Overseas investors shunning Britain

BRITAIN is facing a sharp fall in inward investment as overseas companies turn their backs on the UK, new figures show.

A study will reveal that Britain's dominance as the most powerful magnet in Europe for inward investment is being eroded.

The UK remains the favourite destination for companies investing in Europe. But a combination of a slowdown in the US, growing concerns over Britain's failing transport system and a neglected education system is putting off overseas investors, according to business consultant Ernst & Young.

Last year, there were 2,243 investment projects in Europe paid for by investors from elsewhere. Of those, 575 came to the UK, giving Britain a 26% share, according to Ernst. But after disastrous figures in the first half of the year, Britain's share of inward investment is bound to decline.

This year the number of new projects in the UK announced by foreign firms is expected to fall to about 470.

Ernst & Young's Mark Hughes said: 'It is clear that we will not achieve the 26% share of last year. We'll be lucky to get more than 21%.

'What I fear is that these figures are the beginning of a new trend. The UK's cost base is not as competitive as it was. Overseas companies are beginning to be put off by our poor productivity and appalling transport system.'

CBI director-general Digby Jones warned that more and more companies would bypass the UK because of our failing transport system and inadequate secondary education.

He said: 'Projects being announced now are the result of decisions taken three years ago. People thinking of investing over here are put off now by poor skills and the inadequate infrastructure.

'I fear that inevitably we will lose our edge in Europe and the statistics will prove me right over the next few years.'

Jones said that the Government had taken the correct decisions to invest hugely in roads and rail and tackle the primary education standards.

'But it will be years before we feel the impact of this,' investment,' he said.