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22 April, 2022

How has Covid-19 impacted the FDI relationship between the UK and the UAE?

Covid-19 caused FDI levels to plummet in 2020 before a recovery in 2021, but did the relationship between the UK and the UAE follow this pattern?

By Glenn Barklie

In 2020, the UK received 804 greenfield foreign direct investment (FDI) projects, while there were 336 projects recorded into the United Arab Emirates (UAE), according to GlobalData’s FDI Projects Database. 

The number of projects into the UK fell sharply, decreasing by 23% from 2019. During the same period, the number of greenfield FDI projects into the UAE also fell but by a smaller percentage (14%). 

UK outbound FDI into the UAE

UK-based companies created 49 projects in the UAE in 2020. This represented a 22.2% decrease compared with 2019. 

Nominally, UK-based companies primarily invested in the software and IT services, business and professional services, and tourism sectors in the UAE. Combined, these three sectors accounted for 55% of total UK outbound FDI projects destined for the UAE in 2020. 

Top UK-based investors in the UAE included InterContinental Hotels Group and HSBC. Combined, they accounted for 10% of total project flows in 2019–20. 

In terms of total UK outbound FDI projects, the UAE ranked as the seventh-largest recipient country in 2020. It was also the seventh-largest recipient in 2019. 

UK-based companies primarily established operations in Dubai. In fact, 71% of projects into the UAE by UK companies were located there in 2020. Abu Dhabi and Ras Al Khaimah were the next most popular subnational destinations.

UAE outbound FDI into the UK

UAE-based companies created 12 projects in the UK in 2020. The number of projects increased by 9.1% compared with 2019. 

Business and professional services and logistics were the top sectors in which UAE companies were investing in the UK. Combined, these sectors accounted for two-thirds of total UAE outbound FDI projects destined for the UK in 2020. 

Top UAE-based investors in the UK included the GAC Group, Gulf Agency and Q Communications. Combined, these companies accounted for 35% of the total number of UAE-headquartered projects established in the UK in 2019–20. 

The UK ranked as the second-largest recipient country of UAE outbound FDI in 2020. It was the fifth-largest recipient in 2019. 

UAE-based companies primarily established operations in London. In 2020, 50% of all UAE outbound projects destined for the UK were created in London. The North West was the next most popular subnational destination. 

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