Foreign direct investment (FDI) plays a central role in sustaining the United Kingdom’s position as a global business hub. However, for non-UK companies to commit to significant long-term investment programmes a balanced combination of economic, regulatory, and political conditions is required. Sascha Blodau, General Manager of MERKUR UK, takes a look at the key issues which can encourage or deter investment in UK plc.
Regulatory Stability
Investors need assurance that long-term projects will not be subject to prolonged instability or rapid policy swings. Right up to Rishi Sunak’s decision to call a snap general election last summer the UK industry was preparing for a progressive and modern regulatory regime to support gaming entertainment businesses and their supply chains the length and breadth of the UK.
The delay to see all of the White Paper proposals across the line has been frustrating for many international investors.
Chancellor Rachel Reeves’ speech at the Labour Party Conference signalled the introduction of new gambling taxes and it remains to be seen where those taxes will land.
Companies need certainty that tax, trade, and regulatory policies will remain consistent over the life cycle of their investments. Frequent policy reversals or unclear direction reduce confidence significantly.
A Business-Friendly Government
Certainly, the outcomes of Rachel Reeves’ Autumn 2024 Budget put a huge burden on businesses across all sectors.
In gaming the inability to pass the increased costs on to customers meant that high street gaming operators had to absorb all the increases which came off the bottom line – creating significant structural harms to their enterprises.
Investors throughout the world will be monitoring the implications of November’s budget announcements extremely closely. A competitive corporate tax regime also remains an important condition.
Beyond headline tax rates investors prefer regimes that are not only competitive but also simple, transparent, and predictable.
There’s no doubt that uncertainty over future tax reforms will deter major commitments as investors avoid volatility.
A Healthy High Street
Iceland, Poundland and New Look are among the major retailers to have announced store closures in recent months contributing to the 100,000 retail jobs that have been lost in a year. Empty or boarded-up shops are simply killing the high street.
Anything that impacts visitation is extremely damaging for every single high street business.
A British Retail Consortium study showed that 56 per cent of Finance Directors representing over 9,000 stores said they were pessimistic about the future, with 38 per cent reducing investment and the same proportion reducing job numbers in-store.
Large stores not only account for hundreds of thousands of retail jobs, but they also play a vital role in attracting visitors to high street destinations.
MERKUR UK continues to invest in local communities and a large proportion of our new venues were previously not trading. We have every confidence in the long-term viability of UK town centres but we would also like to see a root and branch overhaul of business rates.
Unlike our bricks and mortar neighbours, high street gaming centres cannot increase their prices and it’s clear that the gaming entertainment sector would be disproportionately damaged by any increase in business rates.
Transport and Infrastructure
All high street businesses would welcome greater investment in local transport, specifically buses to enable people to access their local high street. Improved transport infrastructure creates a larger catchment area which in turn means the ability to engage with more potential customers.
Well-developed infrastructure is vital for operational efficiency. Non-UK companies are more likely to establish large-scale operations where transport and digital connectivity are reliable and modern.
Labour force availability
A key economic factor is the availability of a skilled, flexible workforce. The presence of a diverse labour market underpins investment attractiveness.
Investors want assurance that immigration policies will continue to enable access to global talent pools, especially in high-demand sectors such as leisure and hospitality.
Strong Domestic Demand
Businesses planning long-term investment want confidence that consumer demand will remain robust.
The foremost consideration for any international investor is confidence in the domestic economy which means avoidance of boom/bust policies and a commitment to grow the economy.
One of the stand-out characteristics of the broadly-based leisure and hospitality industry is that it is not subject to geographical restrictions. By growing hospitality, the Government can impact and reach all parts of the country in equal measure.
Legal
The UK’s established rule of law, independent judiciary, and respect for property rights remain strong comparative advantages. Maintaining high standards of corporate governance and compliance reinforces credibility. Political stability is also a decisive factor in securing long-term investment.
In need of a new rating system
Sascha Blodau said… “MERKUR UK continues to invest in local communities and a large proportion of our new venues were previously not trading. We have every confidence in the long-term viability of UK town centres but we would also like to see a root and branch overhaul of business rates……
