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Statistical bulletin: Foreign Direct Investment Involving UK Companies, 2012 (MA4) This product is designated as National Statistics

Released: 06 February 2014 Download PDF

Key Findings

  • Net investment flows into the UK (inward investment) increased in 2012 to £35.4 billion (current prices), from £28.9 billion in 2011. However, both of these estimates are well below flows of net investment into the UK seen between 2005 and 2007.
  • The net flow of direct investment abroad by UK companies (outward investment) decreased from £60.1 billion in 2011 to £26.5 billion in 2012, a fall of £33.6 billion.
  • Net investment flows (outward investment) to Europe declined sharply in 2012 compared with 2011, falling from a net investment of £27.3 billion in 2011 to a net disinvestment of £0.7 billion in 2012.
  • Most sectors involved in net investment abroad (outward investment) saw a decline in 2012, most notably within the services sector, falling from an investment of £42.2 billion in 2011 to an investment of £0.03 billion in 2012. This decline was mainly in the information and communication, financial services and the electricity, gas, water and waste industries.
  • The net position of direct investment abroad by UK companies stood at £1,088 billion (£1.1 trillion) by the end of 2012 (current prices). This was similar to levels reported at the end of 2011 and 2008. The net position of direct investment in the UK by overseas companies at the end of 2012 was estimated at £936 billion, an increase on the value reported at the end of 2011 (£793 billion).
  • Net earnings from direct investment by UK companies’ abroad (outward earnings) amounted to £80.2 billion in 2012. This was a decrease of £19.8 billion on the amount earned in 2011 and a return to similar levels seen in 2010. Net earnings from FDI in the UK (inward earnings) decreased slightly in 2012 to £42.7 billion (current prices), a decrease of £1.7 billion on the amount reported in 2011.

Overview

This Statistical Bulletin provides data on Foreign Direct Investment (FDI) flows, positions and earnings involving UK companies. The investment figures are published on a net basis, that is, they consist of investments minus disinvestments. Investments can include acquisitions of assets or shares and disinvestments can include the disposal of assets or shares.

A summary of these results, by geography, was initially released as an Office for National Statistics (ONS) statistical bulletin for Foreign Direct Investment involving UK companies 2012 on 5 December 2013. This release provides additional information on component and industrial breakdowns.

The FDI estimates are analysed and produced to measure investment data for:

The UK’s FDI statistics are produced according to the agreed international standards set out in the third edition of the Organisation for Economic Co-operation and Developments (OECD) Benchmark Definition of FDI (BD3) and the fifth edition of the International Monetary Fund (IMF) Balance of Payments Manual (BPM5).

The OECD and IMF have recently released new versions of their manuals concerning FDI statistics (BD4 and BPM6). These revised manuals reflect the changes that have occurred in international finance since the previous updates. Along with other countries, the UK is currently working to implement these changes.

For more detail on these changes see the guidance and methodology section of the ONS website.

FDI estimates are essential for measuring the UK’s Balance of Payments. FDI earnings figures feed into the Balance of Payments current account, FDI flows form an integral part of the financial account and FDI positions supply direct investment data to the International Investment Position (IIP) account.

Within the UK, FDI estimates are used by a large number of government departments for briefing and policy formation purposes, including HMRC, Cabinet Office, HM Treasury, UK Trade and Investment, the Bank of England, the Department for Business, Innovation and Skills and the Department for International Development.

UK FDI figures are also extensively used for policy, analysis and negotiations by international organisations, including Eurostat, United Nations Conference on Trade and Development (UNCTAD), OECD and IMF, as well as a number of foreign embassies. More widely the FDI estimates are utilised by commercial companies, academics and independent researchers.

User Engagement

We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have and would be particularly interested in knowing how you make use of these data to inform our work. Please contact us via email: fdi@ons.gsi.gov.uk  or telephone Ciara Williams on +44 (0)1633 456455.

Summary

FDI net investment flows (Table 1.1)

The net flow of direct investment abroad by UK companies (outward investment) decreased from £60.1 billion in 2011 to £26.5 billion in 2012, a fall of £33.6 billion (current prices). This was a return to similar levels of net outward flows seen in 2009 and 2010 and continues to remain substantially lower than the peaks observed in 2000 and 2007 of £154.2 billion and £159.1 billion respectively.

Net investment flows into the UK (inward investment) increased in 2012 to £35.4 billion, a similar amount to 2010. However, both of these figures are well below flows of net investment into the UK seen between 2005 and 2007.

FDI net International Investment Positions (IIP) (Table 1.2)

The net position of direct investment abroad by UK companies stood at £1,088 billion (£1.1 trillion) by the end of 2012 (current prices). This was similar to levels reported at the end of 2011 and 2008.

Outward FDI net positions seem to have recovered from the reduction at the end of 2009 following the 2008/2009 economic downturn. The net position of direct investment in the UK by overseas companies at the end of 2012 was estimated at £936 billion, an increase on the value reported at the end of 2011 (£793 billion). This has been primarily driven by a decreased level of inter-company borrowing and sustained income yields.

FDI net investment earnings (Table 1.3)

Net earnings from direct investment by UK companies’ abroad (outward earnings) amounted to £80.2 billion in 2012. This was a decrease of £19.8 billion on the amount earned in 2011 and a return to similar levels seen in 2010. Although there was a decline in the value of UK earnings abroad in 2012, figures still continue to be above those recorded in 2008 and 2009, when the effects of deteriorating economic conditions became visible in the UK FDI data.

Net earnings from FDI in the UK (inward earnings) decreased slightly in 2012 to £42.7 billion (current prices), a decrease of £1.7 billion on the amount reported in 2011. However, UK inward net earnings have continued to recover from the large fall seen in 2008. Net earnings in 2012 remained broadly similar to the value recorded in 2007 and 2011.

FDI by geography and industry

The overall trends above are partly reflected in the destinations of net investment abroad by UK companies. For example, net investment to Europe declined sharply in 2012 compared with 2011, likely owing in part to relatively subdued economic conditions. On the other hand, net investment into the UK by overseas companies increased from all regions except Africa and Australasia & Oceania.

In contrast to 2011, most sectors involved in net investment abroad saw a decline in 2012, most notably within the information and communication, financial services and the electricity, gas, water and waste industries. These decreases originated from Europe, the Americas and Asia.

However, despite an overall increase in net investment into the UK during 2012, decreases in net investments were seen in half of the industries, particularly in the mining and quarrying industry from Europe.

How our statistics compare with external sources

The UK experienced mixed economic conditions in 2012 as annual GDP growth slowed from 1.7% in 2010, to 1.1% in 2011 and to 0.3% in 2012.

However, the UK remains one of the most active countries for outward and inward FDI in the world. The latest OECD figures suggest that 4.6% of total world inward FDI was to the UK in 2012, whereas 5.8% of total world outward FDI was from the UK.

