he United Kingdom has soared to new heights in attracting inward investment in recent years. During its 2004-05 fiscal year alone, for example, the UK recorded 1,066 inward investment projects — its highest-ever tally — which will create more than 39,500 jobs.
Wales leads the way, attracting more than $633 million in foreign investment in 2003/2004 — 16 percent of the UK total for that time period.
Characteristically, US companies accounted for an inordinately large share of that record-setting investment. American firms generated 466 new or expanded projects in 2004-05, a whopping 47 percent annual increase, UK Trade & Investment reports.
“The US remains the UK’s most important economic partner,” notes UK Trade & Investment Director of Trade Gordon Innes. “US Department of Commerce research confirms
But why are so many US companies choosing UK sites? Well, eight years of sustained economic prosperity certainly haven’t hurt. Then there’s the UK’s rank as Europe’s uncontested leader in deregulation; Britain has opened wide its prized markets to free-market international competition. US firms also highly value the UK’s skilled, adaptable work force. On top of that, the millions of dollars that Britain has poured into its life-sciences base have greatly augmented the nation’s attractiveness for R&D centers.
Hot U.S. businesses are getting hotter in the UK as well: American firms in information technology, pharmaceuticals and finance are increasingly selecting Britain for their European headquarters, securing a strong foothold in the vital European market. Significantly, those very same sectors have led North America’s growth in recent years.
Businesses in all sectors, too, are attracted to Britain’s favorable corporate tax structure, which makes the UK one of Europe’s most profitable places for foreign investors. The current corporate tax rate, for example, is 30 percent. Other noteworthy UK tax benefits include:
- Many double tax treaties: Overseas investors, for example, pay no withholding tax on either interest or royalties;
- No withholding tax on dividends;
- No exchange controls; and
- No restrictions on repatriation of profits.
Finally, there’s the UK’s rich quality of life, which is comparable to what Americans enjoy. Whatever the reasoning, though, one thing is clear: US companies are flocking to the UK, and the trend shows no sign of slowing.