How easy is Britain to back, build, and believe in?

MATCH OF THE DAY: INVESTMENT FREEDOM — Europe 2, Britain 1

Referee: Heritage Foundation: Investment Freedom Index

Brexit was sold as a way for Britain to escape what Boris Johnson called the “job-destroying coils of EU bureaucracy” and thrive on its own terms. Investment freedom is a fair test of that promise because it asks a simple question: can capital come in, own assets, expand businesses and take profits out again without too much political friction? Heritage’s investment-freedom methodology, which scores countries on foreign-ownership rules, sector limits, expropriation risk, exchange controls and capital controls shows Britain still has investment freedom, but not the post-Brexit premium it was promised.

SO WHAT'S THE PROBLEM?

Britain slips from 87 in 2012 to 82.75 by 2026. That is still better than the EU aggregate at 79.23 and better than Germany, France and Italy. But the latest Heritage 2026 index gives Britain an investment-freedom score of 70: respectable, level with Germany, ahead of France and Italy, but nowhere near a runaway winner. Worse, the real-world pull of the UK platform has weakened. PIIE says UK inward FDI as a share of GDP fell to its lowest level since the 1980s, while the ECB estimates Brexit reduced EU-UK FDI flows by around 4 per cent. The visible pattern is blunt: Britain remains open on paper, but less compelling in practice. Verdict: investable, yes; magnetic, no.

Why?

3 REASONS why Britain lost the investment freedom match to Europe

1) PLAN — sovereignty without a route-map

The first miss was strategic. Heritage argued in 2017 that Brexit gave Britain the chance to cut excessive regulation, lower tariffs and build a freer investment model. That opportunity was real. The machinery never quite was. Britain left the EU with sovereignty, but not with a fully worked, funded post-Brexit investment plan that clearly made it a more attractive production base than the market next door. Meanwhile Europe kept the larger route-map: scale, regulatory familiarity and, before Brexit bit, the advantages of seamless market access that made the UK such a powerful gateway. Britain won latitude. Europe kept the engine.

Plan score: UK 4/10, EU 7/10 — Freedom without a route-map is only freedom in theory.

2) POLICY — open enough, but no longer frictionless

On pure policy, Britain still does some things well. The US State Department’s 2025 Investment Climate Statement says the UK remains an attractive FDI destination and imposes few impediments to foreign ownership in most sectors. That is the good news. The less good news is that the National Security and Investment Act regime now covers 17 sensitive sectors, allows voluntary filings for certainty and gives ministers broad call-in powers. This is not French-style heavy screening or Italy’s sprawling Golden Power law, both of which are more interventionist. But neither is it the old British pitch of near-frictionless entry. Britain is freer than the continental interventionists, yet not clearly freer than Germany, whose ministry says outright restrictions are exceptional.

Policy score: UK 6/10, EU 5/10 — Still open to back, less easy to build through.

3) PERFORMANCE — the money no longer votes like it used to

The hardest evidence comes from outcomes. The ECB’s post-Brexit assessment says new barriers, the loss of passporting and business relocations pushed activity towards Dublin, Paris, Frankfurt, Amsterdam and Luxembourg. PIIE says Britain is no longer a leader among peers for inward FDI and that post-Brexit UK trade openness has fallen more sharply than in comparable advanced economies. This is the key distinction between rules and platform. Britain can still tell investors they are welcome. Europe can still offer many of them something larger: depth, access and fewer questions about where the market boundary really sits. Investors do not price legal openness alone. They price certainty, scale and direction.

Performance score: UK 3/10, EU 7/10 — The pitch is decent; the table is harsher.

FINAL WHISTLE — what this score really means

That is what the 2–1 scoreline means. Britain’s problem on investment freedom is that sovereignty did not become a stronger investment mechanism. The UK can still attract capital. The trouble is that Brexit removed one of its old advantages — easy access to the European market — faster than British governments built a new one. So Britain is still fairly easy to back, harder to build in, and hardest to believe in for the long haul. Belief needs a stable story about market size, rules and future direction, not just a claim that ministers are now free to choose.

If Britain wants to be treated as a platform rather than a punt, it needs more than nominal openness. It needs a visible growth machine: steadier industrial signals, fewer policy lurches, and a cleaner settlement with Europe that lowers practical friction even if Brexit itself is not reversed. Otherwise Britain will keep scoring as open enough on paper while losing the wider contest for mobile capital in practice.