Asian firms' investment in UK tumbles

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The Independent Online
The Government's claim that its European policy poses no threat to inward investment is called into question today by a United Nations report showing that the UK's share of foreign investment in the European Union has fallen sharply.

Today, Adair Turner, the Confederation of British Industry's director general, will issue an unusually outspoken warning against the dangers of British isolation from Europe.

These alarm signals will severely embarrass the Government, which has always claimed that its opt out from the social chapter and other signs of semi-detachedness actively attract overseas businesses. However, it is likely to strengthen the Chancellor Kenneth Clarke's pro-European position against the sceptics in the Cabinet.

Mr Turner, in a speech to businessmen in Cardiff, will say that Europhobia is increasing Britain's isolation within the EU. "Our views will go unheeded, our influence will diminish. Ultimately our access to the single market could be at risk - to our enormous economic disadvantage."

The CBI chief's views were backed by the normally Euro-sceptic Institute of Directors yesterday. Ruth Lea, head of policy at the rival employers' organisation, said: "In so far as there is a feeling among overseas investors that Britain might cut loose from the EU, this is a matter for concern."

Mr Turner's warnings are given extra force by today's report from the UN's Conference on Trade and Development. This shows that Britain's share of rising investment in Europe by foreign companies, especially from Japan and the rest of Asia, has shrunk.

Robin Cook, the shadow Foreign Secretary, said: "These figures show how hollow are the Tory boasts on inward investment. The UK share of inward investment from the Far East has dropped fast."

Today's developments follow warnings by big companies that the UK's negative attitude to its European partners and the single currency might affect their investment plans. The Japanese car manufacturer Toyota, Germany's Siemens, and British-based companies including BP and Unilever have all spoken out.

Business, page 20