Inward investment rises despite fall in jobs

The number of jobs created in Britain by overseas investors slumped by a quarter last year despite a large rise in the number of new projects, government figures showed yesterday.

Foreign companies created almost 25,000 jobs last year, down from the 34,400 new posts in 2002, the Department of Trade and Industry said. The UK attracted 811 investment and expansion projects, up by 14 per cent on 2002, making Britain the most popular location for investment in Europe.

Mike O'Brien, a Trade minister, defended the DTI's record, saying the new jobs were highly paid posts. "The fact that many of these jobs are now high-skilled jobs is something we can see as very positive. If people are going for low-skill jobs we are competing with Eastern Europe and the new members of the EU," he said. The DTI said that the rates of pay for these new jobs was up to 17 per cent more than the average wage for the local area.

Mr O'Brien said the figures were evidence manufacturing was not in decline, despite Tuesday's report by the TUC that 750,000 industrial jobs had been lost since 1997, when Labour won power. The DTI said the sector made up a third of inward investment projects and 40 per cent of the jobs created, despite making up only a fifth of the economy. It said the UK had a 40 per cent market share of European software and IT investments, while electronics and pharmaceuticals enjoyed a 55 per cent rise on 2002.

Projects from India rose by 47 per cent - including some call-centre companies, which go some way to offset concern over the exodus of such jobs to the Indian sub-continent. Mr O'Brien said the UK had continued to benefit from a sound economic record with strong growth and high employment and low inflation.

Britain's share of inward investment to Europe rose to 23 per cent from 19 per cent. New investments in Europe as a whole rose 2 per cent, implying some countries suffered a fall.

Malcolm Bruce, the Liberal Democrat trade spokesman, said the Government should disclose how much public money was used to attract the investors. "We don't know if these jobs will be permanent," he said.

Meanwhile a separate survey showed there has been no flood of workers from Eastern Europe in the wake of the EU's expansion on 1 May. Manpower, the recruitment agency, said two-thirds of its branches reported fewer than 10 jobseekers from new members on 1 June.