Statistical bulletin: Foreign Direct Investment Involving UK Companies, 2011 (MA4)

Key Findings

• There was a rise in foreign direct investment abroad by UK companies between 2010 and 2011, particularly directed towards emerging markets.
• Net investment abroad by UK companies was dominated by large increases in the mining and quarrying and financial services sectors.
• Net investment into the UK by foreign companies remains relatively static, suggesting continued reluctance to invest in 2011.

Overview

This publication provides estimates of foreign direct investment flows, positions and earnings involving UK companies, broken down by component, geography and industry for 2011. All investment figures are published on a net basis, that is, they consist of investments net of disinvestments. The estimates in this publication are sourced principally from the Office for National Statistics’ comprehensive annual surveys into foreign direct investment. A summary of these results, by geography, was initially released as an ONS Statistical Bulletin for Foreign Direct Investment involving UK companies 2011 on 6th December 2012. This release provides additional information on component and industrial breakdowns.

User engagement

The structure of this release has been modified in response to some feedback received from its users. 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-Fletcher on +44 (0)1633 456455

Summary

The growth rate of the global economy slowed in 2011 compared with 2010. The IMF estimated that the world economy contracted by 0.6% in 2009 before expanding by 5.1% in 2010 and by 3.9% in 2011. The world GDP growth rate perhaps hints at the more mixed underlying contributions to world growth across regions. The advanced economies, and the euro area in particular, saw slower growth over this period that is somewhat compensated by strong growth in some emerging markets.

These trends are reflected in the destinations of net investment abroad by UK companies. For example, net investment in China and India increased substantially in 2011 compared with 2010. However, net inward investment to the UK showed a more mixed picture, with net investment from all regions falling except from Australasia & Oceania and Europe. Much of the improvement in net FDI from Europe stems from the low net value in 2010.

Most sectors involved in net investment abroad have witnessed growth, most notably within the mining and quarrying and the financial services industries, predominantly originating from European, UK offshore islands and Asian countries. However, despite an overall decrease in net investment into the UK, small increases in net investments were seen in over half of the industries, particularly in the electricity, gas and waste industry from Europe.

Total FDI analysis (outward and inward investment)

Net FDI flows (Table 1.1 and Figure 1.1)

Figure 1.1: UK net FDI flows, 2002 to 2011

Source: Office for National Statistics

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Net flows of FDI abroad by UK companies increased considerably in 2011 to £68.2 billion, an increase of £42.7 billion, following muted performances in 2009 and 2010. The increase was largely driven by rises in equity and other capital transactions. This increase in FDI flows abroad suggests that UK companies see growth opportunities in foreign markets.

Net FDI flows into the UK in 2011 remained steady compared with 2010. These net inflows decreased from £32.1 billion in 2010 to £31.9 billion in 2011. This was in contrast to the large drop seen between 2009 and 2010, as illustrated in Figure 1.1.

Net FDI international investment positions (Table 1.2 and Figure 1.2)

Figure 1.2: UK net FDI international investment positions, 2002 to 2011

Source: Office for National Statistics

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The UK's net FDI international investment positions abroad, a ‘snapshot’ of all FDI assets and liabilities for UK firms investing abroad, reached a record high in 2011. This was up by 5% on the £1,046.1 billion reported at the end of 2010 to £1,098.2 billion at the end of 2011. The peak in 2011 is up 2% on the previous peak of £1,073.6 billion in 2008. The year-on-year change in the level of outward investment differs from the net outward flows, as the levels figures take account of additional factors such as the revaluation of assets and exchange rate variations.

The level of FDI international investment positions in the UK by foreign companies stood at £766.2 billion in 2011, compared with £725.6 billion in 2010, an increase £40.6 billion (6%). This was the highest inward position since 1987, when ONS began collecting positions estimates on an annual basis.

Net FDI earnings (Table 1.3 and Figure 1.3)

Figure 1.3: UK net FDI earnings, 2002 to 2011

Source: Office for National Statistics

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Net earnings from direct investment abroad by UK companies rose from £80.3 billion in 2010 to £101.6 billion in 2011, an increase of £21.3 billion (27%). This value was higher than the earlier peak in 2007.

