How did we mislay half a trillion pounds? Revised data from the Office for National Statistics has just reduced the UK’s ‘net international investment position’ from a surplus of £469 billion to a deficit of £22 billion. Downing Street dismissed this as ‘a technical revision’ — and in truth it’s not as bad it sounds, since what it tells us is that we own fewer foreign assets, and foreigners own more British assets, than had previously been recorded. Does national pride not attach to the idea that the rest of the world sees us as an investment safe haven? So why worry?
Well, past miscounting apart, actual current trends in this respect do not encourage optimism. Foreign direct investment by companies into the UK plunged from a £125 billion surplus in the first half of 2016 to a £25 billion deficit in the first half of this year. That makes a mockery of headlines in the spring about soaring 2016 FDI totals representing ‘a vote of confidence in Brexit Britain’: actually the full-year number (£254 billion, up from £33 billion in 2015) was boosted by multinational takeovers in the brewing and energy industries that had little to do with domestic economics, as well as commitments dating from before the referendum. Meanwhile, City sources say the appetite of global investors for gilts, other sterling bonds and UK shares has faltered markedly since the summer.
Of course — you might argue — there’s bound to be a lull before our top Brexit negotiating team gets it all sorted out and we soar into the global trading stratosphere. Or you might say thank goodness for doses of statistical reality, even when the ONS is merely correcting itself.
Subscribe to The Spectator today for a quality of argument not found in any other publication. Get more Spectator for less – just £12 for 12 issues.