The trends in these flows suggest that FDI inflows to the UK have been increasing since 2010, while the value of FDI outflows fell in 2012 from 2011, yet remained higher than the 2009 and 2010 levels.

Global economic activity continued to slow in 2012. The latest International Monetary Fund (IMF) data estimated that world GDP grew by 3.2% in 2012 after growing by 3.9% in 2011 and by 5.2% in 2010. However, unlike those previous years, the slowing rate of economic activity is more widely spread around the world.

The advanced economies grew by 1.5% in 2012, compared with growth of 1.7% in 2011. This is partly reflecting the continuing economic adjustments in some developed economies following the 2008/09 economic downturn. However, growth in the rest of the world also slowed to 4.9% compared with 6.2% in 2011. The IMF found that a number of emerging markets may be coming off cyclical peaks which would make it harder to sustain the growth rates of previous years.

Rate of Return analysis

One useful indicator related to direct investment earnings is the rate of return. The rate of return is calculated as earnings divided by positions.

Overall, the implied rate of return for outward direct investment abroad by UK companies was 7% in 2012, a decrease on 2011 (9%) and still lower than 2007 (10%).

Foreign companies investing in the UK saw slightly less prosperity on their investments in the UK in 2012. The implied rate of return for inward investment into the UK decreased to 5% in 2012 from 6% in 2011 and was still lower than the value reported in 2007 (7%).

Net FDI Flows Abroad (Outward) by Component and Industry

Component analysis (Table 1.1 and Table 2.2)

Net FDI flows are made up of three primary components: reinvested earnings (sometimes known as un remitted profits); equity capital transactions (including mergers, acquisitions and disposals); and other capital transactions (including inter-company loans and branch head office balances).

Figure 1: FDI net flows abroad by UK companies (outward)

Figure 1: FDI net flows abroad by UK companies (outward)
Source: Office for National Statistics

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Total net outwards FDI decreased sharply between 2011 and 2012, returning to a value more comparable with 2010. This decrease was driven by changes in equity capital transactions, decreasing from a net investment of £29.8 billion in 2011 to a net investment of £7.3 billion in 2012, down £22.5 billion. This was caused by a decrease in the value of acquisition made abroad by UK companies in 2012, which decreased to £25.2 billion, less than half the value witnessed in 2011.

Reinvested earnings in UK companies also declined in 2012, decreasing from an investment of £30.1 billion in 2011 to an investment of £19.3 billion in 2012. This fall was driven by a decrease in the net profit earned by UK companies within their affiliates in Europe and the Americas, particularly in the USA. This may be an indication that UK companies did not achieve as much income on their investments abroad during 2012 compared with 2011.

Industry analysis (Table 2.3)

Figure 2: FDI net flows abroad by UK companies (outward) by sector

Figure 2: FDI net flows abroad by UK companies (outward) by sector
Source: Office for National Statistics

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Net FDI outflows from the UK in 2012 saw a sizeable decrease between 2011 and 2012, returning to values more comparable with 2010. This decline was very noticeable within the service sector.

Services

UK net investment abroad to service sector companies decreased from an investment of £42.2 billion in 2011 to an investment of £0.03 billion in 2012. This large shift can be attributed to three areas within the make up of the service sector.

Net outflows abroad to financial services companies decreased from an investment of £14.4 billion in 2011 to an investment of £4.4 billion in 2012, a decrease of £10 billion. This was driven by decreases in net investment to Europe with large movements of equity capital taking place.

This was mainly distributed across four countries.

  • Two large equity disposals affected the value of financial service sector net outflows from the UK, in particular, to Sweden (Old Mutual PLC of the UK disposed of Skandia insurance company Ltd of Sweden for £2.1 billion, as reported in Q1 2012 M&A statistical bulletin) and Luxembourg (a large disposal within the banking services). 

  • In addition, the Netherlands and UK Offshore Islands also witnessed large decreases in net financial services outflows from the UK during 2012.

It should be noted that international reporting standards require net outward (and inward) direct investment to be reported according to the immediate investing country rather than the ultimate source of investment. As consequence of this, the relative importance of certain countries such as the Netherlands and Luxembourg may be partly due to the presence of high numbers of ‘Special Purpose Entities’ (companies whose primary purpose is to ‘pass through’ investment) in those economies. Care therefore needs to be taken when interpreting these values.

UK companies net investment abroad in the information and communication services industry witnessed a decrease in 2012, falling from an investment of £12.1 billion in 2011 to a disinvestment of £7.3 billion in 2012, a decrease of £19.4 billion. This decrease can be attributed to drops in net investment outflows to Europe, the Americas and Asia.

Within Europe, net UK outflows of information and communication services to the Netherlands saw a large drop, falling from an investment of £0.2 billion in 2011 to a disinvestment of £4.3 billion in 2012. This decrease was largely due to a fall in net profit by companies operating with the region.

Within the Americas, UK net investment of information and communication services to the USA fell from an investment of £4.1 billion in 2011 to a disinvestment of £0.2 billion in 2012, a decrease of £4.3 billion. Furthermore, there was a fall in UK net investment abroad to other Asian countries which decreased from an investment of £3.6 billion in 2011 to a disinvestment of £0.4 billion in 2012. Both of these regions saw increases in net investment from the UK in 2011, which were as a result of large equity transactions between the UK and these regions. In 2012, UK net investment to both of these areas returned to levels more in line with 2010 estimates.

Net investments from the UK to foreign companies abroad within electricity, gas, water and waste industry also saw a decrease, falling from an investment of £9 billion in 2011 to an investment of £0.5 billion in 2012.

Resources

Net UK investment in the resources sector abroad declined in 2012, decreasing from an investment of £9.1 billion in 2011 to an investment of £8 billion in 2012.

Net outflows to companies within the mining and quarrying industry remained the main driver for changes seen in the resources sector during 2012.  This decrease was driven by a fall in net outflows to Asia (decreasing from an investment of £4.1 billion in 2011 to a disinvestment of £0.4 billion in 2012) and to the Americas, in particular the USA, who witnessed a decrease, falling from an investment of £9.6 billion in 2011 to a disinvestment of £1.5 billion in 2012.

Net outflows to Australasia and Oceania offset these decreases in net investment abroad to companies within the mining and quarrying industry. UK net investment increased from an investment of £1.6 billion in 2011 to an investment of £2.6 billion in 2012.
 

Manufacturing

UK net investment abroad to manufacturing-based companies increased from an investment of £4.0 billion in 2011 to an investment of £7.7 billion in 2012.

