What does leaving the EU mean for foreign investment?

Published: 28th Jun 2016

This briefing is largely based on the briefing by the House of Commons Library ‘EU referendum: impact of an EU exit in key UK policy areas’. The opinions and judgements it contains are theirs. We expect to review and add to these articles periodically as events develop.

Foreign direct investment is one of four areas where the UK’s decision to leave the EU has the most obvious economic impact, according to the House of Commons Library.

In 2014, EU countries accounted for about half of investment stocks in the UK. This compares with 24% from the US and 28% from other countries.

The effect of leaving the EU on foreign direct investment is a source of disagreement among experts. On the whole, the House of Commons Library has concluded it is reasonable to say that membership of the single market is one of a few important factors in attracting foreign direct investment. Outside the EU, the UK may be able to create a system of regulation that is more attractive to overseas investors. This could possibly offset some of the impact of leaving the EU.

While in the EU, the UK has not had the power to negotiate international agreements on foreign direct investment with countries outside the EU. The EU was given the power to do this on our behalf in 2009. Once it has left the EU, the UK will regain the power to do this.

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