FDI boosts productivity of UK firms

According to the ONS – the UK’s Office for National Statistics – UK companies that get foreign investment are twice as productive as other firms

FDI – Foreign Direct Investment – comprises not just foreign cash injections but also foreign best practices and foreign management

One has only to consider the success of foreign car-makers within UK shores – Nissan, Honda, Toyota, BMW for example

Long gone are the days of ‘Red Robbo’, perpetual strikes and poor quality of cars at British Leyland – aka the ‘British Disease’

Since then, British owned car manufacturers have nearly disappeared – happily, to be replaced by foreign owned companies who have established themselves as world-beaters – even better than the Japanese at home

And this has all been achieved using the same labour-force pool as was available to British Leyland et alia

Hence, it was British management and their ignorance of Best Practices – working methods, use of robotics, employee training and employment packages for example – that failed the whole UK car sector, not the workers

The ONS claims that ‘UK output per worker’ has flat-lined since the financial crisis of 2008

And pessimists say Brexit will make matters worse for the UK by discouraging overseas investors that bring productivity-enhancing innovation, skills and technology

We disagree, however

First, ONS productivity statistics must be taken with several pinches of salt if they are to have any credibility at all – and, in this case, one wonders how they define ‘UK companies’ versus ‘other firms’ e.g. what sectors covered, what size and number of firms sampled?

Second, given the UK’s many strengths quite apart from Brexit negotiations still being ongoing, it is not clear whether the UK will be seen as an attractive place for future FDI investments, or not

Last, given the economies of virtually all the 27 member nations of the EU (excluding Germany and France) could best be described as ‘basket cases’ – to quote Nigel Lawson, ex Chancellor of the UK Exchequer – there’s unlikely to be much competition from that quarter

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