This was driven by an increase in net outflows within other manufacturing (which includes the manufacture of electrical equipment and repair, maintenance and installation of machinery). This increased from an investment of £1.3 billion in 2011 to an investment of £2.8 billion in 2012 (£1.5 billion increase) and was driven by investments by UK companies in Europe (increasing from an investment of £0.6 billion in 2011 to an investment of £1.5 billion in 2012) and the Americas (increasing from an investment of £0.3 billion in 2011 to an investment of £1.1 billion in 2012)

However, these increases were offset by decreases in UK net outflows to companies who manufacture food, beverages & tobacco products (decreasing from an investment of £0.2 billion in 2011 to a disinvestment of £1.0 billion in 2012) driven by decreases in net outflows to Australia. In addition, UK net investment in petroleum, chemicals, pharmaceuticals, rubber, plastic products also declined. Overall, net outflows increased from an investment of £1.5 billion in 2011 to an investment of £5.8 billion in 2012 with UK outflows to the USA recovering from a large disinvestment witnessed in 2011.

Net FDI International Investment Positions Abroad (Outward) by Component and Industry

Component analysis (Table 1.2)

FDI international investment positions are made up of three primary components: UK companies share of their foreign companies’ affiliates share capital and reserves, inter-company account balances and foreign branch head-office account movements to the UK parent.

Figure 3: FDI net international investment positions abroad by UK companies (outward)

Figure 3: FDI net international investment positions abroad by UK companies (outward)
Source: Office for National Statistics

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At the end of 2012, net FDI international investment positions increased marginally when compared with 2011. Since 2007, the rate of increase of UK FDI international investment positions abroad has remained broadly flat. 

One notable decrease occurred in the level of net amounts due to UK parent companies by branch head offices, which decreased from £17.9 billion at the end of 2011 to £9.7 billion at the end of 2012.

Industry analysis (Table 1.2 and Table 3.3)

Figure 4: FDI net international investment position abroad by UK companies (outward) by sector

Figure 4: FDI net international investment position abroad by UK companies (outward) by sector
Source: Office for National Statistics

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Services

At the end of 2012, UK outward net positions within the service sector increased to £502.0 billion, increasing marginally when compared with the level at the end of 2011. Outward services positions accounted for 46% of the total UK outward position at the end of 2012, in line with the previous year.

Within the total service UK investment position abroad:

  • Financial services accounted for 58% at the end of 2012, compared with 48% at the end of 2011.

  • Information & communication services accounted for 23% at the end of 2012, compared with 25% at the end of 2011.

  • Other services accounted for 8% at the end of 2012, in line with the previous year.

Manufacturing

UK outward investment positions within the manufacturing sector decreased to £170.2 billion at the end of 2012 compared with £185.3 billion at end of 2011 (down 8%). The UK’s outward position within the manufacturing sector accounted for 16% of the total UK outward position at the end of 2012 (compared with 17% at the end of 2011).

Within the manufacturing sector, UK investment position abroad:

  • Petroleum, chemicals, plastic and fuel products accounted for 43% at the end of 2012, compared with 45% at the end of 2011.

  • Food products accounted for 25% at the end of 2012, compared with 28% at the end of 2011.

  • Other manufacturing products accounted for 18% at the end of 2012, compared with 15% at the end of 2011.

Resources

At the end of 2012, UK net outward positions within the resource sector increased to £221.5 billion (up 12% from £197 billion at the end of 2011). Resources accounted for 20% of the total UK net outward position at the end of 2012 (compared with 18% at the end of 2011).

Net Earnings From FDI Investment Abroad (Outward) by Component and Industry.

Component analysis (Table 1.3)

Net FDI earnings abroad by UK companies are made up of three primary components. These include net subsidiaries profit, net interest incurred by UK companies and branch net profits.

Figure 5: FDI net earnings abroad by UK companies (outward)

Figure 5: FDI net earnings abroad by UK companies (outward)
Source: Office for National Statistics

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In 2012, net FDI earnings abroad decreased when compared with 2011, falling from net earnings of £100.0 billion in 2011 to net earnings of £80.2 billion in 2012. This value was a return to 2010 levels. This decrease was driven by a fall in UK companies’ share of their subsidiaries’ net profit and branch net profit abroad. In particular, decreases were seen in net profit in the Americas and Europe.

Industry analysis (Table 1.3 and Table 4.3)

Figure 6: FDI net earnings abroad by UK companies (outward) by sector

Figure 6: FDI net earnings abroad by UK companies (outward) by sector
Source: Office for National Statistics

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All three broad sectors observed reductions in net FDI earnings between 2011 and 2012. The service sector in particular showed the largest decline, decreasing from £41.9 billion in 2011 to £29.2 billion in 2012. Net earnings in 2012 were similar to those observed in 2010.

The decreases in net UK earnings abroad in 2012 in the service sector were driven by:

  • Information and communication services, decreasing from £8.8 billion in 2011 to £0.3 billion in 2012. This was mainly from within Europe.

  • Financial services, decreasing from £21.6 billion in 2011 to £18.9 billion in 2012, driven mainly by the Americas.

The manufacturing sector also saw a decline in 2012, decreasing from £21.3 billion in 2011 to £17.1 billion in 2012. This was driven by decreases in the manufacture of petroleum, chemicals, plastic and fuel products from within Europe. In addition, the resources sector saw a decline on the amount earned from companies abroad, decreasing from £25.0 billion in 2011 to £21.9 billion in 2012, within mining and quarrying making up the majority of this sector.

Net FDI Flows into the UK (Inward) by Component and Industry

Component analysis (Table 1.1)

Net FDI flows are made up of three primary components: reinvested earnings (sometimes known as un remitted profits); equity capital transactions (including mergers, acquisitions and disposals); and other capital transactions (including inter-company loans and branch head office balances).

Figure 7: FDI net flows into the UK by foreign companies (inward)

Figure 7: FDI net flows into the UK by foreign companies (inward)
Source: Office for National Statistics

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Net inward FDI flows into the UK increased in 2012 compared with 2011. This increase was driven by changes in earnings reinvested into the UK by foreign parent companies, increasing from a disinvestment of £4.1 billion in 2011 to an investment of £7.9 billion in 2012, an increase of £12 billion. This was caused by an increase in the amount of total profits made by foreign parents in the UK (predominantly from within Europe and the Americas) and a reduction in the amount of dividends paid back to these foreign parents.

The overall increase in net inflows were offset by a decrease in equity capital transactions between 2011 and 2012. This was the lowest amount seen since 2004 (current prices). Although the amount of acquisitions decreased from £40.4 billion in 2011 to £38.2 billion in 2012, the 2012 figures included a number of large asset transactions.

Industry analysis (Table 1.1 and Table 5.3)

Figure 8: FDI net flows into the UK by foreign companies (inward) by sector

Figure 8: FDI net flows into the UK by foreign companies (inward) by sector
Source: Office for National Statistics

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Despite higher overall values of net FDI inflows to the UK in 2012 compared with 2011, this improvement was not seen consistently across all industry sectors. Net FDI inflows to the UK within the manufacturing and service sectors increased whereas inflows into the resource sector fell.

Manufacturing

Net investment into the manufacturing sector saw year on year growth, increasing from a disinvestment of £3 billion in 2011 to an investment of £7.5 billion in 2012.

