Research Briefing

20 June 2023

By Matthew Ward
Foreign Direct Investment
Statistics

Summary
1 What is foreign direct investment?
2 Inward FDI in the UK
3 UK investment abroad
4 World FDI

commonslibrary.parliament.uk
Number CBP 8534 Foreign Direct Investment Statistics

Image Credits
Canary Wharf / winter by George Rex. Licensed under CC BY 2.0 / image
cropped

Disclaimer
The Commons Library does not intend the information in our research
publications and briefings to address the specific circumstances of any
particular individual. We have published it to support the work of MPs. You
should not rely upon it as legal or professional advice, or as a substitute for
it. We do not accept any liability whatsoever for any errors, omissions or
misstatements contained herein. You should consult a suitably qualified
professional if you require specific advice or information. Read our briefing
‘Legal help: where to go and how to pay’ for further information about
sources of legal advice and help. This information is provided subject to the
conditions of the Open Parliament Licence.

Sources and subscriptions for MPs and staff

We try to use sources in our research that everyone can access, but
sometimes only information that exists behind a paywall or via a subscription
is available. We provide access to many online subscriptions to MPs and
parliamentary staff, please contact [email protected] or visit
commonslibrary.parliament.uk/resources for more information.

Feedback
Every effort is made to ensure that the information contained in these publicly
available briefings is correct at the time of publication. Readers should be
aware however that briefings are not necessarily updated to reflect
subsequent changes.

If you have any comments on our briefings please email

[email protected]. Please note that authors are not always able to
engage in discussions with members of the public who express opinions
about the content of our research, although we will carefully consider and
correct any factual errors.

You can read our feedback and complaints policy and our editorial policy at
commonslibrary.parliament.uk. If you have general questions about the work
of the House of Commons email [email protected].

2 Commons Library Research Briefing, 20 June 2023

Foreign Direct Investment Statistics

Contents

1 What is foreign direct investment? 5

1.1 Flows 5

1.2 Stocks 6

2 Inward FDI in the UK 7

2.1 FDI inflows in 2021 7

2.2 Inward FDI stocks in 2021 10

2.3 Inward FDI by UK region and country 11

2.4 FDI stock on an immediate and ultimate basis 12

2.5 Recent trends in inward FDI in the UK 14

2.6 Inward FDI: impacts of Brexit and Covid 15

2.7 EY, attractiveness surveys 16

3 UK investment abroad 19

3.1 FDI outflows, 2021 19

3.2 Recent trends in FDI outflows 20

3.3 Outward FDI stocks, 2021 20

3.4 Recent trends in outward FDI stocks 21

4 World FDI 23

4.1 Flows 23

4.2 Stocks 26

3 Commons Library Research Briefing, 20 June 2023

Foreign Direct Investment Statistics

Summary

This briefing examines recent trends in UK and world foreign direct investment
(FDI) using data from the Office for National Statistics (ONS) and United
Nations Conference on Trade and Development (UNCTAD).

UK FDI
In 2021:

• The value of foreign direct investment into the UK, i.e., inward flows, into
the UK were worth -£51.7 billion, down from £34.8 billion in 2020.

• The value of inward FDI in the UK (i.e., the stock of FDI invested in the UK)
was £2.0 trillion, up very slightly from 2020.

• The value of outward FDI flows (i.e., investments made by UK companies

in companies abroad) was £61.7 billion, compared to -£74.8 billion in
2020.

• The value of the UK’s outward investment position abroad (i.e., the stock
of UK FDI invested abroad) was £1.8 trillion, up very slightly from 2020.

World FDI
In 2021:

• The value of world inward flows rebounded, after falling sharply in 2020,
reaching $1.6 trillion, an increase of 64% in cash terms compared to
2020 and an increase of 7% compared to 2019.

• The USA maintained its position as the world's largest recipient of inward
FDI flows, accounting for just under a quarter of world inward investment
flows.

• The USA also the world's largest investor abroad, accounting for around
a quarter of outward FDI flows.

4 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

1 What is foreign direct investment?

Foreign direct investment (FDI) is defined as investment in an enterprise

operating in a foreign economy, where the purpose is to have an ‘effective
voice’ in the management of the enterprise.

