The UK is becoming less attractive for foreign investment after Brexit
The country's position as the most attractive place in Europe for foreign investors is at risk in the long term without quick action from the government to secure confidence.
The EY Attractiveness Survey, which measures investor sentiment among the world's top business leaders, found short-term confidence in the UK as a place to invest is holding up.
A quarter said they intended to invest in the UK over the next 12 months, but the number who were positive about the UK's attractiveness over the next three years has slumped seven percentage points since May to 29 per cent, the lowest since 2004.
Read more: Weak sterling helps reel in foreign buyers for British firms
The percentage who expect it to get worse has doubled to 34 per cent in the same period.
“There is no sign of any immediate deterioration in foreign direct investment (FDI) intentions over the next 12 months, in fact there has been an improvement in short-term sentiment since May this year," said EY UK chairman Steve Varley.
"However, the medium-term outlook has worsened across a number of metrics and investors are concerned about how the UK’s attractiveness will develop over the next three years. The UK now has a window of opportunity to address their concerns and preserve future competitiveness.”
Investors in Asia were found to be the most positive about post-Brexit prospects in the UK, while Europeans the most pessimistic.
The US, China, Germany and France are the countries with which the UK should be prioritising trade deals after Brexit, according to business leaders.
Read more: Businesses are confident about the UK economy says survey
The biggest concerns among those surveyed is access to talent and skilled labour and EY is calling on the government for greater clarity on the areas which will be prioritised.
“The UK must act now to develop its vision across major economic powers to maintain and increase the UK’s attractiveness for a post-Brexit world, at a time when economic growth is holding up much better than many forecasters expected," said Varley.
“It will be vitally important to begin communicating this vision as soon as possible, so that investors have an idea of what to expect in the future. This should go some way to addressing the longer term concerns expressed by international investors. For the UK to reach its full trading potential in a post-Brexit world it would be wise to significantly invest in all of the Government capability that drives trade and investment.”