Brexit: More than two million UK employees work for companies that are reliant on investment from the EU – The Independent
The figures underline the potential vulnerability of UK workers if we were to crash out of the EU single market and the customs union.
New “experimental” statistics from the ONS showed on Monday that in 2014 there were around four million UK jobs in companies which benefit from foreign direct investment (FDI) and of that total 2 million received the FDI from EU countries.
This was more than double the 779,000 jobs linked to FDI from the United States, the next biggest source.
Within the EU, the Netherlands was the biggest source country for FDI as measured by this employment metric, with 632,000 jobs, followed by Luxembourg (321,000), France (319,000) and Germany (271,000).
A company is considered to be in receipt of FDI if more than 10 per cent of its shares are held by a foreign-based investor. This applies to both private and publicly listed companies.
The ONS noted that not all EU FDI originates from the EU, with some British multinationals investing back into the UK via their EU subsidiaries and some US companies also investing in the UK via Europe.
Nevertheless, the integration of UK firms with the continent has intensified under the EU single market and customs union, which guarantees tariff-free trade and regulatory harmonisation.
Two million jobs linked to EU investment
Japanese companies, such as Nissan, were induced to invest in the UK in the 1980s specifically because of the promise of frictionless car sales into the rest of the EU and the tariff and customs free import of components from the single market area.
The CEBR think tank has previously estimated that 3.25 million UK jobs are directly and indirectly linked to EU trade.
The ONS has long collected data on UK firms in receipt of FDI, but this is the first time it has combined that information with data from its Annual Business Survey (ABS) to produce an estimate of UK jobs linked to FDI from different regions.
The total number of jobs covered by the ABS in 2014 was 22.9 million. And the total number of businesses covered was 2.1 million, which means 1.2 per cent were identified as being in receipt of FDI.
The ONS reported that overall FDI inflows by value in 2016 , the year of the Brexit vote, were little changed from the previous year, rising by £3bn to £55.7bn.
The statistics agency reported that in 2015 the UK had a total of £533.2bn worth of FDI liabilties from the EU and £550.9bn of FDI assets from there.
Both represent around 40 per cent of total FDI liabilities and assets (compared to a quarter for North America) emphasising Britain’s deep investment links with the Continent.
Separate statistics published by the Department for International Trade (DIT) last week showed new jobs created by foreign investment fell by 9 per cent in 2016.
However, the DIT also said the number of new inward investment projects rose 2 per cent to 2,265 in 2016-17.
City of London analysts say the more than 10 per cent fall in sterling since last June’s referendum has made many UK companies look more attractive for takeovers.
Last week the UK FTSE 100 payments firm Worldpay agreed a £9.1bn merger with US rival Vantiv.