In FDI statistics, an ‘effective voice’ is owning 10% or more of a company; any

investment below this is counted as ‘portfolio’ investment and not included in
FDI statistics. 1

FDI can cover a range of forms of investment, some examples include:

• A UK company establishes a branch or subsidiary in a foreign country,

injecting start-up capital. This is often known as a ‘greenfield’
investment.

• A UK company buys or sells (fully or partially) the equity of an existing

foreign company. This is often known as M&A (mergers and acquisitions)
activity.

• A UK company puts additional capital into an existing foreign subsidiary

or allows it to retain profits rather than return them to the parent
company.

FDI can be either inward or outward:

• Inward FDI measures investments made in a country from another

country – for example investment from a foreign country into the UK.

• Outward FDI measures investments made by domestic companies in a

foreign economy – for example investment from the UK into a foreign
country.

FDI statistics measure two different concepts – flows and stocks.

1.1 Flows

Flows measure annual levels of investment on a net basis.2 For example, in

the UK, inward flows would measure foreign companies’ investments in the

1
See Background notes, Foreign direct investment involving UK companies: 2015, ONS, December 2016
2
Meaning disinvestments will be included

5 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

UK, while outward flows would measure investments made by British

companies abroad.

Flows data can vary significantly from year to year and should be used with
caution - a significant proportion of FDI flows can be accounted for by large
multinational mergers and acquisitions and do not necessarily indicate
significant ‘greenfield’ investments. High flows can also be dominated by a
small number of high value transactions.

1.2 Stocks

The stock measure records the total book value of all existing FDI, inward or
outward at the end of a given period, rather than being a sum of investment
over time. Consequently, stock values are subject to changes in valuation in
company accounts, as well as exchange rate fluctuations, and values can
change from year to year even without new investments.

6 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

2 Inward FDI in the UK

This section looks at the UK’s level of inward FDI flows and stocks in 2021 (the
most recent year for which data are available), as well as recent trends.

Data is taken from the Office for National Statistics (ONS) release Foreign
direct investment involving UK companies: 2021, as well as the United Nations
Conference on Trade and Development (UNCTAD) database on bilateral FDI.

2.1 FDI inflows in 2021

In 2021:

• The value of foreign direct investment into the UK (i.e., the value of
inward flows) was -£51.7 billion, down from £34.8 billion in 2020. 3
• Negative flows mean outflows of investment exceed inflows and can
indicate and can indicate things like disinvestment, discharges of
liabilities, company dividends exceeding recorded income or company
operations being at a loss. 4
• The USA was the single largest investor in the UK, with investment of £6.2
billion, down from £16.9 billion in 2020. Net investment from the
Americas as a whole was -£19.8 billion.
• The Netherlands accounted for the UK’s single largest disinvestment,
with net inward investment of -£24.0 billion.
• Net investment from the EU was -£24.1 billion, compared to £28.0 billion
in 2020, while net investment from Europe as a whole was -£27.6 billion.
• Overall, net investment was negative from all continents except Africa,
which recorded a positive inward investment flow of £0.3 billion.

3
ONS, Foreign direct investment involving UK companies: 2021, 23 January 2023.
4
Eurostat, Negative foreign directive investment (FDI) values

7 Commons Library Research Briefing, 20 June 2023

Foreign Direct Investment Statistics

UK inward investment flows by area

£ billions, 2021
10
0
-10
-20
-30
-40
-50
-60
Africa Australasia & Europe, non- Asia Americas EU Europe World
Oceania EU

Source: ONS, Foreign direct investment involving UK companies: 2021, January 2023

2021 is the first year the value of the UK’s annual inward investment flows
have been negative since 1984.

This fall is in part as a result of the coronavirus pandemic and global

recession and associated disruptions to investment activity, though is also a
continuation of a long-term trend. The ONS have also changed their
methodology for collecting FDI statistics from 2020 onwards and advise
caution in comparing FDI data pre and post 2020. 5

2021 marks the fifth successive year inward FDI flows into the UK have fallen -
inward FDI flows reached a high of £192.0 billion in 2016, before falling in each
subsequent year.

