Britain for Sale? Or Britain as outward investor?

Which of these brands are British? Newcastle BrownAston MartinStrongbowMarmiteRolls RoyceBranston's pickleLand RoverHP saucePG TipsJohn Smiths bitterSarson’s vinegarRowntree Mackintosh

The answer, of course, is that none of them are; they all now have foreign owners. The Office for National Statistics recently reported that more than half the shares in quoted UK companies are owned by foreign investors. Ten years ago, only a third of the shares were foreign owned and 20 years ago the proportion was only 13%.

LindaYueh has taken this report and comments upon it in a really useful article. She looks at the way in which the government welcomes inward FDI, even in strategic areas - four of the big six energy companies, including most of the nuclear industry, are foreign owned. The same goes for British seaports, airports and railways. She reflects on why British businesses are so attractive to overseas buyers, and the implications for jobs in the UK, which may not be as positive as it often assumed; she notes that the profits of those businesses are an outflow on the current account.

She also looks at the positives to be gained from foreign ownership in the country. Research by the Centre for Economic Performance at the London School of Economics shows that foreign-owned plants are, on average, more productive than domestically-owned establishments. Nissan in Sunderlandprovides a good example of that, and also of the point that multinationals can bring fresh ideas and expertise, such as new technologies and management practices. There is some really valuable evidence to be used for analysis here.

But, Britain also makes a tidy return from it's overseas investments, and the end of the article looks at the balance of inward and outward FDI. Linda reports that “The ONS estimates that Britain currently has £1.1 trillion direct investment assets overseas, £300bn more than the rest of the world owns in the UK.” Add to that our vital surplus in investment income. “Since 2000, inflows of investment income have averaged 13.5% of GDP compared to outflows which have averaged 12.4% of GDP. This means each year Britain has received a net flow of investment income equal to 1.1% of GDP from the rest of the world.”