The Government has renewed its commitment to level up the country, and the challenge has only grown in the wake of the economic damage from the pandemic. As we emerge from lockdown and look to get the economy firing on all cylinders again, policymakers must look to utilise all available options to innovate and provide growth opportunities to communities across the country. With new regulatory flexibility, taking advantage of the benefits from foreign direct investment will be critical to not only ‘build back better’ economically, but will be crucial for the regeneration of regions that have been hit hardest.
The benefits of inward investment are significant – from productivity gains, to more innovative and R&D intensive activity, to job and wage growth – FDI can make a significant contribution to the economy. However, while foreign investment in the UK has risen by volume, it has become highly concentrated by geography. The proliferation of investment attraction mechanisms like special economic zones and investment tax credits in other jurisdictions, matched with the growing number of opportunity markets through globalisation, means that competition in the future will be more intense. The question the government faces is how to upgrade the country’s toolkit to maximise the volume and quality to FDI projects, and, importantly, how to ensure that lagging areas benefit.
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