This was driven by an increase in other manufacturing (which includes the manufacture of electrical equipment and repair, maintenance and installation of machinery). This increased from a disinvestment of £5.3 billion in 2011 to an investment of £3.2 billion in 2012 (£8.5 billion increase) and was driven by investments from foreign companies in Europe (the Netherlands, in particular) and also from the USA whose investment doubled in this sector between 2011 and 2012

In addition, the amount of foreign net investment in the manufacture of petroleum, chemicals, pharmaceuticals, rubber and plastic products increased from a disinvestment of £0.7 billion in 2011 to an investment of £4 billion in 2012, an increase of £4.7 billion.

These increases, however, were offset by a decrease in net investments by foreign companies in food, beverages and tobacco products, which decreased from an investment of £1.3 billion in 2011 to a disinvestment of £2.3 billion in 2012, down by £3.6 billion. 

Services

Net investment in the UK service sector from companies abroad increased from an investment of £25.3 billion in 2011 to an investment of £26.3 billion in 2012.

Investments from foreign companies in electricity, gas, water and waste services increased from an investment of £7.2 billion in 2011 to an investment of £11.2 billion in 2012, an increase of £4 billion. This was predominantly driven by a large acquisition in 2012.

The information and communication services industry witnessed an increase in net investment from foreign companies, increasing from a disinvestment of £2.5 billion in 2011 to an investment of £1 billion in 2012, an increase of £3.5 billion. In 2012, initiatives were set up to encourage investment within this area of the economy, which may be a factor contributing to this increase.

Net inflows of financial services increased from an investment of £7.1 billion in 2011 to an investment of £9.4 billion in 2012, an increase of £2.3 billion. The UK continued to be a key destination for financial services investments over shadowing other European countries who may have been affected by the euro zone downturn.

These increases were offset by a decrease in the amount of net investment from foreign companies within the retail and wholesale trade sector which decreased from a net investment of £5.4 billion in 2011 to a net disinvestment of £0.2 billion in 2012, a decrease of £5.6 billion.

Resources

Net investment in the UK resource sector from companies abroad declined in 2012, decreasing from an investment of £5.7 billion in 2011 to a disinvestment of £1.3 billion in 2012.

This decrease was driven by a fall in net investment from foreign companies investing in the mining and quarrying industry. This industry saw a year on year decrease of £7.1 billion, falling from an investment of £5.7 billion in 2011 to a disinvestment of £1.4 billion in 2012.

 

Net FDI International Investment Positions in the UK (Inward) by Component and Industry

Component analysis (Table 1.2)

FDI international investment positions are made up of three primary components: foreign companies’ share of their UK companies’ affiliates share capital and reserves, inter-company account balances and foreign parent branch head-office account movements to the UK.

Figure 9: FDI net international investment positions in the UK held by foreign companies (inward)

Figure 9: FDI net international investment positions in the UK held by foreign companies (inward)
Source: Office for National Statistics

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At the end of 2012, all components of net FDI international investment positions increased when compared with 2011. These increases were primarily driven by an increase in the value of UK equity held by foreign companies caused by rises in the level of net flows which came predominantly from within Europe and the Americas.

Between 2008 and 2009, the inward FDI international investment position fell. Between 2009 and 2011, it was growing at a slower rate than prior to the 2008/2009 economic downturn. However, between 2011 and 2012, there was a sizable increase in the level of inward investment positions (18%) and this level has now risen to its largest value since 1987, when ONS began collecting positions data for the first time on an annual basis.

Industry analysis (Table 1.2 and Table 6.3)

Figure 10: FDI net international investment positions in the UK held by foreign companies (inward) by sector

Figure 10: FDI net international investment positions in the UK held by foreign companies (inward) by sector
Source: Office for National Statistics

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Services

At the end of 2012, UK inward net positions within the service sector increased to £613.9 billion (up 18% from £520.7 billion at the end of 2011). Inward service positions accounted for 66% of the total UK inward position at the end of 2012, in line with the previous year.

Of the total service investment position into the UK:

  • Financial services accounted for 62% at the end of 2012, compared with 36% at the end of 2011.

  • Information & communication services accounted for 11% at the end of 2012, compared with 15% at the end of 2011.

  • Electricity, gas, water and waste services accounted for 9% at the end of 2012, in line with the previous year.

Manufacturing

UK inward investment positions within the manufacturing sector increased to £167.4 billion at the end of 2012 compared with £137.5 billion at end of 2011 (up 22%). Foreign companies net position in UK manufacturing industries accounted for 18% of the total UK inward position at the end of 2012 (compared with 17% at the end of 2011).

Of the total manufacturing investment position into the UK:

  • Petroleum, chemicals, plastic and fuel products accounted for 32% at the end of 2012, compared with 22% at the end of 2011.

  • Food products accounted for 19% at the end of 2012, compared with 31% at the end of 2011.

  • Metal and machinery products accounted for 17% at the end of 2012, compared with 11% at the end of 2011.

  • Other manufacturing products accounted for 16% at the end of 2012, compared with 21% at the end of 2011.

Resources

At the end of 2012, UK inward net positions within the resource sector increased to £76.3 billion (up 12% from £68.1 billion at the end of 2011). Resources accounted for 8% of the total UK inward net positions at the end of 2012 (compared with 9% at the end of 2011) of which mining & quarrying (including oil & gas) represented almost all of these investment positions.

Net Earnings From FDI Investment in the UK (Inward) by Component and Industry

Component analysis (Table 1.3)

Net earnings from FDI in the UK are made up of three primary components. These include net subsidiaries profit, net interest incurred by UK companies and net branch profits.

Figure 11: FDI net earnings into the UK by foreign companies (inward)

Figure 11: FDI net earnings into the UK by foreign companies (inward)
Source: Office for National Statistics

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Total net earnings from foreign direct investment in the UK decreased slightly to £42.7 billion in 2012. This was driven by a decrease in net branch profit figures, which fell from £7.5 billion in 2011 to £ 5.4 billion in 2012. However, this is a broadly stable trend and still remains in sharp contrast to the large net loss seen in 2008.

Industry analysis (Table 1.3 and Table 7.3)

Figure 12: FDI net earnings into the UK by foreign companies (inward) by sector

Figure 12: FDI net earnings into the UK by foreign companies (inward) by sector
Source: Office for National Statistics

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The sector composition of earnings from FDI directed into the UK in 2012 was again dominated by the services sector. However, this area saw a decrease of £8.9 billion, falling from £30.4 billion in 2011 to £21.5 billion in 2012. This was largely driven by a £5.8 billion decrease in retail and wholesale trade services.

Net earnings by foreign companies within the manufacturing sector increased from £4.3 billion in 2011 to £9.8 billion in 2012. This growth was dominated by increases in net inward earnings on computer, electronic and optical products and other manufacturing industries.

Earnings from FDI directed into the UK within the resources sector remained broadly flat, continuing the trend seen since 2009.

