Inward investment into Britain jumped by 31 per cent last year, official figures revealed.
A record 1,066 projects created 39,592 jobs, according to the Department for Trade and Industry.
That was up from 25,463 jobs created by 811 investment projects the previous year.
Trade Secretary Alan Johnson said international comparisons showed the UK was Europe's top investment destination.
The figures come as Tony Blair was calling for EU economic reform away from agricultural subsidies and towards development coupled with freer job markets.
Mr Johnson said: "The UK is still viewed globally as one of the best places in the world to do business thanks to our unrivalled economic performance, emphasis on research and technology and skilled, flexible workforce."
Research and development projects were up 22 per cent to 101, while pharmaceuticals and biotechnology increased 38 per cent to 80 and there was a 61 per cent rise in IT and software projects to 240.
The boom showed claims that a rising tax burden and staying out of the euro would mean Britain struggled to win investment were incorrect, according to Mr Johnson.
"The predictions of the death knell for inward investment in the UK have been proved wrong," he said.
New EU countries from eastern Europe are putting up a fierce fight for investment but are not competing "headto-head" with Britain, officials said.
Services make up the largest area of investment projects, followed by manufacturing.
The US accounts for the lion's share of inward investment, 43 per cent, with 464 projects bringing 17,730 jobs.
However, another 38 countries also set up projects in Britain including emerging economies China and India.
The South-east attracted most jobs, with 5,379 people being hired by foreign companies.
Foreign Secretary Jack Straw said the Government was "ambitious for Britain and are determined to seize the opportunities of the new global economy".
He said: "Inward investors recognise we've taken a lead in deregulating and opening up markets to international competition.
"Our openness to investment and commitment to free trade are essential for our continuing prosperity."