What are registered businesses?
Any reference to “businesses” in this analysis relates only to those businesses registered for VAT and/or PAYE in the UK. Some very small businesses (those without employees, and with turnover below the tax threshold) will therefore be excluded.
What is the UK Non-Financial Business Economy?
The UK Non-Financial Business Economy covers around two-thirds of the whole UK economy (when measured in terms of Gross Value Added). It includes the Production, Construction and Distribution sectors, some parts of the Service sector (excluding finance, public administration and defence, and publicly provided health and education) and some parts of Agriculture.
How do we measure the contribution of these businesses?
One measure that we use is approximate Gross Value Added at basic prices, or simply “value added”. This is a measure of income generated by individual businesses minus the costs of goods and services used to create the income.
For further information on the terms used in this analysis, please see the background notes (21.6 Kb Pdf) .
1. In 2012, just 1% of registered businesses in the UK Non-Financial Business Economy were foreign-owned, but these businesses contributed 29% of UK value added
So while only a small proportion of businesses were foreign-owned, they contributed almost a third of UK value added. This may partly be explained by factors such as their size and the industry sectors that they tend to operate in.
2. The number of foreign-owned businesses decreased between 2009 and 2012, but their contribution to UK value added increased
The 3% decrease in the number of foreign-owned businesses reflects a 10% fall in the number of foreign-owned micro-sized businesses (those with fewer than 10 people in employment). There was actually an increase in the number of small (10-49 people in employment), medium (50-249 people in employment) and large (at least 250 people in employment) foreign-owned businesses, which are likely to contribute more to UK value added.
In contrast, the number of UK-owned businesses increased by 2% over the same period, but their increase in value added was smaller than that for foreign-owned businesses at 7%.
3. Less than half of foreign-owned businesses were micro-sized in 2012
While foreign-owned businesses were less likely to be micro-sized (have fewer than 10 people in employment) than UK-owned businesses, they were also more likely to be large. In fact, 10% of foreign-owned businesses had at least 250 people in employment compared with 0.3% for UK-owned businesses.
4. In 2012, only 4% of foreign-owned businesses were in Construction compared with 13% of UK-owned businesses
The proportion of foreign-owned businesses in Construction was notably smaller than the proportion of UK-owned businesses. This may be related to business size, as the proportion of micro-sized businesses (those with fewer than 10 people in employment) in Construction is relatively large compared with other sectors, and we know that foreign-owned businesses are less likely to be micro-sized than UK-owned businesses.
5. A quarter of foreign-owned businesses were owned from within the USA in 2012
The USA, Germany and the Netherlands were the three countries where most foreign-owned businesses were owned from in 2012. However, in terms of continents, the majority (54%) of foreign-owned businesses were owned from within Europe, with around a third (33%) being owned from within North and South America.
For the data behind this analysis and a time series from 2009 to 2012, please see the data tables (180.5 Kb Excel sheet) .
All the estimates in this release are experimental. Users are asked to take this into account when interpreting the data.
Background notes can be found on the ONS web pages (21.6 Kb Pdf) .
This release is the second in a series of foreign-ownership analyses. The release for 2011 can be found on the ONS web pages.
We are considering the future of ABS foreign-ownership estimates, so please contact us to let us know if and how you are using them.