Background notes

  1. Basic quality information

    The Quality and Methods Information document ( QMI (284 Kb Pdf) ) for Foreign Direct Investment describes, in detail, the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them.

  2. Key issues specific to this release

    The estimates in this statistical bulletin are based on annual FDI surveys for 2012.

    A summary of these results, by geography, was initially released as an Office for National Statistics (ONS) Statistical Bulletin for Foreign Direct Investment involving UK companies 2012 on 5 December 2013. Provisional estimates for 2012, derived from quarterly surveys, have also been published in the quarterly Balance of Payments Statistical Bulletins however the annual surveys provide firmer and more detailed figures. The aggregates for 2012 are included in the Q3 2013 Balance of Payments statistical bulletin to be published on 20 December 2013.

  3. Key concepts and definitions

    Affiliate: An affiliate is an umbrella term that covers both subsidiaries and associates where the investor holds more than 10% of the equity share capital.

    Affiliate

    FDI relationship Minimum Investment Maximum Investment
         
    Affiliate 10% 100%
    -Associate 10% Less than 50%
    -Subsidiary Greater than 50% 100%
         

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    Branch: A branch is a permanent establishment as defined for UK corporation tax and double taxation relief purposes. This is not a separate legal entity. Such establishments should either have a complete set of accounts or be able to compile a meaningful set of accounts, from both an economic and legal viewpoint.

    Direct Investment: Foreign Direct Investment (FDI) refers to investment that adds to, deducts from or acquires a lasting interest in an enterprise operating in an economy other than that of the investor where the investor’s purpose is to have an effective voice in the management of the enterprise.

    For the purposes of FDI statistics, an effective voice is taken as equivalent to holding 10% or more of the equity share capital in the direct investment enterprise.

    Other investments, in which the investor does not have an effective voice in the management of the enterprise, are mainly portfolio investments and these are not covered in this release.

    From the 2005 FDI survey, cross-border investment by public corporations and private property investments are included, as in the Balance of Payments data. Direct investment is a financial concept and is not the same as capital expenditure on fixed assets. It covers only the money invested in a related enterprise by the parent company with the enterprise having the discretion on how to use it.

    A related enterprise may also raise money locally without reference to the parent company. The investment figures are published on a net basis, that is, they consist of investments net of disinvestments by a company into its subsidiaries.

    Direct investment earnings: Direct investment earnings (a part of the income account) provide information on the earnings of direct investors. These can arise from both equity and debt.

    Direct investment flows: Direct investment flows (or transactions) show the net inward and outward investments made during any given reference period. FDI flows comprise of:

    • acquisitions/disposals of equity capital,

    • reinvestment of earnings,

    • inter-company debt.


    FDI inward flows provide a useful indicator in relation to the attractiveness of economies but such interpretations require additional information on which to base sound conclusions.

    Direct investment positions: Direct investment positions (also known as levels or stocks) provide information on the total level of investment made abroad/received from abroad for a given reference date.

    Inward direct investment: From a UK perspective, inward direct investment is investment in a UK resident affiliate (subsidiary or associate) or branch by a non-UK parent company or head office. This can also be referred to as direct investment into the UK.

    Outward direct investment: From a UK perspective, outward direct investment is investment by a UK resident company in a non-UK affiliate (subsidiary or associate) or branch. This can also be referred to as direct investment abroad.

    Reinvested earnings: Reinvestment of earnings or reinvested earnings refer to earnings on equity accruing to direct investors less the value of distributed earnings. Reinvested earnings are included in direct investment income because the earnings of the subsidiary, associate or branch are deemed to be the income of the direct investor (proportionate to the direct investor’s holding of equity), whether they are reinvested in the enterprise or remitted to the direct investor. Reinvested earnings are also treated as a flow of direct investment from the direct investor to their overseas enterprise.

    Special Purpose Entities (SPEs): The term SPE is used to refer to entities such as financing subsidiaries, shell companies and conduits, which typically do not conduct any significant operations in the country in which they are resident other than to pass through investments from their parent company to an affiliate in another country.

  4. Relevance to users

    The UK’s FDI statistics are produced according to the agreed international standards set out in the third edition of the OECD’s Benchmark Definition of FDI (BD3) and the fifth edition of the IMF’s Balance of Payments Manual (BPM5). The definitions and standards set out in BD3 and BPM5 were adopted in 1997. The changes made since 1997 are detailed in the Quality and Methods Information document linked in background note 2 above. Complying with these standards ensures that the FDI statistics produced by the UK are comparable with those from other countries, something that is critical to many users of these estimates.

    The OECD and IMF have recently released new versions of their manuals concerning FDI statistics (BD4 and BPM6). These revised manuals reflect the changes that have occurred in international finance since the previous updates. Along with other countries, the UK is currently working to implement these manuals. For more detail on these changes see the guidance and methodology section of the ONS website.

    ONS makes every effort to provide informative commentary on the data in this release. As part of the quality assurance process, individual businesses are contacted in an attempt to capture reasons for large period on period data movements. It can prove difficult to gather detailed reasons from some businesses to help inform the commentary. Frequently, reasons given for data movements refer to a ‘change in market conditions’ or a ‘restructure of the company’. Consequently, it’s not possible for all data movements to be fully explained.

    ONS are aware that a number of users make use of these data for modelling or forecasting purposes. In doing so, it is important that users make note of our revisions policy (see note 7 in the background notes) and that all time series are on a ‘current price’ basis, which means that the values are as they were at the time of measurement and not adjusted for inflation.

    One question often asked of the FDI release is ‘why are there high levels of investment to and from countries such as Luxembourg and Jersey where there are relatively low levels of economic activity?’ The reason is that ONS figures record transactions between the UK and the first port of call. Some companies are structured such that the first destination is used to pass through investments to a second country in order to take advantage of certain business conditions, such as low tax regimes. This can lead to distortions within the figures.

    In line with the Code of Practice for Official Statistics, the Office for National Statistics will consult fully with data providers and users of the statistics regarding any changes that occur as a result of the adoption of the new manuals.

    FDI estimates are essential for measuring the UK’s Balance of Payments and the UK’s international investment position. FDI earnings figures feed into the Balance of Payments current account, whilst FDI flows form an integral part of the financial account. FDI statistics are also of great interest in their own right. By its very nature, FDI is seen as promoting stable and long-lasting economic links between countries. It is generally believed that FDI can assist host countries in developing local enterprises, promote international trade through access to markets and contributes to the transfer of technology and know-how. FDI can also have an impact on the development of labour and financial markets. Regular analysis of FDI trends and developments is therefore an integral part of most macro-economic and cross border financial analysis. Identifying partner countries and industries is central to most such analysis.

    Within the UK, FDI estimates are used by a large number of government departments for briefing and policy formation purposes. These include HMRC, Cabinet Office, HM Treasury, UK Trade and Investment, the Bank of England, the Department for Business, Innovation and Skills and the Department for International Development.