Net investment earnings by foreign companies in the UK rose from £37.5 billion in 2010 to £43.6 billion in 2011, an increase of £6.1 billion. This is a continuation of the rise in direct investment earnings since the low estimates recorded in 2008. However, the 2011 figures still remained below those seen in 2006 and 2007.

Rate of Return analysis 

Another 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 9.3% in 2011, an increase on both 2010 (7.7%) and 2009 (6.9%), although still lower than 2007 (10.1%).

Foreign companies investing in the UK have also witnessed some prosperity on their investments in the UK. The implied rate of return for inward investment into the UK increased to 5.7% in 2011, up from 5.1% from the previous year. This is the highest rate of return observed since the value reported in 2007 of 7.3%.

Notes for Total FDI analysis (outward and inward investment)

1. All values are current prices (see background notes)

Net FDI flows abroad (outward) by component, geography and industry

Component Analysis (Table 2.2 and Figure 2.1)

Figure 2.1: Net FDI flows abroad by component, 2008 to 2011

Source: Office for National Statistics

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Net FDI flows are made up of three primary components: reinvested earnings; equity transactions (including mergers, acquisitions and disposals); and other capital transactions (Table 2.2).

Each of these components saw an increase between 2010 and 2011 which suggests that UK companies are more conducive to investing in foreign markets. However, all component values remain below the peaks prior to the 2008 recession.

The largest increase was seen in other capital transactions, which rose from a net disinvestment of £20.2 billion in 2010 to a net investment of £1.7 billion in 2011, a net increase of £21.9 billion. This was primarily due to large movements in the level of inter-company debt. However, for the majority, this increase was due to the effects resulting from the crisis in the Gulf of Mexico in 2010; when comparing 2008 to 2010, the amount of debt continues to remain static.

Reinvested earnings and net acquisition and disposals have also displayed upward trends; reinvested earnings have slightly overtaken net acquisitions and disposals, which may indicate that companies are expecting better income on their investments abroad.

Geographical and industrial analysis (Tables 2.1 and 2.3, Figures 2.2 and 2.3)

Figure 2.2: Net FDI flows abroad by region, 2008 to 2011

Source: Office for National Statistics

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The value of net investment abroad by UK companies rose from £25.5 billion in 2010 to £68.2 billion in 2011, the highest value recorded since 2008.

Although there was some recovery in FDI flows to traditional UK markets (USA, Europe), net investment abroad was still below the pre-crisis peaks in many cases.

However, there was a notable increase in net investment to Asia and the Middle East, in particular India, rising from £1.9 billion in 2010 to £7.1 billion in 2011. In 2011 a number of European economies were still struggling to realise an assured recovery from the financial crisis, while India was projected by the IMF to have a 2013 GDP growth of 6%. This may indicate the beginning of a more prolonged trend towards Asian investment.

Figure 2.3: Net FDI flows abroad by industry type, 2008 to 2011

Source: Office for National Statistics

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Since 2008, there has been a shift in the industrial composition of investment patterns from the manufacturing sector to the services sector, coupled with the resources sector showing positive signs of recovery.

During 2011, the industrial breakdown of these flows reveals subtle movements in FDI, as opposed to very large shifts, which is to be expected after a global financial shock when many investors could be expected to behave in a cautious and measured manner. FDI flows out of the UK seemed to mainly build upon existing investments from previous years as opposed to new ventures.

There was also a change in the locations of industry-specific investments. For example, in the services sector, total financial services net FDI abroad increased, but less was directed at the USA (£1.7 billion in 2011 compared with £4.4 billion in 2010) and more at Asia (£4.4 billion in 2011 compared with £2.7 billion in 2010).

The USA saw large increases in investment in the mining & quarrying industries (£9.6 billion in 2011 compared with a £20.3 billion disinvestment in 2010) as well as the information & communication industries. In Europe, UK investors seem to be re-establishing traditional investment strongholds, such as retail & wholesale trade, financial services and other manufacturing. Europe also saw strong FDI outflows from the UK in the electricity, gas, water & waste industry (£7.8 billion in 2011 compared with £0.2 billion in 2010). This suggests that there were significant cross-border investment projects taking place between the UK and the rest of Europe.

Notes for Net FDI flows abroad (outward) by component, geography and industry

1. All values are current prices (see background notes)

Net FDI international investment positions abroad (outward) by component, geography and industry

Component analysis (Table 3.2 and Figure 3.1)

Figure 3.1: Net FDI international investment positions abroad by component, 2008 to 2011

Source: Office for National Statistics

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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.

