The recent announcement by the U.S. Secretary of Commerce Penny Pritzker that the Department of Commerce will host the third SelectUSA Investment Summit on 19-21 June 2016 in Washington, DC is a firm signal that the United States remains “Open for business” – a statement which embodies President Barack Obama’s strategy for the sustained rebuilding of the United States economy by generating growth and jobs.
SHINING LIGHT: THE UNITED STATES AND UNITED KINGDOM’S UNIQUE RELATIONSHIP
The enduring transatlantic partnership between the United Kingdom and the United States remains a distinctive conduit for facilitating mutual trade and investment flows. The relationship is a shining light in a complex, global economic arena, which is populated with a myriad of bilateral and regional trade agreements – toolkits for generating national growth and prosperity. The experienced team of commercial and SelectUSA specialists in the U.S. Commercial Service offices in the US embassies in the UK and Ireland, together with their partners, supporters and associates are the fulcrum for delivering efficient trade and investment services across all industries and sectors.
Foreign direct investment (FDI) between the UK and the US has developed over time and remains robust. At the end of 2014, cumulative outward direct investment from the US into the UK hit $587.9 billion, an increase of 2% over 2013’s position. Direct investment from UK into the US reached $448.5 billion at the end of 2014, a fall of 10.5% from 2013(1). According to the latest UN’s World Investment Report, the 2014 inflow decline is largely attributed to Vodafone’s $130 billion disinvestment of its stake in Verizon Wireless, “without which flows into the United States would have remained stable”. The UK remains the No.1 source for US FDI, accounting for a 15.5% share of total FDI stock followed by Japan with 12.9%.
UNITED KINGDOM IN EUROPE – WHAT NOW?
The performance of the UK economy and the strategic decisions of executives of small and medium-sized enterprises, large corporations, publically listed companies, as well as of founders of tech start-ups who are expanding to the United States, will be framed by the ongoing regional policy issues circulating in the European Union. High on the agenda is the United Kingdom’s future membership of the EU.
Further, the ongoing negotiations of the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union are gathering pace. The dialogue on TTIP’s potential impact on business and society is expected to intensify in the final stages of negotiations. President Obama’s position is clear:
“ Having the UK in the EU gives us much greater confidence about the strength of the transatlantic union, and is part of the cornerstone of the institutions built after (the Second World War) that has made the world safer and more prosperous. We want to make sure that the United Kingdom continues to have that influence”(2)
U.S. PRESIDENT BARACK OBAMA
CONFIDENCE IN THE UNITED STATES ECONOMY
Business leaders are buoyant about the US economy. A.T. Kearney’s 2015 Foreign Direct Investment Confidence Index – ‘a forward looking ranking and analysis of how political, economic, and regulatory changes will likely affect a country’s FDI inflows’ – provides critical insights on the medium-term economic outlook for key markets around the world. For the third year in succession, the United States tops the index, leading second- place China, which shrank from last year’s record-setting margin. Forty six per cent of the executives surveyed, disclosed a greater optimism about the US economic position than a year ago, with only 10% more pessimistic.
The US economy’s incremental return to growth is a notable factor for executives developing strategic plans for investment and expansion in the US. The A.T. Kearney Index sheds further light on why the US continues to be the world-leading destination for foreign direct investment. The table below is revealing. It identifies market size; good regulatory factors that make doing business easy; lack of corruption; a general secure environment; a talented and skilled workforce; high-quality infrastructure; government incentives; and favourable tax rates as high priorities(3).
SELECTUSA: SHOWCASING THE UNITED STATES AS THE WORLD’S PREMIER BUSINESS LOCATION
The SelectUSA programme in the UK and Ireland is actively engaging with investor firms that are exploring US expansion. The programme is responding to the growing appetite of UK companies seeking to capture a share of the vast consumer spending power, access to a sophisticated capital market and an adventurous venture capital landscape.
In 2014, average expenditures per consumer unit(4) were $53,495, a 4.7% increase from 2013 levels, according to the U.S. Bureau of Labor Statistics. In 2013, spending decreased 0.7%(5).
SelectUSA is positioned to support companies at any stage of their US plans, including UK firms with existing US operations further expanding across the US, as well as those utilising their US entities to export to third-country markets.
In addition, SelectUSA continues to work closely with the economic development organisations (EDOs) of each state, region and county to ensure investor firms are efficiently connected to local contacts and tap into business opportunities and state-defined incentive programmes. Indeed, while SelectUSA is geographically neutral in its services, EDOs remain highly proactive in targeting the UK and European firm to win foreign direct investments. The SelectUSA’s UK team in the Embassy’s U.S. Commercial Service is focused on adding value to both investors and EDOs, always with the objective of creating growth and jobs in the United States.
As a US federal government initiative, SelectUSA is fast becoming the go-to point of contact for UK companies to gather quality information and support as they build their market entry strategies.
In 2014 the U.S. Commercial Service piloted a series of investor ready roadshows in London, Edinburgh and Belfast, under the banner of “SelectUSATech”, aimed at UK start-ups, technology and digital firms eager to explore the investment opportunity to scale up their companies in to the United States. The seminar series delivered practical information, which any savvy tech founder would need to comprehend about the US business environment: legal, tax, accounting, insurance, visa/immigration and finance. The @SelectUSATech engagement continues to grow in the UK and Ireland, expanding to an inaugural SelectUSA Financial Technology (FinTech) delegation to Washington DC, New York City and Boston in November 2015, led by US Ambassador, Matthew Barzun. The SelectUSATech seminar series are set to return in 2016.
2016 will be marked by inevitable changes in both the United Kingdom and the United States. Leaders will come and go; measurements of market and economic performances will rise and fall; and trade and investment transactions will ebb and flow according to vagaries of policies, agreements and regulations. As time transitions into 2016, one prediction is a fair certainty: the enduring bond between the United States and the United Kingdom will continue, and it is the ambition of the SelectUSA team in the UK, Ireland and US to be best positioned to facilitate the long term trade and investment links towards the creation of economic growth and jobs.
1 U.S. Bureau of Economic Analysis. Overview U.S. International Trade in Goods and Services http://www.bea.gov/international/factsheet/factsheet.cfm?Area=327 (assessed October 18, 2015)
2 BBC North America editor, Jon Sopel interview with President Barack Obama, 24 July, 2015 http://www.bbc.co.uk/news/uk-politics-33647154 (accessed October 18, 2015)
3 A.T. Kearney Foreign Direct Investment Confidence Index®, 2015, Connected Risks: Investing in a Divergent World https://www.atkearney.com/research-studies/foreign-direct-investment-confidence-index/2015/publication
4 Consumer units include families, single persons living alone or sharing a household with others but who are financially independent, or two or more persons living together who share expenses.
5 Bureau of Labor Statistic, U.S. Department of Labor, Consumer Expenditures – 2014, New Release, Thursday, September 3, 2015 Ref:USDL-15-1696 http://www.bls.gov/news.release/pdf/cesan.pdf (accessed October 25, 2015)
Established by Executive Order of the President, SelectUSA is a government-wide initiative to promote business investment in the United States by both domestic and foreign firms.
To learn more, visit www.SelectUSA.gov.