The Government yesterday said the UK was the top investment location in Europe as figures showed more than 800 projects by overseas companies last year created more than 25,000 jobs.

Manufacturing represented almost a third of the inward investment and 40 per cent of the jobs, showing the UK's success in advanced technology, said ministers.

In the past financial year, 811 investment projects were made by companies from 40 countries, an increase of 14 per cent on the previous year.

UK Trade and Investment, which helps overseas companies move to the UK, said there had been an increasing trend towards smaller projects. The report said the UK was the top investment location in Europe, particularly for research, development, software, electronics, pharmaceuticals, financial services and call centres.

Trade and Industry Secretary Patricia Hewitt said: "These figures demonstrate that the UK is a great place to do business.

"Whether in manufacturing, services or the sciences, the way to compete in the global marketplace is to keep improving people's education and skills.

"We should not fear the growth of other economies or seek to compete with low wage economies for low wage work."