The amount of share capital and reserves of foreign affiliates abroad has increased, continuing the upward trend seen in 2009 and 2010. The 2011 value of £1,132.1 billion is the highest level recorded, surpassing the £1,047.5 billion seen in 2008.

The net inter-company and branch head office amounts in 2011 showed slight decreases, but otherwise remained stable compared with figures in 2010.

Geographical and industrial analysis (Table 3.1 and 3.3 and Figures 3.2 and 3.3)  

Figure 3.2: Net FDI international investment positions abroad by region, 2008 to 2011

Source: Office for National Statistics

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The rise in level of FDI international investment positions abroad by UK companies principally reflects an increase in the value of investment in the Americas of £27.7 billion, from £265.4 billion at the end of 2010 to a level of £293.1 billion at the end of 2011. The Americas accounted for 27% of the UK’s world investment total. Within the Americas, the increase was largely driven by increases in investment to the USA (up £25.6 billion) and Brazil (up £7.9 billion). The biggest location within the Americas for direct investment from the UK in 2011 was the USA, accounting for £210.4 billion (19% of the UK’s world total).

There was an increase of £17.9 billion in the UK’s outward investment positions in Asia, from £105.7 billion in 2010 to £123.6 billion in 2011. Within Asia, the increase was mainly driven by increases of £4.7 billion in the Gulf Arabian countries and £5.6 billion in Hong Kong.

The level of FDI international investment positions in Australasia & Oceania also rose by £5.0 billion, from £32.1 billion at the end of 2010 to £37.1 billion in 2011. The increase in the level of FDI international investment positions in Australasia & Oceania was mainly driven by an increase in Australia of £4.7 billion.

Again, these findings may be hinting at confidence in global recovery suggesting that UK companies were capitalising on growth abroad.

There was a somewhat mixed response towards direct investment to Europe in 2011. However in light of the debt problems within the Eurozone at the time, this is perhaps unsurprising. There was a small increase in the outward investment positions across all European countries, from £612.8 billion in 2010, to £613.4 billion in 2011. This increase was primarily driven by increases in investments to the Irish Republic (up £3.8 billion) and Spain (up £1.8 billion). The region however saw decreases in its 2011 investment positions. The largest of these were in Luxembourg by £3.3 billion and the Netherlands by £2.5 billion. The two aforementioned countries remain the largest areas in Europe for direct investment by the UK in 2011. This may partly reflect the presence of so-called Special Purpose Entities (SPEs) in these countries. 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 investment from their parent company to an affiliate in another country.

Figure 3.3: Net FDI international investment positions abroad by industry type, 2008 to 2011

Source: Office for National Statistics

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The UK’s outward position within the services sector rose from £478.8 billion in 2010 to £495.7 billion in 2011 (up 4%). By the end of 2011, service industries accounted for 56% of the total outward FDI (compared with 57% at the end of 2010). Of these, financial services continued to dominate accounting for 48% of the overall outward position in 2011; information and communication services accounted for 25%; and other services accounted for 8%.

The manufacturing sector accounted for 21% of the total UK outward direct investment positions at the end of 2011. Of these:

• Petroleum, chemicals, pharmaceuticals, rubber and plastic products accounted for 45%.

• Food products accounted for 29%.

• Other manufacturing accounted for 15%.

UK outward direct investment positions within the resources sector increased from £171.1 billion at the end of 2010 to £196.9 billion at the end of 2011 (up 15%). The resources sector accounted for 22% of the total UK outward direct investment positions, up slightly from 20% at the end of 2010, with mining & quarrying (including oil & gas) accounting for virtually all of this. 

Notes for Net FDI international investment positions abroad (outward) by component, geography and industry

1. All values are current prices (see background notes).

Net earnings from FDI investment abroad (outward) by component, geography and industry.

Component analysis (Table 4.2 and Figure 4.1)

Figure 4.1: Net FDI earnings by component, 2008 to 2011

Source: Office for National Statistics

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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 net branch profits (Table 4.2).

In 2011, all components of net FDI earnings abroad increased compared with 2010, continuing an upward trend since 2008.

