UK is creative investment hub but needs support to grow

The UK is second only to the US as an international hub for investment in the creative industries, according to a new analysis of trends in investment trends over 10 years and also since COVID.

With a 9.3 per cent global share of Foreign Direct Investment (FDI) in creative industries in 2023, the UK's share was more than three times bigger than China's, estimates the report by the Creative Industries Policy & Evidence Centre (Creative PEC). The UK's share of creative industries FDI is also higher than its share of FDI projects across all industries (7 per cent)

However, the report's authors warn that the UK's FDI share and the absolute number of inward FDI projects involving the UK have both declined in recent years and suggest policies to support future UK creative investments will be needed. The report is part of the State of the Nations Series from the Creative PEC, which is led by Newcastle University with the RSA, and funded by the UKRI via the Arts and Humanities Research Council, and also provides detail on investments by region and creative sub-sector.

The UK has also traditionally been one of the principal nations for undertaking Outward FDI, by investing in overseas assets. During the 2013–2023 period, the UK again ranked second – after the USA – for creative OFDI by project count and UK creative FDI accounted for 11 per cent of all FDI leaving the UK in these years.

But the report states that the UK's "share of inward FDI has fallen from a peak of 12% in 2021, and absolute numbers of inward FDI projects have also fallen since 2019. There is a similar story for outward creative FDI. Against the backdrop of falling FDI flows for the overall UK economy, this decline suggests that initiatives for both attracting and generating creative FDI should be a priority for policymakers."

Successive UK governments have sought to increase investment to boost economic growth and the current government identified the creative industries as a key sector for investment and growth in its recent green paper Invest 2035: the UK’s modern industrial strategy.

From a policy standpoint, the Creative PEC report stresses the importance of continuing to attract inward creative FDI while supporting UK firms to expand internationally. Local and regional policy strategies are essential for attracting specific types of creative FDI, it says, with emphasis given to understanding and mapping regional capabilities.

Further analysis on FDI is recommended to understand the long-term impact of FDI on job creation, regional economies and creative industry clusters. More data on the size and value of creative FDI projects is also necessary to assess the broader economic impact, such as FDI spillovers. Research into the role of M&As in the creative sector and their effects on intellectual property and firm growth would also help shape future policy directions.

Download the full report

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