    UK FDI figures are also extensively used for policy, analysis and negotiations by international organisations, including Eurostat, UNCTAD, OECD and IMF, as well as a number of foreign embassies. More widely the FDI estimates are utilised by commercial companies, academics and independent researchers.

    User Engagement

    We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have and would be particularly interested in knowing how you make use of these data to inform our work. Please contact us via email: fdi@ons.gsi.gov.uk or telephone Ciara Williams on +44 (0)1633 456455.

    Following the success of last year's business statistics user event a second all-day event, coordinated jointly with the Department for Business, Innovation and Skills (BIS), took place on 24 September 2013. The event, The Changing Shape of Trade and Investment in the UK, featured a range of talks from users, producers and suppliers of business trade and investment statistics, not just from central government and the devolved administrations, but also local government, media, business representatives and researchers. To view the content of the day, please visit Storify.

  5. Guidance on interpreting Foreign Direct Investment statistics and making international comparisons

    Exchange rates: Enterprises are asked to returns values in sterling, as entered in their accounts, rounded to the nearest £0.1 million. Where conversion from a foreign currency is involved, they are asked to use the same rate of exchange as in their own accounts. The effect of exchange rates should not be underestimated as these can also have a large impact on the differences between positions figures when making comparisons with other countries.


    Valuation of equity: Enterprises are asked to return market values and book values where possible. Enterprises are asked to refrain from using any other valuation method such as historical cost. Book values are likely to be significantly different from current market values as book values tend to reflect values at earlier periods when assets were acquired or subsequently revalued.  The effect of using different valuation methods should not be underestimated as these can also have a large impact on the differences between positions figures when making comparisons with other countries.


    SPEs (Special Purpose Entities): These companies, that have set up for pass through investment purposes are very difficult to identify and as a consequence there can be huge discrepancies in data with countries such as Luxembourg and the Netherlands. Current methodology stipulates that we measure cross border transactions only but merely identify whether the partner country is an SPE or not. We do not ask where the next destination is and this can show distortions in the figures.

    Table A: Definitions of geographic and economic areas

    Europe
    EU Austria Belgium Bulgaria Cyprus
      Czech Republic Denmark Estonia Finland
      France Germany Greece Hungary
      Irish Republic Italy Latvia Lithuania
      Luxembourg Malta Netherlands Poland
      Portugal Romania Slovakia Slovenia
      Spain Sweden    
             
    EFTA Iceland Liechtenstein Norway Switzerland
       
    Other European Countries Albania Andorra Belarus Bosnia and Herzegovina
      Croatia Faroe Islands Gibraltar Macedonia, the Former Yugoslav Republic of
      Moldova Montenegro Russian Federation San Marino
      Serbia Turkey UK Offshore Islands (Guernsey, Jersey, other Channel Islands & Isle of Man Ukraine
      Vatican City State      
    The Americas      
      Anguilla Antigua & Barbuda Argentina Aruba
      Bahamas Barbados Belize Bermuda
      Bolivia Bonaire, Sint Eustatius & Saba Brazil British Virgin Islands
      Canada Cayman Islands Chile Colombia
      Costa Rica Cuba Curacao Dominica
      Dominican Republic Ecuador El Salvador Falkland Islands
      Greenland Grenada Guatemala Guyana
      Haiti Honduras Jamaica Mexico
      Montserrat Nicaragua Panama Paraguay
      Peru St Kitts & Nevis Saint Lucia Sint Maarten
      St Vincent & the Grenadines Suriname Trinidad & Tobago Turks & Caicos Islands
      Uruguay US Virgin Islands USA Venezuela
             
    Asia        
      Near & Middle East Countries      
      Armenia Azerbaijan Palestinian Territory Georgia
      Iran Israel Jordan Lebanon
      Syria      
             
      Gulf Arabian Countries      
      Bahrain Iraq Kuwait Oman
      Qatar Saudi Arabia United Arab Emirates Yemen
             
      Other Asian Countries    
      Afghanistan Bangladesh Bhutan Brunei Darussalam
      Burma/Myanmar Cambodia China Hong Kong
      India Indonesia Japan Kazakhstan
      Kyrgyzstan Laos Macao Malaysia
      Maldives Mongolia Nepal North Korea
      Pakistan Philippines Singapore South Korea
      Sri Lanka Taiwan Tajikistan Thailand
      Timor - Leste Turkmenistan Uzbekistan Viet Nam
             
    Australasia & Oceania      
      American Samoa Antarctica Australia Bouvet Island
      Christmas Island Cocos (Keeling) Islands Cook Islands French Polynesia
      French Southern & Antarctic Lands Fiji Guam Heard Island & Macdonald Islands
      Kiribati Marshall Islands Micronesia, Federated States of Nauru
      New Caledonia New Zealand Niue Norfolk Island
      Northern Mariana Islands Palau Papua New Guinea Pitcairn
      Samoa Solomon Islands South Georgia & South Sandwich Islands Tokelau
      Tonga Tuvalu US Minor Outlying Islands Vanuatu
      Wallis & Futuna      
    Africa        
      Algeria Angola Benin Botswana
      British Indian Ocean Territory Burkina Faso Burundi Cameroon
      Cape Verde Central African Republic Chad Comoros
      Congo Democratic Republic of the Congo (Zaire) Djibouti Egypt
      Equatorial Guinea Eritrea Ethiopia Gabon
      Gambia Ghana Guinea Guinea Bissau
      Ivory Coast (Cote d'Ivoire) Kenya Lesotho Liberia
      Libya Madagascar Malawi Mali
      Mauritania Mauritius Morocco Mozambique
      Namibia Niger Nigeria Rwanda
      Sao Tome & Principe Senegal Seychelles Sierra Leone
      Somalia South Africa South Sudan St Helena, Ascension & Tristan da Cunha
      Sudan Swaziland Tanzania Togo
      Tunisia Uganda Zambia Zimbabwe
    OECD        
      Australia Austria Belgium Canada
      Chile Czech Republic Denmark Estonia
      Finland France Germany Greece
      Hungary Iceland Irish Republic Israel
      Italy Japan Luxembourg Mexico
      Netherlands New Zealand Norway Poland
      Portugal Slovakia Solvenia South Korea
      Spain Sweden Switzerland Turkey
      USA      
             
    Central & Eastern Europe    
      Albania Bosnia & Herzegovina Croatia Macedonia, former Yugoslav Republic of
      Montenegro Serbia    

    Table source: Office for National Statistics

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    Industry allocation: The analysis of UK FDI abroad (outward) is based on the industry of the foreign affiliate. Similarly the analysis of FDI in the UK (inward) is based on the industry of the UK affiliate.

