ey.com/attractiveness Companies are taking notice. Since the Brexit referendum, education, skills and talent may be constrained by restrictions on Alphabet has committed to a new headquarters at Kings Cross immigration and by the perception that the UK is less welcoming 14 to foreigners. More than 200,000 students from other European that will house 7,000 workers, up from 4,000 UK staff today. 15 countries study in the UK, 28% of all European mobile students, Apple committed to a new office for 1,400 and more in Battersea. Facebook and Amazon are also expanding in London, where and far ahead of Germany (17%), Austria (8%) and France (7%).17 Europe’s premier digital start-up cluster and ecosystem has sprung However, Cambridge University has reported that the number 16 up in the district of Shoreditch. of applications it has received from prospective EU students have dropped by 14% since the referendum. And the University’s However, some of the same strengths that underpin the UK’s vice-chancellors have warned that immigration restrictions could 18 attractiveness are more threatened by Brexit. For example, have “serious repercussions” for UK research. EY point of view An attractive future Our 2016 UK attractiveness survey, published in May 2016, confirmed areas for trade, which should form the basis for an integrated UK another strong year attracting FDI to the UK. It did, however, also attractiveness strategy: identify increased investor nervousness about the UK’s future 1. Developing a comprehensive approach to skills attractiveness, mainly concerning potential changes to its trade relationship with the EU. 2. Delivering improved infrastructure In response, we’ve updated our investor perceptions survey to compare 3. Signing trade deals to preserve and grow the UK’s market access the mood now with that before the referendum. The results of this, 4. Introducing incentives to encourage investment together with a detailed analysis of FDI in Europe over the last decade, provide the basis for our updated UK attractiveness report. 5. The creation of a digital platform The results are mixed. On the plus side, there is no sign of any All these initiatives should be developed at both national and city or region deterioration in investment intentions over the next 12 months. In fact, levels to ensure trade continues to support UK economic performance and there has been an improvement in short-term sentiment since our last that the benefits of FDI are felt across the whole economy. survey. This integrated strategy must be communicated to investors as soon as However, the medium-term outlook has worsened across a number of possible, with a focus on making certain they are aware of the UK’s vision metrics and investors are concerned about how the UK’s attractiveness for the economy beyond 2019. will develop over the next three years. The respite offered by the stable The current environment is challenging, but there are opportunities as immediate outlook offers the UK Government the chance to implement well as threats. The UK has the chance to move decisively and to position policies that will maintain and grow the UK’s longer-term attractiveness. itself for an attractive future. A sector strategy is essential for shaping the UK’s approach to FDI, and to trade more generally. Once sector priorities have been identified, Mark Gregory our discussions with investors indicate that there are five priority action Chief Economist, EY UK & Ireland 14 “Google commits to £1bn UK investment plan,” BBC website, http://www.bbc.com/news/ business-37988095, accessed 20 December 2016. 15 “Apple moves UK HQ to Battersea power station boiler room in London,” The Guardian website, 17 “EUA Brexit Factsheet: UK — European Research Collaboration and Student Mobility,” European https://www.theguardian.com/uk-news/2016/sep/28/apple-moves-british-hq-into-battersea-power- University Association website, http://www.eua.be/Libraries/publications-homepage-list/ station-boiler-room, accessed 19 December 2016. eua-brexit-factsheet-research-collaboration-and-student-mobility, accessed 8 December 2016. 16 “Facebook ‘likes’ Britain’s talent, to add jobs despite Brexit,” Reuters website, http://www.reuters. 18 “Cambridge warns of Brexit hit on EU student numbers,” Financial Times website, https:// www. com/article/us-facebook-britain-idUSKBN13G0VV, accessed 19 December 2016. ft.com/content/f4b1cd0a-bd68-11e6-8b45-b8b81dd5d080, accessed 19 December 2016. EY’s European attractiveness survey January 2017 15