While the fall in value of inward FDI flows into the UK since 2016 may seem
dramatic, it is important to remember that inward flows can be very volatile
from year to year and that 2016’s total was unusually high.

This was attributed by the Office for National Statistics to “a handful of high-
value mergers and acquisitions” in 2016, notably four foreign acquisitions of
British companies each with an individual value in excess of £10 billion,
including the £79 billion takeover of brewer SABMiller and the £24 billion
takeover of chipmaker ARM. 6 The value of inward mergers and acquisitions
has generally fallen since 2016. In 2020, they fell to their lowest value since
2014, increasing slightly in 2021.

5
ONS, Foreign direct investment statistics, overview of methods changes: 2020, 3 February 2022
6
ONS, UK foreign direct investment, trends and analysis 30 January 2018

8 Commons Library Research Briefing, 20 June 2023

Foreign Direct Investment Statistics

UK, value of inward FDI flows and inward M&A activity

£ billions, 2012-2021
250
Inward M&A
200
Inward FDI flows
150

100

50

-50

-100
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: ONS, Foreign direct investment involving UK companies: 2021, January 2023; Mergers and
acquisitions involving UK companies, June 2023

Trends in inward FDI into the UK as a percentage of GDP over the last decade
are shown in the graph below. In 2016, the value of the UK’s inward FDI was
equal to 9.6% of GDP.

This has now fallen year-on-year since 2016 and was equal to -2.3% in 2021.
The average over the last 10 years has been 2.4%.

UK inward FDI flows

% GDP, 2012-2021
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: ONS, Foreign direct investment involving UK companies: 2021, January 2023; series YBHA

9 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

2.2 Inward FDI stocks in 2021

In 2021:

• The value of the inward FDI stock in the UK (i.e., the stock of FDI invested
in the UK) was £2.0 trillion, up from £1.9 trillion in 2020.
• EU countries accounted for 34% of the stock of FDI in the UK, down from
37% in 2019. The EU’s share of the stock of FDI in the UK fluctuated
between 34% and 50% over the last decade.
• Looking at individual countries, the USA accounted for just over a third of
the UK’s inward stock of FDI, slightly below the EU. Over the last decade,
the USA’s share the stock of FDI in the UK has fluctuated between 24%
and 34%.
• Europe as a whole (i.e., including European countries outside the EU)
accounted for 48% of the stock of inward FDI in the UK, down from a high
of 61% in 2013.

UK inwa rd FDI stock

2021

£ billions % total
USA 675.7 33.7%
Netherlands 217.5 10.9%
UK Offshore Islands 205.0 10.2%
Luxembourg 121.3 6.1%
France 100.9 5.0%
Japan 92.0 4.6%
Belgium 88.8 4.4%
Switzerland 74.4 3.7%
Canada 42.4 2.1%
Spain 41.3 2.1%
EU 685.1 34.2%
Non-EU 1,317.3 65.8%
World 2,002.4 100.0%

Source: ONS, Foreign direct investment involving UK companies: 2021

10 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

Stock of international investment in the UK

% total, 2021
60%
48.5%
50%
42.4%
40% 34.2%
30%

20%
8.2% 7.8%
10%
0.8%
0%
Europe Americas EU Europe, non- Asia Australasia &
EU Oceania

Source: ONS, Foreign direct investment involving UK companies: 2021

2.3 Inward FDI by UK region and country

Since 2022, the ONS have produced data on UK inward FDI, broken down by
region and country of investment. 7

In 2021 (the most recent year for which data are available), 5 of the 12 regions
and countries of the UK experienced positive inward investment flows, while
seven experienced a net disinvestment. Yorkshire and Humber had the
highest positive inward investment, with an inward investment flow of £3.9
billion, while Scotland had the highest net disinvestment of -£18.2 billion.

UK inward FDI flows by region and country

£ billions, 2021

-5

-10

-15

-20

7
See ONS, Foreign direct investment, experimental UK subnational estimates: 2021, 23 April 2023

11 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

Source: ONS, Foreign direct investment, experimental UK subnational estimates: 2021

In terms of inward FDI stocks, in 2021, London accounted for 45% of the stock
of inward FDI in the UK, while the South-East of England accounted for 17%.

