Foreign investment in UK at record high last yr-DTI

LONDON, July 5 (Reuters) The number of foreign investment projects in Britain hit a record high in the last year, safeguarding nearly 56,000 jobs and creating over 34,000, a government report showed on Wednesday.

The Department for Trade and Industry said the number of inward investment projects in the UK rose to a record high of 1,220 in the 2005/06 fiscal year, a 14 percent improvement from a year ago.

The figures corroborate a report last month that showed Britain is the top destination for foreign direct investment in Europe.

The United States was by far the dominant source of investment in the UK, with 446 projects and 24,455 jobs, followed by Japan with 84 projects and 31,263 jobs.

''These figures are proof that the UK is a great place to do business and the best base from which to compete internationally,'' said Trade and Industry Secretary Alistair Darling.

And in a sign that the fast-growing emerging Asian economies are extending their reach, the number of projects financed by India shot up 111 percent to 76, making it the third-largest investor in the UK, generating nearly 4,000 jobs.

China invested in 27 projects in the last year, creating over 1,000 new jobs.

A breakdown of the data showed that while the number of new projects and expansions were steady compared with a year ago, the overall total was boosted by rise in the number of M&A deals to 375.

And most of the investment was centered on software, IT and e-commerce, although the pharmaceuticals, finance and automotives sectors also drew in strong foreign investment.

However, the increased focus on such knowledge-based industries which are not very labour-intensive meant that the number of new jobs generated fell by 14 percent on the year.

Reuters DH VP0457