UK companies’ share of their subsidiaries’ net profit abroad rose to their highest levels since the peak observed in 2007. Between 2010 and 2011, net profit abroad increased by £17.6 billion from £70.9 billion in 2010 to £88.5 billion in 2011, with the value of net branch profits also showing a slight increase. Both of these movements may be a possible indication of recovery to the post crisis economy.

Net interest of UK subsidiaries abroad remained relatively constant. This was primarily driven by the level of inter-company debt remaining static. This may indicate that companies are generating profits on existing assets rather than making additional investments.

Geographical and industrial analysis (Table 4.1 and 4.3 and Figures 4.2 and 4.3)

Figure 4.2: Net FDI earnings abroad by region, 2008 to 2011

Source: Office for National Statistics

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Europe remained the region with the highest income for UK companies investing abroad. It also witnessed the largest increase from £30.9 billion in 2010 to £46.6 billion in 2011, up by £15.7 billion. The proportion of the total UK outward earnings from Europe was 46% in 2011, up from 38% in 2010. One of the largest changes to outward earnings was in the Irish Republic, rising from a net disinvestment of £10.1 billion in 2010 to a net disinvestment of £0.7 billion in 2011. This may be a sign of recovery, following the muted performances in 2009 and 2010 resulting from the economic conditions in the Irish Republic in 2011.

The Americas also saw an increase, where earnings from outward investment were up from £21.5 billion in 2010 to £27.3 billion in 2011, and an increase of £5.8 billion. The Americas accounted for 27% of the UK total earnings abroad in 2011, unchanged from 2010.

Asia also saw large growth between 2010 and 2011. Earnings on UK investments increased from £15.9 billion in 2010 to £19.1 billion in 2011.

Figure 4.3: Net FDI earnings abroad by industry type, 2008 to 2011

Source: Office for National Statistics

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Industrial analysis on earnings from UK FDI directed abroad revealed further clues to post-crisis trends. All sectors observed upward trends between 2010 and 2011. The services sector in particular showed considerable growth increasing from £29.1 billion in 2010 to £42.5 billion in 2011.

UK earnings abroad included large investments in the financial services sector; in fact UK FDI earnings abroad (from UK companies investing abroad) showed a substantial increase in financial services income, from £8.7 billion in 2010 to £22.2 billion in 2011.

Notes for Net earnings from FDI investment abroad (outward) by component, geography and industry.

1. All values are current prices (see background notes).

Net FDI flows into the UK (inward) by component, geography and industry.

Component Analysis (Table 5.2 and Figure 5.1)

Figure 5.1: Net FDI flows into the UK by component, 2008 to 2011

Source: Office for National Statistics

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The figures show that net inwards FDI fell slightly in 2011 when compared with 2010.

The decrease in net acquisitions and disposals is the largest of the three inward investment components. Closer analysis shows a large movement in the disposals, from a disinvestment of £4.9 billion in 2010 to a disinvestment of £13.2 billion in 2011.

Reinvested earnings in the UK by foreign parents fell from an investment of £0.7 billion in 2010 to a disinvestment of £4.3 billion in 2011. This was caused by the increase in the amount of dividends paid to foreign parents, which exceeded the net profit made by UK companies during the year.
 
The level of other capital transactions showed a net investment of £2.8 billion in 2011, compared to a net disinvestment of £12.6 billion in 2010. The increase in this amount is mainly in the inter-company account, suggesting a rise in the level of debt from UK companies that is due to foreign parent companies.

Geographical and industrial analysis (Table 5.1 and 5.3 and Figure 5.2 and 5.3)

Figure 5.2: Net FDI flows into the UK by region, 2008 to 2011

Source: Office for National Statistics

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The value of net investment into the UK by foreign companies decreased marginally from £32.1 billion in 2010 to £31.9 billion in 2011, the lowest value recorded since 2004.

Concerning the overall trend of falling inward FDI flows from non-UK firms into the UK, there are two factors that may be contributing. The first could be lower confidence in the performance of the UK economy relative to other economies such as Asia. This may explain a very large disinvestment into the UK from Germany, traditionally a source of large investment into the UK.

The second factor may be domestic conditions in traditional UK investor countries, such as Spain and France, and emerging markets being more selective with inward investment. For example, Chinese investment into the UK is negligible and Indian investment is also very small. Even the USA, traditionally one of the stronger sources of inward investment in the UK, has not returned to its pre 2008 level of net investment.