Combined, London and the South-East accounted for 62% of the UK’s total
stock of inward FDI.

UK inward FDI stock by region and country

% total, 2021
50%

40%

30%

20%

10%

0%

Source: ONS, Foreign direct investment, experimental UK subnational estimates: 2021

Companies for which ONS could not calculate subnational results have been
placed in the not allocated category.

2.4 FDI stock on an immediate and ultimate basis

All figures in this section are based on investments made on an immediate

parent company basis, with the geographical origin of investment in the UK
being based on the country in which the company is resident, rather than the
residence of the ultimate parent company.

The ONS now produce FDI statistics that reflect investment made on the basis
of the ultimate controlling parent company (i.e., over 50% of the voting
power). This approach is designed to reflect not where the financial flow
necessarily comes from directly, but rather “identifies the country of the
ultimate decision-maker for each UK business receiving FDI.” 8

8
ONS, UK foreign direct investment, trends and analysis: July 2019, 28 July 2019

12 Commons Library Research Briefing, 20 June 2023

Foreign Direct Investment Statistics

This distinction is important as it can highlight offshore investment – that is

investment that effectively passes through one country en route to another.

An International Monetary Fund (IMF) paper on the subject describes this as

the difference between “phantom FDI”, which it describes as “investments
into empty corporate shells with no link to the local real economy” and real
FDI, which it describes as investment “between an investor in one economy
and an active and substantial business in another economy.” 9 The paper uses
the example of Luxembourg, which records inward investment levels similar
to the USA (despite the USA having a population around 550 times larger)
though this is largely investment that passes through Luxembourg “without
leaving many real traces in the transit”; accordingly Luxembourg’s outward
FDI flows roughly matches their inward FDI flows. 10 A 2019 Financial Times
article described phantom FDI as playing “no productive role in the
economies which host it, instead it is moved around the world purely to
reduce big companies’ tax bills.” 11

Such investment is often conducted through special purpose entities (SPEs).

These are legal entities set up to “obtain specific advantages from a host
economy”, in which they have “little to no employment, physical presence, or
production.” Often, these are set up in offshore financial centres, to benefit
from low taxes in the host economy. 12 As a result, these entities can “inflate
FDI data considerably”, while having little impact on the host economy. 13

The table below shows the stock of international investment in the UK on the
basis of the ultimate controlling parent country of investments in 2020 (the
most recent year for which data is available).

The main difference in these approaches is seen in investments from Europe

and the Americas. Investments from the EU fall from 39% of the stock of
inward investment in the UK on an immediate basis to 30% on an ultimate
basis, whereas investments from the Americas increase from 36% on an
immediate basis to 45% on an ultimate basis. Much of this is accounted for by
investment from the USA, which increases from 25% on an immediate basis to
36% on an ultimate basis. Investment from other continents and areas
remain broadly similar.

9
J. Damgaard, T. Elkjaer, and N. Johannesen, What Is Real and What Is Not in the Global FDI Network?
IMF Working Paper, 11 December 2019, p 1-2
10
J. Damgaard, T. Elkjaer, and N. Johannesen, as above, p 1-2
11
Phantom investment calls for an exorcism, Financial Times, 10 September 2019
12
Evrim Bese Goksu, Theo Bikoi, Padma Hurree Gobin, Special Purpose Entities Shed Light on the Drivers
of Foreign Direct Investment, IMF, 25 March 2022
13
Jannick Damgaard, Carlos Sánchez-Muñoz, United States Is World's Top Destination for Foreign Direct
Investment: The move comes amid a decline in offshore financial centers’ share of global FDI, IMF, 7
December 2022

13 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

Stock of international investment in the UK

% total, 2020
50% 45%
Immediate Ultimate
39%
40% 36%
30%
30%

20%
14%
11% 10% 9%
10%
1% 1%
0%
EU Americas Europe, non- Asia Australasia &
EU Oceania

Source: ONS, Inward FDI involving UK companies: immediate and ultimate basis, July 2022

2.5 Recent trends in inward FDI in the UK

The chart below shows the UK’s world ranking in terms of the stock of inward
FDI since 1990. Over this period, the UK’s position in the world has fluctuated
between fifth and second, while the United States has been ranked first every
year.

