U.K. Says It's the Best Investment Deal in Europe

Jul 11 2001

LONDON - The U.K. remains the leading European country for outside investors, particularly in the technology sector, according to a government report released Wednesday.

Invest-UK, a British government agency that seeks investment abroad, said Wednesday that there were 869 investment projects in the U.K. in fiscal year 2000-01, up 15 percent from the previous year. These projects created 71,488 new jobs, the agency said. More than half the investments were in the Internet, software, technology and telecommunications fields.

"We attract more investment than any other country in Europe and, in the world, are second only behind the U.S.," boasted ministers Jack Straw and Patricia Hewitt, in their introduction to the report.

By the far the largest single country investing in the U.K. was the U.S. American firms invested in 421 projects creating 39,662 jobs; Germany was the next largest investor, with 71 projects creating 4,814 jobs.

Despite the global technology slump that began in the spring of 2000, technology companies continued to make investments in the U.K. Of the 869 projects, 323 were in the IT, technology and software sectors. Among the larger such deals were Insight Technologies, an Arizona-based computer marketing firm that plans to have 1,700 employees in its European headquarters, located in Sheffield, and Citysearch, which opened its European headquarters in London.

Still, the job creation figures may be slightly misleading, since they do not take into account firms that create jobs in the U.K. and then eliminate them through layoffs. In recent months, U.S.-based Internet firms such as TheStreet.com, Excite and 24/7 Media have laid off staff based in the U.K. The Invest-UK report does not account for such cutbacks.

Tom Harris, the U.K.'s general consul to the U.S., said in an interview that U.S. companies still want to invest in the U.K., despite the worldwide tech slump. But "people are taking more time to make decisions," Harris said. "Twelve months ago, there was almost a freneticism, an emphasis on speed and first-move advantage. Companies are taking a more measured approach this year." Harris said that the predicted growth in third-generation telephones would continue to make Europe, and thus the U.K., an essential market for U.S. telecom firms.

Harris added that the possible entry of the U.K. in the European economic union would not greatly affect U.S. companies that wish to invest there. "American businesses, particularly in the knowledge fields, are much less sensitive to exchange rate issues than some others, especially assembly and manufacturing," Harris said.