Immigration changes may be chocking off inward investment

by Legal Author on September 11, 2012

Post by Sejal Karavdra Head of Immigration DBS law

Excessive and onerous changes made to UK Immigration laws are damaging economic growth according to an influential trade body. UK Trade and Investment (UKTI), the body that tries to woo businesses to the UK, has found that these changes may be preventing foreign companies from investing in the UK.

The ability of the UK to attract high value foreign direct investment is central for growth in the UK. The report goes on to warn that the harsh changes to the immigration laws are having a negative effect on the business environments

UKTI carried out a survey of foreign firms that were considering investing in the UK and found that 50% of these were concerned about the Immigration control in the UK. The report said: “These ‘front of mind’ concerns are usually near-term and have the prospect of impacting adversely on companies’ immediate business competitiveness and therefore the UK’s ability to attract investment.”

The firms are facing a number of practical difficulties,  including obtaining visa’s for important employees under Tier 2 of the points based system, especially in India, the necessity to raise salaries in some cases and the higher level of English that is now required.

Companies also cited rules governing intra-company transfers, which allow them to bring in their own employees from abroad. These problems included having to keep re-applying for visas and artificially inflating salaries to meet the threshold for them. The five-year limit for staff who transfer within firms “could have serious implications on business”, the report added.

Firms feel that these factors would have a major immediate impact on their businesses and therefore may consider investing elsewhere.

UKTI have stated that “The ability of the UK to attract high value foreign direct investment is central to the ability for growth in the UK.”

The government claims that they want to do all they can to assist growth in the UK, however the changes that they are making to immigration law appear to indicate that they are deterring people from even making an application.

The changes may have been introduced to benefit the economy by restricting immigration but this report suggests the opposite is true.

Legal Author

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  • ArgieBee

    The UK wants FDI to create jobs for people in the UK. Unfortunately it often does the opposite, and the figures used by UKTI are very unreliable i.e. they are based on estimates provided by the foreign investors.

    For example, Kraft took over Cadburys and UKTI reported 3,000 UK jobs safeguarded as a result of this FDI and the promises made by Kraft. Hundreds of jobs were lost within months and many more since then.

    The Fraser’s “investment” in Manchester United is another high profile example of FDI. which resulted in wealth being offshored and reduced taxes being paid in the UK. Why register MU in the Caymen Islands?

    However the worst “FDI” is connected with intra company transfer visas. Companies invest in projects in the UK and bring in their own cheaper workforce to do the work. It undermines British businesses that employ UK workers.

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