Between 2015 and 2018, the UK was ranked third in the world, behind the USA
and Hong Kong, before overtaking Hong Kong to reach second in the world in
2019, before falling back to third in 2020, behind the USA and the Netherlands
and subsequently returning to second in 2021.

In 2021, the value of the stock of inward FDI in the UK was $2.63 trillion, behind
the USA at $13.6 trillion and ahead of the Netherlands on $2.60 trillion. 14
Again, it is important to remember stock values are subject to changes in
valuation in company accounts, as well as exchange rate fluctuations, and
values can change from year to year even without new investments.

14
Data taken from UNCTAD Stat database

14 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

UK rank in stock of world inward FDI, 1990-2021

1 = most inward FDI that year; based on US$ data
1

6
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020

Source: UNCTAD, Bilateral FDI database

2.6 Inward FDI: impacts of Brexit and Covid

The available evidence on the impact of Brexit and Coronavirus pandemic on

inward investment in the UK is mixed.

Quarterly data produced by the ONS indicates that inward investment in the
UK continued to grow after the EU referendum result in June 206 and grew in
14 of the 20 quarters between Q1 2017 and Q4 2021, albeit at a much slower
rate than in 2016. Again, it is important to remember that 2016’s total was
exceptionally high and FDI flows can be very volatile.

Quarterly data from Q1 2016 are shown in the chart below.

Investment slowed markedly following Q1 2020, though remained positive in

every quarter - a net inflow of £20.6 billion in Q1 fell by 95% in cash terms to
£1.1 billion in Q2, increasing slightly in Q3, before falling to £0.7 billion in Q4.

2021 saw two quarters of positive growth and two quarters of net
disinvestment; the first quarter of 2022 also saw a net disinvestment.

This is broadly in line with global trends – the impact of the Coronavirus
pandemic saw global FDI inflows fall 35% in 2020 compared to 2019. 15

15
See UNCTAD, Investment Trends Monitor, 27 October 2020

15 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

FDI inflows into the UK

£ billions, Q1 2016 - Q4 2022
100

80

60

40

20

-20

-40
2016 2017 2018 2019 2020 2021 2022

Source: ONS, Balance of Payments

A 2019 Economist article suggests that the UK remained attractive to foreign

investors, owing to “low corporation tax and a stable legal system” in spite of
Brexit related uncertainty; a counter argument suggests post-referendum FDI
has been “little more than asset-stripping”, with foreign investors taking
advantage of the weakened pound to acquire British companies cheaply. 16

2.7 EY, attractiveness surveys

EY (formerly Ernst and Young) publish an annual “attractiveness survey” of

foreign investors’ investments in the UK and their perceptions of it as a
destination for investment.

The 2022 UK Attractiveness Survey Adapting to a Changed World reported the

UK’s number of inward investment projects increased in 2021 compared to
2020, but remained below 2019 levels, as covid related restrictions continued
to affect inward investment.

The UK’s market share of European inward investment projects was 17%, its
second-lowest level over the last ten years, down from the all-time high of
21% of projects attracted in 2015, with the report stating that “it does appear
the UK has now settled at a lower level of the European market.” The UK’s
share of inward investment projects has stabilised after “falling sharply
following the 2016 vote for Brexit”, with the 21% of projects attracted in 2015
“representing the high-water mark.”

Some notable findings included in the 2022 report include:

16
The Economist, How is Brexit affecting FDI into Britain? 11 May 2019

16 Commons Library Research Briefing, 20 June 2023

Foreign Direct Investment Statistics

• 58% of investors surveyed planned to invest in the UK in the next 12

months, up from 41% in 2020. The report points out that the investment
survey coincided with the Russian invasion of Ukraine and that this would
likely colour future investment plans.

• Investors’ longer-term sentiments on inward investment plans for the UK

were “strong”, signalling “investors have moved on from Brexit.”

• There has been a sectoral shift in inward investment, with investment in

manufacturing projects up while investments in service sector projects
fell, a trend reflective of “pandemic-induced changes, such as the shift to
hybrid and remote working reducing the need for physical presence in
key service sectors such as digital and business services.”