Figure 5.3: Net FDI flows into the UK by industry type, 2008 to 2011

Source: Office for National Statistics

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Despite the weaker overall FDI inflows to the UK in 2011, there was a general improvement of FDI inflows into the UK’s financial services industry compared with 2010. Net investment in financial services from Spain, Belgium and Luxembourg increased after muted 2010 levels. Additionally, the USA tripled its net investment in the UK financial service sector between 2010 and 2011.

There was still caution elsewhere, however, with France continuing its net disinvestment in UK financial services, and Germany reducing its level of financial service net investment. It is not surprising to see a mixed reaction from Europe, given the debt problems in the Eurozone at the time, and a stronger reaction from the USA, which was undergoing a more assured, if still modest, recovery.

Outside of financial services, a notable inflow was that of French investment into UK electricity, gas, water & waste, which came to £0.9 billion in 2011. Despite the tsunami in Japan in 2011, retail and wholesale trade FDI flows into the UK from Japan turned positive after large net disinvestments in 2009 and 2010 (around a net disinvestment of £3.0 billion each year). 

Notes for Net FDI flows into the UK (inward) by component, geography and industry.

1. All values are current prices (see background notes).

Net FDI international investment positions in the UK (inward) by component, geography and industry

Component analysis (Table 6.2 and Figure 6.1)

Figure 6.1: Net FDI international investment positions in the UK by component, 2008 to 2011

Source: Office for National Statistics

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In 2011, all components of net FDI international investment positions increased when compared with 2010. 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 earnings and flows. This was then offset by smaller increases in the level of inter-company debt.

The rate of increase of FDI international investment positions in the UK has slowed but remains the largest value since 1987, when ONS began collecting positions data for the first time on an annual basis. (Table 6.2).

Geographical and industrial analysis (Table 6.1 and 6.3 and Figures 6.2 and 6.3)

Figure 6.2: Net FDI international investment positions into the UK by region, 2008 to 2011

Source: Office for National Statistics

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The increase in investment positions of direct investment into the UK by foreign companies principally reflected an increase in the level of investment from Europe of £20.3 billion (from £417.2 billion at the end of 2010 to £437.5 billion at the end of 2011) and Asia of £11.2 billion (from £54.8 billion at the end of 2010 to £66.0 billion at the end of 2011).

At the end of 2011, Europe accounted for 57% of the total (compared with 58% at the end of 2010). The Americas accounted for 32% of the total (compared with 33% at the end of 2010). At a country level, the USA was still the primary source of inward investment into the UK with USA companies holding £203.8 billion of investment in the UK at the end of 2011, an increase of £5.6 billion from the previous year.

Figure 6.3: Net FDI international investment positions into the UK by industry type, 2008 to 2011

Source: Office for National Statistics

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At the end of 2011, UK inward net positions with the services sector increased to £497.5 billion (up 11% from £447.7 billion at the end of 2010). Services accounted for 71% of the total at the end of 2011 (compared with 68% at the end of 2010). Of these investment positions into the UK:

• Financial services accounted for 35%.

• Retail and wholesale trade & repair services accounted for 19%.

• Information & communication accounted for 16%.

UK inward investment positions within the manufacturing sector increased to £135.1 billion at the end of 2011 compared with £130.3 billion at end of 2010 (up 4%). Manufacturing industries accounted for 19% of the total at the end of 2011 (compared with 20% at the end of 2010). Of these investment positions into the UK:

• Food products accounted for 29%.

• Petroleum, chemicals, plastic and fuel products accounted for 22%.

• Other manufacturing accounted for 21%.

Resources fell to £68.1 billion at the end of 2011 (down 17% from £81.9 billion at the end of 2010). Resources accounted for 10% of the total UK inward net positions at the end of 2011 (compared with 12% at the end of 2010) of which mining & quarrying (including oil & gas) represented almost all of these investment positions.

Notes for Net FDI international investment positions in the UK (inward) by component, geography and industry

1. All values are current prices (see background notes)

Net Earnings from FDI investment in the UK (inward) by component, geography and industry

Component analysis (Table 7.2 and Figure 7.1)

Figure 7.1: Net FDI earnings by component, 2008 to 2011

Source: Office for National Statistics

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Total net earnings from foreign direct investment in the UK increased to £43.6 billion in 2011, its highest level since 2007. This may be an indication of recovery within the UK economy, after the difficulties from the recession in the immediate preceding years.

