Central London office take-up continues apace

Inbound tech investment into the UK hits 10 year high despite Brexit

The total number of foreign direct investment (FDI) projects into the UK’s tech sector reached a 10 year high in 2016 with 269 investments made, according to EY.

However, this was a year of very marginal growth, up only 0.4% compared to 2015.

As a result, the UK’s market share fell from 30% of all tech investments across Europe in 2015 to 27% in 2016 - the lowest percentage recorded by the UK for FDI in the sector since 2008.

At the same time, the total number of tech investments across Europe increased in 2016 by 9% - from 898 in 2015 to a ten-year high of 980.

London maintained its leading position as the city attracting the largest share of tech FDI projects in Europe by some distance.

The capital secured 17% of all tech FDI projects across Europe with 168 investments - three times more than Paris in second place with 56, and nearly four times more than Berlin in third with 44.

However, the gap between London and the rest of the UK widened with the capital securing 63% of all inbound tech investments into the UK in 2016, compared to 57% in 2015 and 43% in 2007.

Rahul Gautam, EY’s head of technology, media and telecommunications for the UK & Ireland, said: “The UK, and London in particular, continue to lead Europe for inbound tech investment, but there is no room for complacency.

“Last year saw growth slow overall and the success in London was not mirrored in other regions. In fact the volume of tech investment fell in the remainder of England, excluding the ‘Midlands Engine’, with the ‘Northern Powerhouse’ hit particularly hard - experiencing a drop of 34% from 35 projects in 2015 to 23 in 2016.”

Looking at the origin of FDI into the UK’s tech sector in 2016, the United States dominates according to the report.

FDI from the USA made up 41% of the total, still below its decade long average of 49%.

No single country then provides more than 6% of projects, with India coming second and Australia together with France coming third.