• 60,372 jobs were created from FDI projects in 2021, the highest level in
the past decade.

• London remained the UK’s largest destination for inward investment

projects, despite falls in its overall share of the UK’s number of inward
investment projects. In 2021, London accounted for 39.7% of the UK’s
inward investment projects, roughly the same as in 2020, though almost
10 percentage points lower than in 2019.

• Despite this fall, London remained the leading European city for inward
FDI projects, with 394 projects in 2021, over two and a half times greater
than the number secured by Madrid (140) and Paris (133).

The 2023 survey Navigating through turbulence, published in June 2023

reported that despite a “continuing strong performance” the UK “still has
work to do on international perceptions, addressing some of the fallout from
recent political and economic turmoil” and that “Brexit continues to present
hurdles to certain types of investment, especially those relying on access to
the European Single Market.”

The report also states that international competition for inward investment
“will intensify”, owing to developments such as the “subsidy-heavy US
Inflation Reduction Act” and that the UK government may lack “resources to
match the incentives being offered elsewhere.”17

Notable findings in the 2023 report include:

• Total inward FDI projects to the UK fell by 6.4% in 2022, putting it second
place in Europe, behind France.

• The UK also fell to third place in Europe for perceived attractiveness,

behind Germany and France, with the report stating “Brexit has reduced
the UK’s relative attractiveness for some investors.”

17
EY, Navigating through turbulence: EY UK Attractiveness Survey UK including Scotland spotlight, June
2023, p 2-3

17 Commons Library Research Briefing, 20 June 2023

Foreign Direct Investment Statistics

• Despite the fall in project numbers, the UK secured the highest FDI
related jobs total in Europe, at 46,779, ahead of Spain with 39,104 and
France on 38,102.

• The USA remained the biggest investor in the UK, accounting for 23.9% of
all UK inward investments, though the USA’s share of investment into the
UK has been declining since 2019.

• India overtook Germany as the second largest source of inward

investment projects, accounting for 8.8% of the total, with the UK
securing 58.2% of Indian investment projects in Europe in 2022.

• London retained it is status as the UK’s largest destination for inward

investment projects, despite sharp falls in the number of inward
investment projects secured compared to 2021. London’s share of UK
projects fell to a ten year low of 32.2%.

• Scotland secured the second highest number of projects in 2022, while

Manchester and Edinburgh were the most successful cities outside
London in securing inward investment projects.

18 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

3 UK investment abroad

3.1 FDI outflows, 2021

In 2021:

• The UK investment flows abroad were worth £61.7 billion, up from -£74.8
billion in 2020. 18
• By individual country, the UK’s highest overall investment was in the
USA– this amounted to £49 billion, followed by the UK Offshore Islands,
with investment of £13.1 billion. 19
• Overall, the UK recorded a net disinvestment with EU countries of £10.2
billion, though a positive net investment in Europe as a whole of £6.3
billion (the deficit was largely made up by investment flows to the UK
Offshore Islands).
• UK’s outward FDI flows to the USA reached their highest level since 2017.

UK outward FDI flows

2021

£ billions % total
USA 49.0 79.4%
UK Offshore Islands 13.1 21.2%
Finland 6.0 9.6%
Ireland 4.5 7.2%
Hong Kong 3.7 5.9%
Australia 3.2 5.2%
Canada 3.1 5.1%
South Africa 2.4 3.9%
Switzerland 2.1 3.4%
India 2.0 3.2%

World 61.7 100.0%

Source: ONS, Foreign direct investment involving UK companies: 2021, January 2023

18
The UK previously recorded a net disinvestment abroad for three successive years between 2014 and
2016
19
This grouping is made up of the Channel Islands and Isle of Man

19 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

3.2 Recent trends in FDI outflows

In 2021, the value of the UK’s outward FDI flows reached highest level since
2017. Over the last ten years, the UK has recorded four years of negative
investment flows abroad (2014-16 and 2020).

