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.
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: email@example.com or telephone Ciara Williams-Fletcher on +44 (0)1633 456455
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.
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.
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 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.
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%.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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).
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).
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.
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.
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.
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).
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.
Basic quality information
The Summary Quality Report (284 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.
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.
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,
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.
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.
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: firstname.lastname@example.org or telephone Ciara Williams-Fletcher on +44 (0)1633 456455.
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.
|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|
|Anguilla||Antigua & Barbuda||Argentina||Aruba|
|Bolivia||Bonaire, Sint Eustatius & Saba||Brazil||British Virgin Islands|
|Dominican Republic||Ecuador||El Salvador||Falkland Islands|
|Peru||St Kitts & Nevis||Saint Lucia||Sint Maarten|
|St Vincent & the Grenadines||Suriname||Trinidad & Tobago||Turks & Caicos Islands|
|Uruguay||US Virgin Islands||USA||Venezuela|
|Near & Middle East Countries|
|Gulf Arabian Countries|
|Qatar||Saudi Arabia||United Arab Emirates||Yemen|
|Other Asian Countries|
|Timor - Leste||Turkmenistan||Uzbekistan||Viet Nam|
|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|
|British Indian Ocean Territory||Burkina Faso||Burundi||Cameroon|
|Cape Verde||Central African Republic||Chad||Comoros|
|Congo||Democratic Republic of the Congo (Zaire)||Djibouti||Egypt|
|Ivory Coast (Cote d'Ivoire)||Kenya||Lesotho||Liberia|
|Sao Tome & Principe||Senegal||Seychelles||Sierra Leone|
|Somalia||South Africa||South Sudan||St Helena, Ascension & Tristan da Cunha|
|Central & Eastern Europe|
|Albania||Bosnia & Herzegovina||Croatia||Macedonia, former Yugoslav Republic of|
Release of this country data is subject to restrictions where confidential data relating to individual enterprise groups is concerned.
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.
|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|
|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|
|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|
|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|
|Electricity, Gas, Water & waste|
|350||Supply of electricity, gas, steam & air conditioning|
|360||Water collection, treatment & supply services|
|380||Waste collection,treatment, disposal recycling services|
|390||Remediation & other waste management services not elsewhere specified|
|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)|
|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)|
|Professional, scientific & technical 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)|
|732||Market research (market research, opinion polls, media representation)|
|740||Design, photography, translation & other professional, scientific & technical services|
|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)|
|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|
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.
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).
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.
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.
|Outward FDI||Inward FDI|
|Selected Sample Size||1,716||2,740|
|Numbers co-operating fully or partially||1,336||2,264|
|Overall response rate (%)||78||83|
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
Standard error (£ million)
Coefficient of variation (%)
Table source: Office for National Statistics
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 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
FDI Investment Flows
FDI International Investment Positions
Table source: Office for National Statistics
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.
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:
|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)|
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.
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
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.
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.
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.
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|Ciara Williams-Fletcher||+44 (0)1633 456455||Business Outputs and Development Divisionfirstname.lastname@example.org|