UK leads Europe in high-tech investment from overseas

The UK continues to attract major international investment

The UK is the most attractive European country for foreign direct investment in the software and hardware technology sectors, and London remains the most popular destination within the country, according to a new report by Ernst & Young.

The European Attractiveness Survey (PDF) shows that the UK attracted 119 software projects during 2009, 49 in London alone, many more than Paris with 20 and Munich with 11.

The US was the chief instigator of deals coming to the UK, responsible for 55 new initiatives, but Germany, France, Sweden and the Netherlands also made significant investments in the UK.

On the hardware side, 17 major projects came to the UK, 12 in London, and the US was again the most active financier of new developments with eight of the projects.

Karl Havers, technology leader at Ernst & Young, explained that the UK is benefiting from a number of factors that help keep inward investment high.

"Historically many firms have come to the UK before expanding to the rest of Europe. We have a very flexible workforce, and being natural English speakers is a big benefit as it's the main business language of the world," he said.

"London and the south east are particularly popular locations due to the entrepreneurial spirit that exists in those areas and a number of big R&D and university sites."

However, Havers warned that the government needs to move quickly to make the tax environment in the UK more favourable for large corporations and individuals, as well as doing more to champion business acumen.

"The Conservatives have said they will make the tax situation more competitive, but they need to do so urgently as there are a lot of other countries hoping to entice exciting new technology companies, and the UK could lose out," he said.

"Moreover, we need to continue to invest and promote in young people a desire and excitement around business and innovation. It's vital for the future that entrepreneurial spirit remains a key part of our economy."