2016 A.T. Kearney Foreign Direct Investment Confidence Index® Finds Foreign Investors Likely to Reduce UK Investment Flows in the Event of Brexit

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May 25, 2016, 09:00 ET

WASHINGTON, May 25, 2016 /PRNewswire/ -- According to an annual survey of over 500 global business executives, a decision by British voters in the upcoming referendum to leave the European Union ("Brexit") would weaken foreign investor confidence in the UK.

Globally 71% of firms surveyed by management consultancy A.T. Kearney plan to increase their foreign direct investments ("FDI") in the next 3 years and only 20% to reduce them, a positive balance of 51%. This reflects general investor confidence, focused on developed markets, which drove global FDI flows in 2015 almost back to the levels seen before the 2008 financial crisis.

But the same firms would view a post-Brexit UK more critically: only 47% would increase and 31% would decrease their FDI into the UK. While still a positive balance (of 16%), this would be significantly lower than the global trend and diminishes the UK's recent position as a clear top five destination for FDI globally.

"Over the past 18 years, A.T. Kearney's research has consistently demonstrated that investors first and foremost want to invest in robust economies, with large internal or regional markets, and with lower political risk. Investors are anticipating that Brexit would diminish the economic fortunes of both the UK and the wider EU," said Paul A. Laudicina, Chairman of A.T. Kearney's Global Business Policy Council.

In the event of a Brexit, European firms say they would decrease their investment into the UK more sharply than firms based in other regions. Services firms—which include banks and financial services—would reduce FDI into the United Kingdom the most.

"Foreign investment is highly important for any economy, underpinning trade and productivity growth. The UK has traditionally been one of the top beneficiaries of investment into Europe, so it is troubling that one-third of global companies expect to scale back their UK investment plans in case of Brexit," commented Mark Page, UK Managing Director of A.T. Kearney.

Apart from the Brexit issue, the United Kingdom continues to score highly on the dimensions important to foreign investors. The United Kingdom had ranked third in the 2015 Index, but fell narrowly behind Canada and Germany into fifth place in 2016. However, the United Nations Conference on Trade and Development estimates that 2015 inward FDI levels were very close to 2014 levels of US$72 billion. For full survey results, please visit www.atkearney.com/gbpc/foreign-direct-investment-confidence-index.

About the 2016 Foreign Direct Investment Confidence Index^®

The 2016 A.T. Kearney Foreign Direct Investment (FDI) Confidence Index® is constructed using primary data from a proprietary survey administered to senior executives of the world's leading corporations. The survey was conducted in January 2016.

Respondents include C-level executives and regional and business leads. All companies participating in the survey have annual revenues of $500 million or more. The participating companies are headquartered in 27 different countries and span all sectors. The selection of countries from which to survey senior executives is based on data from the United Nations Conference on Trade and Development (UNCTAD), with the 27 countries represented in the FDI Confidence Index accounting for more than 90 percent of the source of global FDI flows in recent years. Service-sector firms account for 45 percent of respondents, while industrial firms account for about 35 percent and IT firms account for about 15 percent.

The Index is calculated as a weighted average of the number of high, medium, and low responses to the questions on the likelihood of making a direct investment in a market over the next three years. Index values are based on responses only from companies headquartered in foreign markets. For example, the Index value for the United States was calculated without responses from U.S.-headquartered investors. Higher Index values indicate more attractive investment targets.

FDI flow figures are the latest statistics available from the United Nations Conference on Trade and Development (UNCTAD), and all 2015 figures are estimates.

About A.T. Kearney
A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues.

To learn more about A.T. Kearney, please visit www.atkearney.com.