External investment in UK tech falls

The United Kingdom’s appeal to foreign direct investment (FDI) in tech projects has decreased, resulting in criticism that the country is “closed for business.” Despite ranking second in the world for the amount of overseas investment received, with 929 projects, the FDI for tech projects fell by almost a quarter (23%) last year compared to 2021.

According to Julie Linn Teigland, managing partner, EMEIA, EY, the UK’s main objective should be to create the conditions for businesses to manufacture in Europe, invest in research and development, and make digital and green investments to promote future prosperity. Although the UK came top for jobs generated by outside capital at 46,779, it was still considered “closed for business” in the tech industry.

London-based fintech unicorn Revolut has recently expressed frustration with the UK’s business regulations, citing complex regulatory red tape that has made the country less attractive to businesses from other nations. Company co-founders Nikolay Storonsky and Vlad Yatsenko have stated that the UK government does not promote business the way US tech champions are supported by their government through lobbyists, politicians, and governors.

The UK’s competitiveness as a place to do business in tech has been further impacted by Microsoft President Brad Smith’s comment that the country is “closed for business” in response to the competition regulator blocking a deal to acquire video game giant Activision Blizzard for £55bn. In the face of the declining FDI, industry experts believe that it is critical to create a compelling business case for global investors to invest in the UK amidst competition from the US and China.

Software and IT services have been responsible for producing the most new roles in Europe, with 67,116 new roles created. As Europe seeks to capture the pent-up demand and deferred plans, the UK’s complex business regulations and decline in FDI suggest that it must improve its investment landscape to attract foreign investment.