UK net FDI flows abroad

£ billions, 2012-2021
150

100

50

-50

-100

-150
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: ONS, Foreign direct investment involving UK companies: 2021, January 2023

Between 1990 and 2021, the UK’s position in terms of world outward FDI flows
fluctuated between 1st in (2000) and 18th (in 2012); net disinvestments meant
the UK was ranked 217th between 2014-16 and 216th in 2020.
The United States has ranked first in all but three years over this period – 1990
(when Japan was first), 2000 (when the UK was first), 2005 (when the
Netherlands was first) and 2018 and 2019 (when Japan was first). 20

3.3 Outward FDI stocks, 2021

In 2021:

• The value of the UK’s outward investment position abroad (i.e., the stock
of UK FDI invested abroad) was £1.8 trillion, up very slightly from 2020.
• UK investments in EU countries accounted for 40.4% of the total stock of
UK investments abroad, up very slightly from 40.1% in 2020, though
down from a high of 47.0% in 2012.
• Europe as a whole (i.e., including European countries outside the EU)
accounted for 50.0% of UK’s stock of investment abroad.

20
Data from UNCTAD

20 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

• Looking at individual countries, the USA accounted for just over a quarter
of UK’s stock of investment abroad in 2021.

Stock of UK investment a broa d

2021

£ billions % total
USA 461.4 26.1%
Netherlands 155.2 8.8%
Luxembourg 127.2 7.2%
Spain 95.9 5.4%
France 91.6 5.2%
UK Offshore Islands 83.9 4.7%
Hong Kong 77.6 4.4%
Irish Republic 70.2 4.0%
Switzerland 52.2 2.9%
Australia 41.0 2.3%

EU 714.0 40.4%
Non-EU 1,055.3 59.6%
World 1,769.3 100.0%

Source: ONS, Foreign direct investment involving UK companies: 2021, January 2023

Stock of UK investment abroad

% total, 2021
60%
50.0%
50%
40.4%
40% 34.0%
30%

20%
10.2% 9.7%
10% 3.3% 2.5%
0%
Europe EU Americas Asia Europe, Aust. & Africa
non-EU Oceania

Source: ONS, Foreign direct investment involving UK companies: 2021, January 2023

3.4 Recent trends in outward FDI stocks

The chart below shows the UK’s world ranking in terms of the stock of FDI held
abroad since 1990. Over this period, the UK’s position in the world has

21 Commons Library Research Briefing, 20 June 2023

Foreign Direct Investment Statistics

fluctuated between fifth and second, while the United States has ranked first
every year. The UK was the second largest holder of FDI stock abroad
between 2000 and 2013, before falling to third in 2014 and 2017 (behind the
USA and the Netherlands) and to fourth between 2018 and 2020 (behind the
USA, Netherlands and China) and fifth in 2021 (behind the USA, Netherlands
China and Canada).

UK rank in stock of outward FDI, 1990-2021

1 = largest FDI stock; based on US$ data
1

6
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020

Source: UNCTAD, Bilateral FDI database

22 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

4 World FDI

This section looks at recent trends in world FDI.

4.1 Flows

In 2020, inward investment flows fell to their lowest level since 2005 (in cash
terms) - world flows of inward FDI fell by 35% to $1.0 trillion, down from $1.5
trillion in 2019. This followed three consecutive years of relative stability in
inward investment levels between 2017 and 2019, after a record high of $2.1
trillion in 2015.

This fall in inward investment flows was due to Covid-19 pandemic and
related lockdowns, which slowed existing investment activity, while prospects
of a future recession had a negative influence on new investment activity.
The fall was more pronounced in investment flows to developed economies –
the value of inward flows in developed economies fell by 58% in cash terms
between 2019 and 2020, while the value of inward investment flows to
developing economies fell by 10%. Developing economies accounted for two
thirds of global FDI in 2020, up from just under half in 2019.

The relatively small overall fall in investment in developing countries was

attributed by UNCTAD to “resilient flows in Asia”, owing to the relatively
successful containment of the coronavirus pandemic in East Asia, meaning
investment in the region remained stable. 21 Mainland China saw the value of
its inward FDI flows increase by 6% between 2019 and 2020, while the value of
Hong Kong’s inward FDI flows grew by 85% in cash terms, from $73 billion to
$135 billion.
In flows in Europe fell by 80%, while in flows in the EU fell by 48%. The change
in inflows to North America was less pronounced – inflows to the USA fell by
33%, while inflows to North America as a whole fell by 40%.
Despite this fall, the USA remained the largest host country for inward FDI in
2020, with inflows worth $151 billion.

21
UNCTAD, Investing in Sustainable Recovery: World Investment Report 2021, June 2021

23 Commons Library Research Briefing, 20 June 2023

Foreign Direct Investment Statistics

World inward FDI flows

$ trillions, 1990-2021

2.5 World
Developed economies
2.0
Developing economies
1.5

1.0

0.5

0.0
1990 1995 2000 2005 2010 2015 2020

Source: UNCTAD, Bilateral FDI database

The value of world inward flows rebounded in 2021, reaching $1.6 trillion, an
increase of 64% in cash terms compared to 2020 and an increase of 7%
compared to 2019.
Although investment flows to developing countries grew by 134% in cash
terms between 2020 and 2021, they remained below 2019 levels.
By contrast, investment flows to developing economies were 17% higher in
2021 compared to 2019. Developing economies accounted for 53% of world
inflows in 2021.
The increase in investment flows to developing economies was mostly
generated by investment flows to developing Asian economies, with
investment flows to developing Asian economies reaching all-time high for
the third consecutive year, combined with a partial recovery in investment
flows to Latin America and the Caribbean, and an upswing in investment
flows to Africa. 22
Flows to least developed countries also grew, though these countries
accounted for a very small percentage of the growth experienced by
developing economies.
Projections from the United Nations Conference on Trade and Development
(UNCTAD) for 2022 suggest investment flows will likely see a “downward
trajectory, at best remaining flat” owing to the conflict in Ukraine, combined
with “lingering effects of the pandemic” causing a “triple food, fuel and
finance crisis in many countries”, leading to investor uncertainty. 23
In 2021, the USA maintained its position as the world’s largest recipient of
inward FDI flows, accounting for just under a quarter of world inward

22
United Nations Conference on Trade and Development, World Investment Report 2022, June 2022, p xi
23
United Nations Conference on Trade and Development, World Investment Report 2022, June 2022, p xi

24 Commons Library Research Briefing, 20 June 2023

Foreign Direct Investment Statistics

investment flows. The value of the USA’s inward flows grew by 144% between
2020 and 2021, reaching $367 billion, their highest level since 2016.
Mainland China accounted for 11% of world inward investment flows, down
from 16% in 2020.

World inward FDI flows

% total, 2021
25%

20%

15%

10%

5%

0%

Source: UNCTAD, Bilateral FDI database

In terms of outward FDI flows, the USA accounted for just under a quarter of
world outward FDI flows in 2021. China accounted for 9% of world outward
flows, down from 20% in 2020.

World outward FDI flows

% total, 2021
25%

20%

15%

10%

5%

0%

Source: UNCTAD, Bilateral FDI database

25 Commons Library Research Briefing, 20 June 2023

 Foreign Direct Investment Statistics

4.2 Stocks

The USA remained the country with the largest amount of inward FDI stock in
2020, accounting for 30% of the world’s total. In cash terms, the value of the
USA’s stock of inward investment increased by 26% between 2020 and 2021,
reaching a record high of $13.6 trillion.

World inward FDI stock

% total, 2021
35%
30%
25%
20%
15%
10%
5%
0%

Source: UNCTAD, Bilateral FDI database

The USA also remained the world’s single largest holder of outward FDI stock
in 2021, accounting for just under a quarter of the world’s total in 2021.

World outward FDI stock

% total, 2021
25%

20%

15%

10%

5%

0%

Source: UNCTAD, Bilateral FDI database

26 Commons Library Research Briefing, 20 June 2023

The House of Commons Library is a research and
information service based in the UK Parliament.
Our impartial analysis, statistical research and
resources help MPs and their staff scrutinise
legislation, develop policy, and support constituents.

Our published material is available to everyone

on commonslibrary.parliament.uk.

Get our latest research delivered straight to your inbox.

Subscribe at commonslibrary.parliament.uk/subscribe
or scan the code below:

commonslibrary.parliament.uk

@commonslibrary