The net profit of UK companies increased from £26.1 billion in 2010 to £31.2 billion in 2011. Again, this rise in earnings may indicate an improvement in the performance of UK companies owned by foreign parents.

Both subsidiary net interest and branch net profit figures were comparatively stable between 2010 and 2011. The stability of the branch profit figures is in sharp contrast to the large net loss seen in 2008, which may imply some form of recovery after this period.

Geographical and industrial analysis (Table 7.1 and 7.3 and Figures 7.2 and 7.3)

Figure 7.2: Net FDI earnings into the UK by region, 2008 to 2011

Source: Office for National Statistics

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The largest increase and the highest level of inward UK earnings came from The Americas, possibly driven by increased investment in the UK service industry between 2010 and 2011. Europe had the second highest level of earnings in 2011, but it has remained static compared with 2010.
The five countries receiving the highest earnings from direct investment in the UK in 2011 were:

• USA with £18.0 billion (compared with £15.0 billion in 2010).

• France with £5.2 billion (compared with a £4.7 billion in 2010).

• Germany with £4.7 billion (compared with £4.9 billion in 2010).

• Netherlands with £4.6 billion (compared with a £3.0 billion in 2010).

• UK offshore Islands with £1.9 billion (compared with £4.1 billion in 2010).

Figure 7.3: Net FDI earnings into the UK by industry type, 2008 to 2011

Source: Office for National Statistics

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The sector composition of earnings from FDI directed into the UK in 2011 was again dominated by the services sector. This area witnessed an increase of £6.4 billion between 2010 and 2011, largely driven by a £3.9 billion increase in financial services. Earnings from non-UK firms investing in the UK were centred on this area.

The resources and manufacturing sectors remained relatively static following the overall trend of falling inward flows. Even the USA, traditionally one of the stronger sources of inward investment in the UK, has not returned to its level of net investment observed before 2008.

Notes for Net Earnings from FDI investment in the UK (inward) by component, geography and industry

1. All values are current prices (see background notes).

Background notes

1. Basic quality information
    
   The Summary Quality Report (155.1 Kb Pdf)  for Foreign Direct Investment (FDI) 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 surveys into foreign direct investment for 2011. Provisional estimates for 2011, derived from quarterly surveys, have already been published in the quarterly balance of payments statistical bulletins but the annual surveys provide firmer and more detailed figures. The aggregates for 2011 were included in the Q3 2012 Balance of Payments Statistical Bulletin published on 21 December 2012.
   

3. Key concepts and definitions:

   Associates: Associates are incorporated companies which are not subsidiaries, but companies in which the investing company participates in the management without having a controlling interest that is a holding of less than 50% of the equity capital.

   Branches: Branch means a permanent establishment as defined for UK corporation tax and double taxation relief purposes.

   Current prices: Current prices refers to prices as they were at the time of measurement and not adjusted for inflation.

   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 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 (or income) 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 subsidiary, associate or branch by a non-UK parent company or head office. Can also be referred to as direct investment in the UK. 

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

   Rate of return: This is normally defined as income on direct investment equity as a percentage of the overall direct investment position. 

   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 investment from their parent company to an affiliate in another country.

   Subsidiaries: Subsidiaries are as defined in section 258 of the Companies Act 1989 and in the main are companies in which the parent company owns more than half of the equity share capital.
   
   

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 fivth 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 Summary Quality Report linked in background note 1 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. 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, including HMRC, Cabinet Office, HM Treasury, UK Trade 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-Fletcher on +44 (0)1633 456455.

5. Guidance on interpreting foreign direct investment statistics:

   FDI by country: The analysis of inward investment is based on the country of ownership of the immediate parent company. Thus, inward investment in a UK company may be attributed to the country of the first foreign parent, rather than the country of the final ultimate parent. As an example, to the extent that foreign direct investment in the UK is channeled through holding companies in the Netherlands, the flow of investment from this country is overstated at the immediate parent level and the underlying inflow from the ultimate parent level is understated. However, attribution on the basis of the immediate level is in accordance with the internationally agreed definition of foreign direct investment and allows for international comparability of data.

