Summary: Initial disruption then business as usual
We could see a period of weaker foreign direct investment inflows as the United Kingdom’s new relationship, including the tariff structures, is renegotiated. But if (an admittedly uncertain “if”) Britain is able to obtain favourable terms, foreign direct investment would probably recoup this lost ground.
Consequently, concerns about a drying up of foreign direct investment if Britain votes to leave the European Union are somewhat overblown. Access to the single market is not the only reason that firms invest in Britain. Other advantages to investing here should ensure that foreign firms continue to want a foothold in the country. Accordingly, we still think that Britain would remain a haven for foreign direct investment flows even if it was outside the European Union.