The Midlands Engine region has recorded its highest number of foreign direct investment (FDI) projects in the past decade.
The Midlands Engine region has recorded its highest number of foreign direct investment (FDI) projects in the past decade, with an 8% increase in 2017 compared to the previous year – up from 130 to 140. According to EY’s 2018 UK Attractiveness Survey, the Midlands Engine lags behind London (459 projects), the Northern Powerhouse (235 projects) and the southern region of England (203 projects), but is ahead of Scotland (116 projects).
However, when comparing employment statistics, the Midlands Engine region secured the second highest number of jobs created from these FDI investments (10,606 jobs) behind the Northern Powerhouse (14,158 jobs) – but ahead of London (8,552).
The number of jobs secured as a result of FDI investments in the Midlands in 2017 has seen an increase of 18% compared to the previous year (up from 8,990 to 10,606) and marks the highest number of jobs secured in the region in a year over the last decade. The region has increased the number of jobs secured in each of the last four years.
Nottingham was within the top 20 most attractive locations to investors in the UK, sharing its 20th place with six other locations, recording six projects after just one project was recorded in 2016.
The largest number of projects investing in the Midlands Engine region, by activity type, were in sales and marketing, with 50 projects attracted to the region, representing 36% of the total number of investment projects in 2017 (up from 32% in 2016).
The second largest number of projects were created in manufacturing, with 48 projects – the highest number of such investments recorded in the decade (and up 55% on 2016).
In the UK as a whole, the sector that generated the largest number of projects was digital. In the Midlands, digital projects saw a 36% increase in 2017 compared to the previous year with 15 projects in 2017.
Simon O’Neill, Managing Partner at EY in the Midlands, comments: “The Midlands Engine vision for growth is attractive on the international stage and it’s positive that we are seeing it translate into record levels of investment across a broad spectrum of sectors and importantly creating jobs.
“Although projects recorded in Birmingham were down 34% year on year in 2017, the city still ranks in fourth position in the top 20 inward investment locations in the UK. The fact that Coventry, Solihull and Nottingham also make the top 20 as significant locations attracting serious inward investment is also major cause for celebration.
“The economic benefits from hosting high profile events – such as Birmingham’s hosting of the Commonwealth Games in 2022 and Coventry set to be the UK’s City of Culture in 2021 – should not be underestimated. They will firmly put the spotlight on this region and I hope will be a catalyst for further inward investment.”
Fiona Piercy, Midlands Engine Programme Director added: “We welcome the news of record investment and job creation in the Midlands and our unique partnership is working to put robust plans in place that will bolster this performance further to create a better and more balanced economy.
“The Midlands Engine Vision for Growth sets out priority areas for investment in infrastructure, trade and investment, innovation and enterprise that will enable the Midlands to add over £50 billion to the Midlands and UK economy by 2030, helping drive Britain’s Post-Brexit economic growth.”
The UK remains the number one destination for FDI in Europe, ahead of Germany and France, despite a decline in sentiment from foreign investors towards the UK as a place to invest. The UK attracted 1,205 FDI projects in 2017, a 6% increase when compared to 2016 (1,138).
Investors expressed clear concerns surrounding Brexit, which contributed to the UK’s waning attractiveness and a decline in FDI projects in certain sectors, including, financial services, business services and logistics. A 22% increase in digital investments into the UK helped to cushion the hit and push the UK into growth territory.
According to the report, there was a marked increase in UK outbound investment by 35% in 2017 to a new high. 110 of those investments went into Germany and 79 to France, as UK businesses appear to be accelerating their activity to position themselves for a post Brexit environment.
Simon O’Neill concludes: “The UK’s FDI performance shows an economy in transition, influenced by uncertainty from Brexit and the force of technological change. In 2017 a swell of digital projects flowed into Europe, changing the shape of FDI and bringing new dynamic businesses to the continent. Digital projects increased by 33% across Europe – three times the rate of overall market growth – and 36% in the Midlands, but only 22% across the UK as a whole.
“At a time when investor sentiment towards the UK as an attractive destination is impacted by Brexit, opportunity arises in the shape of digital. A renewed focus on digital skills, infrastructure, and investment in research and development will help to shape the UK as an attractive environment, to maintain its competitiveness in a post-Brexit world.”