    Table B: SIC 2007 code and description

    Resource industries 
         
      Agriculture, forestry &fishing 
      010 Crop & Animal & Production, hunting & related services activities
      020 Forestry & Logging 
      030 Fishing & Aquaculture  
         
      Mining & quarrying (including oil & gas production)
      050 Mining of coal & lignite
      060 Extraction of crude petroleum & natural gas
      070 Mining of metal ores (ferrous & non ferrous incl. Uranium & Thorium)
      080 Mining & Quarrying -  other 
      090 Mining & oil gas extraction - support service activities daily
         
    Manufacturing Industries 
         
      Food products, Beverages & Tobacco products
      100 Manufacture of food products
      110 Manufacture of beverages
      120 Manufacture of tobacco products  
         
      Textiles & wood activities 
      130 Manufacture of textiles 
      140 Manufacture of wearing apparel
      160 Manufacture of wood  & wood products (except furniture), straw articles & plaiting materials 
      170 Manufacture of paper & paper products
      180 Printing & reproduction of recorded media  
         
      Petroleum, chemicals, pharmaceutical rubber and plastic products
      190 Manufacture of coke &, refined petroleum products
      200 Manufacture of chemicals & chemical products (non pharmaceutical)
      210 Manufacture of basic pharmaceuticals products & pharmaceutical preparations
      220 Manufacture of rubber & plastic products
         
      Metal & machinery products
      240 Manufacture of basic metals (incl. first processing, e.g. tubes, pipes, hollow profiles etc) 
      250 Manufacture of fabricated metal products (excl machinery & equipment) 
      280 Manufacture of machinery not elsewhere classified
         
      Computer, electronic & optical products 
      260 Manufacture of computer, consumer electronic & optical products 
      261 Manufacture of electronic components
      262 Manufacture of loaded electronic boards 
      263 Manufacture of communication equipment 
      264 Manufacture of consumer electronics 
      265 Manufacture of instruments and appliances for measuring, testing and navigation: watches and clocks 
      266 Manufacture of irradiation, electro medical & electrotherapeutic equipment 
      267 Manufacture of optical instruments & photographic equipment
      268 Manufacture of magnetic & optical media 
         
      Transport Equipment 
      290 Manufacture of motor vehicles, trailers and semi trailers
      300 Manufacture of other transport equipment   
      301 Building & shipping & boats 
      302 Manufacture of railway locomotives & rolling stock machinery
      303 Manufacture of air & spacecraft & related
      304 Manufacture of military
      309 Manufacture of transport equipment not fighting vehicles elsewhere classified
         
      Other manufacturing 
      150 Manufacture of leather & other related products
      230 Manufacture of other non metallic mineral products 
      270 Manufacture electrical equipment (incl. domestic appliances) 
      310 Manufacture of  furniture (domestic & non domestic) 
      320 Manufacturing of other articles not elsewhere specified (toys, jewellery, musical instruments, sports goods, dental supplies, brooms & brushes)  
      330 Repair, maintenance & installation of machinery & equipment
         
    Services Industries 
         
      Electricity, Gas, Water & waste
      350 Supply of electricity, gas, steam & air conditioning 
      360 Water collection, treatment & supply services
      370 Sewerage services
      380 Waste collection,treatment, disposal recycling services
      390 Remediation & other waste management services not elsewhere specified 
         
      Construction        
      410 Construction of buildings (residential, non residential, commercial, development of building projects
      420 Civil engineering (roads, railways, utilities & water projects, other civil engineering projects)
      430 Specialised construction activities (demolition & site preparation, wet and dry trade activities, other construction activities)
         
      Retail and wholesale trade, repair of  motor vehicles & motorcycles 
      450 Wholesale & retail trade, repair of motor vehicles & motorcycles and accessories
      460 Wholesale trades (excl motor vehicles & motorcycles)
      470 Retail trade (excl motor vehicles & motorcycles)
         
      Transportation & storage 
      490 Transport on land (incl.pipelines)
      500 Transport on  water (sea, coastal &  inland) 
      510 Transport in the air (passenger & freight)
      520 Transport support activities (warehousing, operation of terminals & stations, cargo handling)
      530 Postal & courier activities
         
      Information & communication            
      580 Publishing activities (books, newspapers, periodicals directories, software)
      590 Motion picture, video & TV production, sound recording & publishing activities
      600 Programming & broadcasting activities of radio & TV (over air or via satellite, cable or internet)
      610 Telecommunications activities (wired, wireless, satellite & other telecommunications activities) 
      620 Computer programming, consultancy & related activities (games, software development, programming,computer facilities management)
      630 Information services activities (data processing & hosting, web portals, news agencies, other  information activities)
         
      Financial services             
      641 Banks (64.11 & 64.191)
      642 Building societies (64.192)
      643 Non Financial holding companies only (64.201/4)
      644 Financial holding companies only (64.205)
      645 Other financial services trusts & funds
      651 Life insurance only (65.11) 
      652 General insurance, reinsurance & pensions funding (65.12, 65.2, 65.3)
      661 Security dealing for others only (66.12)
      662 Financial services (services auxiliary to financial services & insurance activities excl security dealing)
      663 Fund managers
         
      Professional, scientific & technical activities                 
      691 Legal activities 
      692 Accounting activities
      701 Head office activities 
      702 Management consultancy activities (public relations, financial management, consultancy & management activities)
      710 Architectural & engineering activities (architecture, urban planning, engineering consultancy, testing and analysis)
      720 Scientific research & development (biotechnology, natural sciences, engineering, social sciences and humanities) 
      731 Advertising
      732 Market research (market research, opinion polls, media representation)
      740 Design, photography, translation & other professional, scientific & technical services
      750 Veterinary activities
         
      Administration & support service activities   
      770 Rental & leasing activities (motor vehicles, personal & household goods, intellectual property - excl copyrighted works)
      780 Employment activities (employment agencies, entertainment castings, other human resources activities)
      790 Travel agencies, tour operators, other reservation service activities
      800 Security & investigation activities (investigation, private security, security systems)
      810 Services to buildings & landscape activities (facilities support, cleaning, disinfection & extermination,landscaping) 
      820 Office administrations, support & other business support activities (document preparation, call centres, conference organisers, collection agencies,packaging, other support activities)
         
      Other Services 
      550 Accommodation (hotels, holiday accommodation, hostels, camping, other)
      560 Food & beverage service activities (restaurants, take aways, catering, pubs, clubs, other food service activities not elsewhere specified)
      680 Real estate activities
      840 Public administration, compulsory social security   
      850 Education (primary, secondary & higher education, driving schools, sports education, cultural education, educational support)
      860 Human health defence, activities (hospitals, nursing homes, general & specialist medical practice, dental practice)  
      870 Residential care activities 
      880 Social work activities without accommodations (elderly, children, other social work activities)
      900 Creative arts & entertainment activities (performing arts, operation of arts facilities, artistic creation, support of performing arts) 
      910 Libraries, archives, museums and other cultural activities (botanical, zoological nature reserve sites, historical buildings & sites 
      920 Gambling & betting activities 
      930 Sports, amusement & recreation activities (sports facilities, racehorse owners, fitness facilities, amusement parks & other recreational activities) 
      940 Activities of membership organisations (business organisations, trade unions, other membership organisations) 
      950 Repair of computers, personal & household goods 
      960 Other personal service activities (washing and dry cleaning, hairdressers, funerals, physical well being, other activities) 
      970 Activities of households as employers of domestic personnel 
      980 Undifferentiated goods and services producing activities of private households for own use
      990 Activities of extraterritorial organisations and bodies 
         

    Table source: Office for National Statistics

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  6. Accuracy

    Sampling and non-sampling error: Sampling error is the error caused by observing a sample instead of the whole population. While each sample is designed to produce the ‘best‘ estimate of the true population value, a number of equal sized samples covering the population would generally produce varying population estimates.

