The Cameron government plans to pull out all the stops in expanding trade and attracting inward investment
Aslew of Indian companies have in recent years headed for British shores, to invest in the UK, and more are following suit. And why shouldn't they? On its website, the agency UK Trade and Investment (UKTI) lists eight factors that it says makes the UK Europe’s leading investment destination for international companies developing their global businesses:
# It is the easiest place to set up and run a business in Europe: The World Bank found that it takes just 13 days to set up a business in the UK, compared to the European average of 32 days. It ranks the UK as the first in Europe, and fifth in the world, as the easiest place to operate a business.
# It provides access to the world’s largest market: The UK is the number one gateway to Europe, giving easy access to the 27 member-states of the European Union, and the world's largest single consumer market, with its population of nearly 500 million. The UK's extensive international connections (travel and IT) infrastructure makes the UK the ideal location to grow an international business.
# It offers a strong science base: The UK is a world leader in innovation, ranking second only to the USA for the quality of its research base.
# It offers a stable regulatory environment: The UK has a stable regulatory environment with a consultative approach to the formulation of regulation, so that there are no surprises for business. The UK is one of the most stable political environments in which to do business: according to Transparency International, the UK is one of the most transparent countries in the world. It has a higher rating than France, Germany, USA and Japan.
# It has a flexible workforce: The UK has one of the most flexible labour markets in Europe. The World Bank ranks the UK the second best place in Europe to employ workers, behind Denmark.
# It is the most attractive destination for inward investment: According to Ernst and Young, in 2009/2010 the UK attracted the most company investments in Europe.
# The UK offers world-class transport links: Heathrow’s Terminal 5 is open and working efficiently. Additional expansion is planned for sea container terminals at London Gateway and Felixstowe, and for the rail network, with investment in London Cross Rail and rail freight infrastructure.
# Finally, there are the Olympic opportunities: The London Olympic Games in 2012 will directly award £6 billion of contracts which in turn will generate an estimated 75,000 business opportunities to supply chains in the coming years.
And the recently-elected government of Conservative Prime Minister David Cameron intends to build on these advantages. Cameron has said the establishment of the UK as a top investment destination for foreign companies was a key part of the economy’s long-term recovery.
“Attracting and retaining inward investment is hugely important for our economic recovery,” he said. “We are determined to deliver the pro-business environment investors need, getting the deficit down to create certainty and stability, cutting business taxes, delivering flexible employment and cutting red tape and regulation.”
The UK has already emerged as a destination of choice for Australian investors. High-profile Australian brands such as Macquarie Bank and Servcorp have led a steady stream of Foreign Direct Investment (FDI) into the UK, as investors seeking entry into European markets take advantage of the UK's reputation as a top destination for headquarters.
The dominance of UK cities in Europe has resulted in 277 companies relocating their international operations to Bristol, Manchester, London and Birmingham, resulting in the UK playing home to more European headquarters than all other EU economies combined.
A total of 67 Australian projects are currently taking place in the UK, among them office provider Servcorp’s plans to invest more than AU$17 million to expand in London and Europe following the opening of its first offices in the capital earlier this year. While many rival economies continue to recover slowly under austerity measures introduced by governments across the globe, the Australian dollar, which has escaped comparatively unscathed from the economic downturn, continues to be invested in the UK.
The UK Trade & Investment website quotes its director in Australia ,Paul Noon, as saying that key location factors have made the UK stand out against rival European countries throughout the recession.
Further new initiatives to be undertaken by the UK government are expected to reinforce the country’s attractiveness as an investment destination. For one thing, it plans to put commerce at heart of international policy. Foreign Secretary William Hague has promised a “commercial” orientation to foreign policy, which will be focused on promoting exports and inward investment.
Speaking at a conference in Japan as official figures showed that the number of jobs created by inward investment projects climbed by 20 per cent last year, Hague told attendees the approach would secure the recovery at home by building closer business links with foreign companies and countries.
“We will work in a targeted and systematic fashion to secure the UK’s economic recovery, promote open markets and improved financial regulation and to open the way to greater access for British companies in new markets worldwide,” he said.
“To do this, we will inject a new commercialism into the work of our Foreign Office and into the definition of our country’s international objectives, ensuring that we develop the strong political relationships which will help British business thrive.”
His pledge comes shortly after Prime Minister Cameron declared he would be “messianic” in chasing both trade and investment abroad, especially with regard to emerging economic powerhouses in Asia and South America. Hague, who has already visited China, has just taken the message to the Gulf, while Business Secretary Vince Cable will travel to Brazil.
The other new initiative is the simpler tax system that is to be put in place in the UK, which is expected to attract more inward investment. That is the view of Taxand, the world’s largest organisation of tax advisers, which welcomed the move by Chancellor George Osbourne to simplify Britain’s complex tax system.
Multinational companies in the UK will be free from tax burdens in compliance and day-to-day operations thanks to the tax simplification process, the organisation said. In a survey of advisers carried out by Taxand, almost half (48 per cent) said that complex tax systems introduced by governments across the world was likely to push investors away. A fifth of those surveyed said high corporate tax was the most significant factor in discouraging inward investment.
Frederic Donnedieu, Chairman of Taxand, said: ““The announcement in the UK is a welcome first step in the global simplification of tax systems and is likely to fire the gun for other jurisdictions who will seek similar reforms to ensure they are competing on an equal footing for foreign investment.”
As part of the reform, Mr Osbourne revealed a new Office for Tax Simplification will oversee the work. It will be tasked with studying 400 tax reliefs to see how many can be removed, both to simplify the system and fund tax cuts elsewhere.
The OTS will write two reports for the Chancellor within the next year — on tax reliefs this autumn and on business taxes ahead of the spring 2011 Budget. The first reviews will begin in early September. Speaking at the Treasury, Mr Osborne said: “I want to create a simpler tax code, a more competitive tax code which says to the world that Britain is open for business.”
Source: UK Trade & Investment
