent) of the increased value for the EU. Outward earnings growth for non-EU Europe was led by the UK Offshore Islands (£8.4 billion), which accounted for half of the overall increase (£16.6 billion) for that region.

ALCHEMPro News Desk (KD)