    Sample surveys are employed rather than censuses, because the census process is too lengthy and costly to be viable for these surveys. Standard errors are an estimate of the sampling error and provide a measure of the precision of the estimate. A lower standard error indicates a more precise estimate.

    Due to a change in the estimation methodology for 2012, the standard error calculations are currently under review. Standard errors for the FDI 2012 annual data will be available in a supplementary paper.

    Non-sampling error: In addition to sampling errors, there is also the potential for non-sampling error. This cannot be easily quantified. One potential source of non-sampling error is from non-response, which relates to the failure to obtain data from the sample. Low response rates may introduce bias if respondents are not fully representative of those selected in the sample. Various efforts are made to minimise non-response. Written reminders are sent to non responding businesses and these are followed up with telephone, fax and email reminders. In addition, there is the possibility of using the legal powers of the Statistics of Trade Act to enforce a response, though ONS prefers to work together with businesses to produce the necessary information.

    The response rates for the 2012 annual surveys are shown below:

    Table C: Response rates 2012

      Outward FDI Inward FDI
    Selected Sample Size 2,155 3,099
    Numbers co-operating fully or partially 1,786 2,768
    Non-responders 369 331
    Overall response rate (%) 83 89

    Table source: Office for National Statistics

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    Non-response bias is a potential issue for all statistical surveys. Non-response bias occurs where the answers of respondents differ from the potential answers of those who did not respond. The risk of non-response bias is minimised by efforts to maximise response rates and the use of estimation techniques that can attempt to correct for any bias that may be present. Despite this, it is not easily possible, on any survey, to quantify the extent to which non-response bias remains a problem. However, there is no evidence to suggest that non-response bias presents a particular issue for the FDI surveys.

    Imputation methods are used to estimate values for all business in the sample who did not return data. Estimation methods are used to estimate values for all non-sampled business within the population, in order produce an estimate for the population. The proportion of the imputed and estimated values are shown below:

    Table D: Imputed proportion of final published FDI figures

    %
      FDI Investment Flows FDI International Investment Positions FDI Earnings
    FDI Outward   3   3   2
    FDI Inward   6   5   5

    Table source: Office for National Statistics

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  7. Revisions

    Data for 2011 has been revised in this statistical bulletin and will not be revised any further. Data for 2012 will remain provisional until December 2014, when the next FDI statistical bulletin will be released.

    Revisions to earlier years are one indication of the reliability of the key indicators in this release; these can be obtained by monitoring the size of revisions. The table below records the size of revisions for the last five years. The information was revised taking into account new information received. This is mainly due to respondents to the surveys revising the values they have already returned and also late returns replacing data that was initially imputed or constructed for. The revised data may itself be subject to sampling or other sources of error.

    Table E: Size of revisions for last five years

    Figures in £ million
        Revisions between first publication and estimates three years later
      Value in latest period Average revision over the last five years (bias)   Average over the last five years without regard to sign (average absolute revision)
    Outward flows 53,427 1,380   7,301
    Outward positions 1,099,536 4,205   5,222
    Outward earnings 98,334 -798   2,134
    Inward flows 32,874 -911   1,527
    Inward positions 794,734 4,392   11,472
    Inward earnings 43,680 -999   1,209

    Table source: Office for National Statistics

    Table notes:

    1. All values are current prices (see Background Notes).
    2. A minus sign indicates net losses.

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    A statistical test is applied to the average revisions to find out if there is bias in the estimates. The revisions are considered to be biased if the mean revision is significantly different from zero. In 2011, these tests were not statistically significant for any of the key variables, implying that any observed bias was due to chance.

  8. Notes to tables

    The sum of the constituent items in tables may not always agree exactly with the totals shown due to rounding of the figures.

  9. Office for National Statistics

    The Office for National Statistics (ONS) is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to Parliament. ONS is the UK government's single largest statistical producer. It compiles information about the UK's society and economy, and provides the evidence-base for policy and decision-making, the allocation of resources, and public accountability. The Director General of ONS reports directly to the National Statistician who is the Authority's Chief Executive and the Head of the Government Statistical Service.

    The UK Statistics Authority has reviewed this publication in its report: “Assessment of compliance with the Code of Practice for Official Statistics”: Statistics of International Transactions, which was published on 8 December 2011.

    This review recommended that the Foreign Direct Investment Involving UK Companies estimates be designated as a National Statistic, subject to ONS carrying out certain requirements. ONS met all of these requirements on 3 May 2013.

    Designation can be broadly interpreted to mean that the statistics:

    • meet identified user needs;

    • are well explained and readily accessible;

    • are produced according to sound methods, and

    • are managed impartially and objectively in the public interest.

    Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed. 

  10. Social media

    Follow ONS on Twitter 

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    Watch our videos on YouTube.

  11. The Government Statistical Service (GSS)

    The Government Statistical Service is a network of professional statisticians and their staff operating both within the Office for National Statistics and across more than 30 other government departments and agencies.

  12. National Statistics

    National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.

  13. Government Statistical Service (GSS) business statistics

    To find out about other official business statistics, and choose the right data for your needs, use the GSS Business Statistics Interactive User Guide. By selecting your topics of interest, the tool will pinpoint publications that should be of interest to you, and provide you with links to more detailed information and the relevant statistical releases. It also offers guidance on which statistics are appropriate for different uses.

  14. Discussing ONS business statistics online

    There is a Business and Trade Statistics community on the StatsUserNet website. StatsUserNet is the Royal Statistical Society’s interactive site for users of official statistics. The community objectives are to promote dialogue and share information between users and producers of official business and trade statistics about the structure, content and performance of businesses within the UK. Anyone can join the discussions by registering via either of the links above.

  15. Special events

    ONS has published commentary, analysis and policy on 'Special Events' which may affect statistical outputs. For full details visit the Special Events page on the ONS website.

  16. Release policy

    A list of those given pre-publication access to the contents of this release is available on the ONS website.

  17. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

Statistical contacts

Name Phone Department Email
Ciara Williams +44 (0)1633 456455 Business Outputs and Developments Division fdi@ons.gsi.gov.uk
Get all the tables for this publication in the data section of this publication .
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