European slowdown hits inward investment into UK

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The Independent Online

Britain suffered its worst year for foreign investment in almost a decade in 2003 as a slump in flows from the anaemic European economy failed to offset a turnaround in interest from US companies.

Britain suffered its worst year for foreign investment in almost a decade in 2003 as a slump in flows from the anaemic European economy failed to offset a turnaround in interest from US companies.

Overseas companies invested a total of £12.4bn in the UK last year, down from £16bn in 2002 and the lowest since 1994.

The main cause was a fall of more than 50 per cent in inflows from the European Union to £7.7bn from 2002's £15.7bn. The US poured in almost £3bn after taking £2.1bn out of the UK the previous year.

The Conservatives seized on the figures, saying they showed the UK was being "suffocated" by higher taxes and red tape. Oliver Letwin, the Shadow Chancellor, said: "This persistent decline in foreign investment shows that companies are finding Britain an increasingly less attractive place to invest their money.

"Businessmen the world over are turning their backs on Tony Blair's Britain."

But the Treasury and the Government's trade and investment agency dismissed the accusations, saying the stock of foreign investment in the UK was rising. Paul Boateng, chief secretary to the Treasury, said: "Instead of talking down our economy, Oliver Letwin should recognise that the UK maintains the highest stock of foreign direct investment as a proportion of GDP of any G7 country.

"Under this government, we now have 300,000 more businesses, business investment at record levels while our economy has continued to grow for the longest continuous period in Britain's industrial history."

A spokesman for UK Trade and Investment, the Government agency, said the stock of investment had risen to £341.7bn from 2002's £324.7bn.

Investment overseas by UK companies jumped by £7bn to £40.7bn. Investment into the UK rose by £19bn while flows into Europe fell by £11bn, according to the agency's figures.

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