The number of foreign direct investment (FDI) projects in the UK has declined to an 18-year low. In the financial year ending March 2025, 1,375 FDI projects landed in the UK, according to new information from the Department for Business and Trade. This is 12 per cent down from the previous year and the lowest since 2007-08. The number of new projects is down nearly 40 per cent from the peak in 2016-17. FDI in other European countries has also declined.
FDI is crucially important. Quite apart from the financial benefit, investment from overseas businesses into the UK promotes innovation, new commercial practices and boosts productivity.
We need to enhance the attractiveness of the UK as a place to do business. Encouragingly, the Government has committed to maintaining corporation tax at 25 per cent and announced plans in the new industrial strategy to begin to enhance skills and to address the UK’s electricity prices – the highest in the G7.
The Government can also maximise the appeal of the UK as a hub for game development. The recent commitments to boost support for the UK Games Fund and Games London are great moves. The Government should also examine TIGA’s proposals for enhancing the Video Games Expenditure Credit. TIGA has suggested that the Government could achieve this via an Independent Games Tax Credit (IGTC).
An IGTC could have a rate of 53 per cent on 80 per cent of qualifying costs, on budgets for games of up to £23.5 million, in line with the existing Independent Film Tax Credit.
Enhancing VGEC via an IGTC would help to keep the UK a leading location for game development globally, boost investment, including FDI, create highly skilled jobs and reinforce the growth of games clusters throughout the UK.
TIGA CEO Dr Richard Wilson OBE said: “Foreign direct investment plays a vital role in strengthening the UK economy, and it can also make an important contribution in high-growth, high-tech sectors including video games. To remain globally competitive, the UK must provide an attractive environment for investment and innovation. Enhancing the Video Games Expenditure Credit through an Independent Games Tax Credit, targeted specifically at studios with comparatively smaller budgets, would be a strategic way to achieve this. A tailored IGTC would stimulate inward investment, foster new IP development, and help ensure that the UK remains a world leader in games development. With global competition intensifying, now is the time to take bold steps to support one of our most creative and dynamic industries.”
