Britain top target for foreign investors

BRITAIN is attracting more foreign investment than any eurozone country, it has emerged. The statistics are a further blow to pro-euro campaigners who claim the UK's continued isolation from the single currency is costing thousands of jobs and closing businesses.

And although the global economic downturn has affected the overall foreign investment level, Britain has continued to dominate the European market. Last year, the UK attracted a fifth of all investment in Europe, compared with only 13% in France and 8% in Germany - both of which have seen sharp falls in their share.

Figures published on Wednesday by the Government agency Invest UK reveal that in 2001-2002 foreign investors started 764 projects and expansions here, creating 34,087 jobs. And though this is 12% lower than the previous 12 months, when 71,488 jobs were created, the global downturn since September 11 is seen as the cause. Stock market falls since then also meant lower US investment levels, though Britain remained by far the favourite target for American investors.

The UK still receives double the US investment into the Netherlands, more than four times that into Germany and six times that into France. European business leaders also continued to show huge confidence in the UK.

Though German and French politicians are pushing for closer EU integration, bosses in both countries still prefer to invest heavily in the UK. They launched 50 projects here over the last financial year, creating 7,500 jobs.

Trade Secretary Patricia Hewitt said Britain was still easily outperforming its European competitors. She added: 'We continue to be the top inward investment location in Europe, though we are not immune from the global economic downturn. Many directors are postponing expansion decisions, but Britain remains their favourite potential location.'

George Eustice, manager of the anti-euro No Campaign, welcomed the figures. He said: 'They show that even in a tough year the UK is more attractive than the eurozone. Investors like our lower taxes and lighter regulation. The biggest threat to investment is giving away control of our economy.'

But pro- euro campaigners claimed the overall drop in investment showed Britain was already suffering outside the Eurozone. Lord Marshall, who runs the pro-euro Britain in Europe movement, said: 'Inward investment has been warning for years that Britain's isolation from the single currency makes us a less attractive investment location. The longer we stay out of the euro, the more foreign investment will be at risk.'

But Trade Minister Baroness Symons denied Britain's role outside the euro was affecting trade and said people were happy with the UK Government's present position.

Downing Street believes a referendum on joining the euro may now be held after the next General Election, in three or four years time. The assessment on the Chancellor's five economic tests must be made by next June, but doubts are growing that Gordon Brown will be able to insist euro membership offers clear benefits to the UK. He is widely seen to be more reluctant than Tony Blair to rush into such a referendum.