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Foreign investment in UK rises despite slump across rest of Europe Foreign investment in UK rises despite slump across rest of Europe
(3 months later)
Britain saw its foreign investment jump last year, bucking the falling trend in the rest of Europe and cementing its status as a haven for investors.Britain saw its foreign investment jump last year, bucking the falling trend in the rest of Europe and cementing its status as a haven for investors.
In a boost to the coalition as it champions trade deals, figures from the UN showed that the flow of money into the UK continued to recover last year after a slump in 2009.In a boost to the coalition as it champions trade deals, figures from the UN showed that the flow of money into the UK continued to recover last year after a slump in 2009.
In its annual world investment report on Wednesday, the UN Conference on Trade and Development (Unctad) said foreign direct investment (FDI) into the UK rose 22% in 2012 to more than $62bn (£41bn). That contrasted with a drop of 18% for the world, 42% for Europe and 85% in Germany.In its annual world investment report on Wednesday, the UN Conference on Trade and Development (Unctad) said foreign direct investment (FDI) into the UK rose 22% in 2012 to more than $62bn (£41bn). That contrasted with a drop of 18% for the world, 42% for Europe and 85% in Germany.
The numbers echo reports from the property and financial markets that foreign investors are increasingly seeing the UK as a place to invest their money in the context of the eurozone's problems.The numbers echo reports from the property and financial markets that foreign investors are increasingly seeing the UK as a place to invest their money in the context of the eurozone's problems.
"The UK is not part of the eurozone; the situation appears a bit better there and it is seen as a bit of a safe haven," said an Unctad economist, Hafiz Mirza."The UK is not part of the eurozone; the situation appears a bit better there and it is seen as a bit of a safe haven," said an Unctad economist, Hafiz Mirza.
He said much of the growth in investment into the UK came from a sharp rise in reinvested earnings, suggesting that companies already in the UK were choosing to expand here. There was also a rise in "greenfield projects", where a company launches a venture from scratch. Mirza said that rise suggested continuing growth in investment into the UK. "Those greenfield projects tell us what is happening in the future," he added.He said much of the growth in investment into the UK came from a sharp rise in reinvested earnings, suggesting that companies already in the UK were choosing to expand here. There was also a rise in "greenfield projects", where a company launches a venture from scratch. Mirza said that rise suggested continuing growth in investment into the UK. "Those greenfield projects tell us what is happening in the future," he added.
Much of the greenfield money came from developing countries, he explained, citing projects such as the redevelopment of Battersea power station in London by a Malaysian consortium.Much of the greenfield money came from developing countries, he explained, citing projects such as the redevelopment of Battersea power station in London by a Malaysian consortium.
Developing countries played a bigger role in the flow of foreign direct investment around the world in 2012, Unctad said. They took the lead in attracting FDI in 2012 and, for the first time ever, absorbed more FDI than developed countries, accounting for 52% of global FDI flows.Developing countries played a bigger role in the flow of foreign direct investment around the world in 2012, Unctad said. They took the lead in attracting FDI in 2012 and, for the first time ever, absorbed more FDI than developed countries, accounting for 52% of global FDI flows.
Unctad had been expecting the global total for foreign direct investment to pick up in 2012, rather than falling 18% to $1.35tn. Mirza said it appeared many companies were sitting on the cash they had made and still feeling cautious about spending any of it.Unctad had been expecting the global total for foreign direct investment to pick up in 2012, rather than falling 18% to $1.35tn. Mirza said it appeared many companies were sitting on the cash they had made and still feeling cautious about spending any of it.
He was cautious about the outlook, forecasting FDI to change little in 2013, with an upper range of $1.45tn.He was cautious about the outlook, forecasting FDI to change little in 2013, with an upper range of $1.45tn.
Unctad warned that factors such as "structural weaknesses in the global financial system, the possible deterioration of the macroeconomic environment, and significant policy uncertainty in areas crucial for investor confidence" might lead to a further decline in FDI flows.Unctad warned that factors such as "structural weaknesses in the global financial system, the possible deterioration of the macroeconomic environment, and significant policy uncertainty in areas crucial for investor confidence" might lead to a further decline in FDI flows.
"Recovery to more vigorous investment levels will take longer than expected, mostly because of global economic fragility and policy uncertainty," Unctad said."Recovery to more vigorous investment levels will take longer than expected, mostly because of global economic fragility and policy uncertainty," Unctad said.
"As macroeconomic conditions improve and investors regain confidence in the medium term, transnational corporations (TNCs) may convert their record levels of cash holdings into new investments.""As macroeconomic conditions improve and investors regain confidence in the medium term, transnational corporations (TNCs) may convert their record levels of cash holdings into new investments."
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