HC Deb 08 November 1973 vol 863 cc252-3W
Mr. Deakins

asked the Secretary of State for Trade and Industry if he will list the benefits to the United Kingdom of inward and outward investment, respectively; and if he will quantify them for the most recent year for which figures are available.

Sir G. Howe

Inward investment can benefit the balance of payments, expand production of goods which might otherwise not be made here, create employment and contribute to regional development. It can lead to access to new technology and to increased exports, or import substitution.

Outward investment can create trade opportunities in new markets or can increase or maintain existing markets. It can secure access to vital raw materials. It can make British know-how and equipment better known and can benefit developing countries. It can generate invisible earnings, directly through profit remittances, or through an increased use of shipping, freight and insurance services.

There may be other benefits in particular cases. Not all benefits are quantifiable and there may be offsetting disbenefits. The recent Steuer Report concludes that inward direct investment in the United Kingdom has on balance (i) resulted in a real increment of about 2 per cent. per annum in the national income and hence in the real income per head of population; and (ii) benefited the balance of payments by up to 10 per cent. of the output of foreign-owned firms. The 1970–71 figures show that affiliates of overseas companies in the United Kingdom exported just over a quarter of our total exports. Exports by United Kingdom companies to related companies overseas also accounted for about a quarter of our total exports during that period.

The latest available figures for United Kingdom receipts associated with inward and outward investment flows are:

£ m
Inward direct investment, including oil and insurance (1972) 343
Earnings from United Kingdom outward direct investment, excluding oil (1972) 814
Receipts of royalties from related concerns overseas (1971) 43
Receipts from services rendered to related concerns overseas (1971) 74