UK companies are increasingly turning their backs on homeland investments as record oil prices, high interest rates and tough credit conditions prevail. As economic activity slows here “the global economic balance of power is shifting to the East” according to Confederation of British Industry director-general Richard Lambert.

According to research by Grant Thornton, offshore acquisitions by UK companies last year was £129.2 billion, more than double the £53.8 billion value of domestic M&A and triple the £43.6 billion spent abroad in 2006.

Head of M&A at Grant Thornton Corporate Finance, David Brooks, said: “On balance this international diversification of assets held by UK companies can be viewed as a positive development, as substantial UK investment of economies still enjoying growth rates of more than 5 per cent should offer substantial flow-back benefits.”

Lambert also found optimism but stressed the: “Absolute necessity of raising the national skills and knowledge base at every level.” He pointed out a number of reasons to be positive including householder equity locked away in their homes and said the Bank of England has been “doing a good job of managing inflation expectations.”