The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
United Kingdom Statement: https://www.state.gov/reports/2023-investment-climate-statements/united-kingdom/
Executive Summary
The United Kingdom (UK) is an attractive destination for foreign direct investment (FDI) and imposes few impediments to foreign ownership. The country offers a robust, business-friendly environment to reliably expand trade and invest. It has a mature, high-spending consumer market and an open, liberal economy with world-class talent. Investors have access to a market of 67 million people, diverse suppliers and partners, and benefit from a range of programs to help businesses of all shapes and sizes grow, including a £100 billion infrastructure spending commitment.
Market entry for U.S. firms is facilitated by a common language, legal heritage, and similar business institutions and practices. The UK is well supported by sophisticated financial and professional services industries and has a transparent tax system in which local and foreign-owned companies are taxed alike. The pound sterling is a free-floating currency with no restrictions on its transfer or conversion. There are no exchange controls restricting the transfer of funds associated with an investment into or out of the UK. UK legal, regulatory, and accounting systems are transparent and consistent with international standards. The UK legal system provides a high level of protection. Private ownership is protected by law and monitored for competition-restricting behavior.
Prime Minister Rishi Sunak aspires for the UK to be an “innovation nation” and has publicly committed to using science and technology to drive growth and achieve a net-zero carbon emissions economy. Although the UK has been relatively forward leaning on renewable energy in recent years, Russia’s war against Ukraine further accelerated government aims to have more homegrown energy and a more diversified supply of natural gas. On March 30, 2023, the UK government announced a “Powering Up Britain” package that includes an Energy Security Plan, which details efforts to decarbonize the UK’s energy system, and a Net Zero Growth Plan, which includes ambitions in areas such as offshore wind, low-carbon hydrogen, carbon capture and storage, new nuclear, and green finance, among others, with an eye toward a carbon-neutral economy by 2050.
With the onset of the war in Ukraine in February 2022, and the introduction of sanctions against Russia, the UK government accelerated its plans to tackle money laundering by foreign entities. Less than a month after the invasion, Parliament approved the Economic Crime (Transparency and Enforcement) Act 2022, which obliges overseas entities to register beneficial owners of UK properties. Further legislative measures to combat illicit finance may follow.
To facilitate inward foreign investment, the UK government’s Invest in the UK website (https://www.great.gov.uk/international/investment/) is a comprehensive source of information on the advantages of investing in the UK, current investment opportunities, sector specific background, and government contacts. Over the past decade, the UK has been one of Europe’s top recipients of FDI and it remains the top destination for U.S. outbound investment, totaling more than $1 trillion in 2021. According to the UK’s Office of National Statistics, both the inward and the outward FDI positions (stocks) increased in 2021 compared with 2020; the UK’s inward position increased to £2 trillion ($2.8 trillion), while the outward position increased to £1.8 trillion ($2.5 trillion). However, total net FDI flows into the UK fell to -£51.7 billion ($71.1 billion) in 2021, while net flows abroad totaled £61.7 billion ($84.9 billion) over the same time. The OECD reports inward FDI to the UK totaled $63.3 billion in the first nine months of 2022. The UK government provides comprehensive statistics on FDI in its routine investment. Read more at Ballance of Payment Bulletins. updates.
Currency conversions in this report were calculated using the yearly average exchange rates published by the IRS: https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates .