In recent years the British government has spent substantial sums in order to attract foreign multiinationals to the UK. Amongst other things this has been motivated by the possibility that foreign multinationals bring with them new technologies which may "spill over" to the economy. The present paper discusses the evidence on productivity spillovers in the UK and provides further results. While the international evidence on productivity spillovers is far from conclusive on whether or not these benefits actually accrue to domestic firms, recent evidence based on micro level data for the UK is quite encouraging. Our empirical analysis, based on OneSource for the period 1988 to 1996, is in line with that evidence. However, spillovers depend on the market orientation of FDI, with export oriented FDI being more likely to generate positive spillovers, while domestic market oriented FDI seems to crowd out domestic firms and reduce their productivity. Also, the export orientation of domestic firms matters, in general, exporters appear to benefit most from spillovers than non-exporters.