   The same principle also applies on the outward survey where, in accordance with international standards, outward investment is attributed to the country of the immediate subsidiary rather than the ultimate destination of the investment.

   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	Ukraine	UK Offshore Islands (Guernsey, Jersey, other Channel Islands & Isle of Man
   	Vatican City State

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   Definitions of geographic and economic areas:

   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

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   Definitions of geographic and economic areas:

   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

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   Definitions of geographic and economic areas:

   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

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   Definitions of geographic and economic areas:

   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

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   Definitions of geographic and economic areas:

   OECD and Central & Eastern Europe

   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

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   Release of this country data is subject to restrictions where confidential data relating to individual enterprise groups is concerned.

   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.

   Standard Industrial Classification (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

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   Valuation of equity:  Enterprises were asked to returns values in sterling, as entered in their accounts, rounded to the nearest £0.1 million. Where conversion from a foreign currency was involved, they were asked to use the same rate of exchange as in their own accounts. 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. 
   

6. Accuracy

   Data sources and methods:

   The figures in this publication are based on annual surveys to businesses. Data for the banking sector are collected by the Bank of England, other sectors are covered by ONS surveys. The banking surveys collect information from all banks. The ONS surveys are based on samples only. This methodological note concentrates on these sample surveys which are statutory surveys, collecting information under the Statistics of Trade Act 1947.

   The surveys are conducted using questionnaires which are generally sent to the head of the enterprise group within the UK and which request consolidated information for the group as a whole. The survey is divided into two parts: one measures FDI by UK groups abroad (outward survey) and the other measures FDI in the UK by foreign groups (inward survey).

   Sampling frame:

   The surveys are run from a register, which is compiled primarily from administrative information such as VAT details from HM Customs and Excise and PAYE from the Inland Revenue. The register holds a number of variables including information on the country of ownership for each group. It also holds information on which UK groups have foreign affiliates.

   The main source of information on these foreign links for the latest annual survey was a Dun and Bradstreet publication. This was supplemented with information from ONS surveys into acquisitions and mergers of companies. These surveys are conducted on a continuous basis, collecting information when a UK company acquires or disposes of a foreign company and similarly when a foreign company acquires or disposes of a UK company. Work is currently being undertaken to review the register sources used for the survey to ensure completeness. In particular, Dun and Bradstreet's 'WorldBase'® information has been used to give a better estimate of the population of companies with foreign links.

   Sample design:

   Sampling of enterprise groups for inclusion is based on stratified designs for the known FDI historical population and the new register source provided by the Dun and Bradstreet publication ‘WorldBase’®.

   For the known FDI population the outward survey strata are defined in terms of the value of the net international investment position (at book value) of the foreign affiliates. Similarly for the inward survey strata are defined as the net international investment position (at book value) of the UK group.

   For the ‘WorldBase’® population the outward survey strata are defined in terms of the number of foreign affiliates held by the UK parent company. For the inward survey the strata are defined in terms of the turnover of the UK group.

   For both populations, in order to maximise the survey coverage of foreign direct investment assets, all groups in the top strata (containing the largest businesses) are sent questionnaires. However, in strata containing smaller businesses only a proportion are selected. Additionally, the sample of smaller businesses is rotated to minimise burden on the respondents.

   The 2011 survey was based on combined sample sizes of Outward 1,716 and Inward 2,740.

   Statistics of sample size and response rates - latest survey conducted

   	Outward FDI	Inward FDI
   Selected Sample Size	1,716	2,740
   Numbers co-operating fully or partially	1,336	2,264
   Non-contacts/refusals	380	476
   Overall response rate (%)	78	83

   Table source: Office for National Statistics

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   Valuation of Equity:

   Enterprises were asked to return values in sterling, as entered in their accounts, rounded to the nearest £0.1 million. Where conversion from a foreign currency was involved, they were asked to use the same rate of exchange as in their own accounts. 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.

   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. The sampling error measures this variation.

   Sample surveys are employed rather than censuses, because the 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 low standard error indicates a precise estimate. To aid comparison, the standard error is also expressed as a percentage of the total value. This quantity is called the coefficient of variation and it allows the standard errors to be put into context. A high coefficient of variation indicates a greater relative variation.

   A brief summary of the sampling errors for the 2011 surveys are displayed in the table below.
    
   

   Sampling errors for the 2011 survey

   	Estimate	Standard error (£ million)	Coefficient of variation (%)
   Inward earnings	43,643	967	2.2
   Inward flows	31,914	7,176	22.5
   Inward positions	766,166	12,969	1.7
   			1.2
   Outward earnings	101,611	1,185	1.2
   Outward flows	68,229	3,637	5.3
   Outward positions	1,098,177	10,793	1

   Table source: Office for National Statistics

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   In addition to sampling errors there is the potential for non-sampling error that cannot be easily quantified. One potential source of non-sampling error is non-response, which relates to the failure to obtain data from some businesses selected in the sample. Another source of non sampling error may be as a result of undetected deficiencies that may occur in the survey register and errors may be made by the contributors when completing the survey questionnaires.

   Various efforts are made to minimise non-response. Written reminders are sent to non-responding businesses. 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 force a response, though ONS prefers to work together with businesses to produce the necessary information.

   Imputation:

   Imputation techniques are used to estimate values for those members of the population where data are not available, either due to the enterprise being outside the sample or a non respondent. The imputation process accounts for the following figures and percentages of the final published figures:
   
   

   Imputed proportion of final published FDI figures

   £ million

   	FDI Investment Flows		FDI International Investment Positions		FDI Earnings
   FDI Outward	7498.9	11.0%	69999.8	6.4%	8125.3	8.0%
   FDI Inward	10060.8	31.5%	144443.3	18.9%	9834.1	22.5%

   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 answer. The risk of non-response bias is minimised by efforts to maximise response rates and estimation techniques can attempt to correct for any bias that might 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.
   

7. Revisions

   Imputation techniques are used to estimate values for those members of the population where data are not available, either due to the enterprise being outside the sample or a non respondent. The imputation process accounts for the following figures and percentages of the final published figures:

   Size of revisions for the last five years

   £ million

   		Revisions between first publication and estimates three years later
   	Value in latest revised period	Average revision over the last five years (bias)		Average over the last five years without regard to sign (average absolute revision)
   Outward flows	25,501.6	3,840		4,841
   Outward positions	1,046,111.2	485		8,399
   Outward earnings	80,276.2	-355		1,690
   Inward flows	32,106.1	2,204		4,642
   Inward positions	725,556.8	-575		6,505
   Inward earnings	37,533.2	-942		1,152

   Table source: Office for National Statistics

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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

   Symbols used in the tables:

   -     Nil or less than half the final digit shown
   ..    Disclosive / confidential data (more information is available on the ONS website)
   n/a  Data not available for this period

   Total values:

   The components in the tables may not equal the total value.  This may be caused by:

   • Rounding of data: The sum of constituent items in tables or charts may not always agree exactly with the totals shown due to rounding.

   • Discontinuity arising from including private property data, public corporations and bank holding companies, see tables 1.1, 1.2 & 1.3.
     

9. Other sources of FDI information:

   Foreign Direct Investment (FDI) Statistical Bulletin.
   The FDI statistical bulletin is produced on an annual basis. It precedes this business monitor and is published within 12 months of the end of the latest data year (publication of this statistical bulletin is in the month of December. For example data for 2011 was published on 6 December 2012). It shows FDI flows, investment positions and earnings by area and main country for both the inward and outward FDI surveys.

   Balance of Payments (BOP) Statistical Bulletin.
   The BOP Statistical Bulletin is produced on a quarterly basis (March, June, September, and December); it contains world total net FDI flows, investment positions and earnings data.
   • Table G of that Bulletin shows earnings from FDI investments,
   • Table J shows data for FDI flows and
   • Table K shows data for FDI investment positions.

   Mergers & Acquisitions Statistical Bulletin.
   The M&A Statistical Bulletin is published on a quarterly basis (March, June, September and December) and provides another source of FDI data relating to mergers and acquisitions involving UK companies. Apart from publishing the information on these transactions, it is used to update the register of businesses from which the FDI surveys are conducted.

   These Statistical Bulletins are all freely available on the Office for National Statistics website.

10. 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 their 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 National Statistics, subject to ONS carrying out certain requirements. ONS is working hard to meet the requirements set out in this assessment report.

    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.
    

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12. The Government Statistical Service (GSS)

    The GSS 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.
    

13. Special events

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

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 new 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.

    Release policy

15. 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

    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

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