Boost for region as foreign investors flock after Covid
Investment from abroad growing at fastest rate in the UK
THE Midlands is proving more attractive to foreign investors than anywhere else in the UK. The region saw a strong performance for foreign direct investment (FDI) projects last year, according to new research.
The 2022 Attractiveness Survey, produced by financial services firm EY, said the West Midlands saw its number of FDI-backed projects growing at a faster rate than the rest of the UK.
The region welcomed 78 FDI projects in 2021, up 27.9 per cent from the 61 projects located in the region in 2020.
The West Midlands even improved on its immediate pre-pandemic performance, with only 64 projects taking place in 2019.
By comparison, UK project numbers grew just 1.8 per cent from 975 in 2020 to 993 in 2021.
The leading location for FDI was, unsurprisingly, Birmingham with 17 projects, making it the sixth highest number for a city outside of London, while Warwick was a stand-out location in the country as a whole with growth in the digital sector boosting projects from two in 2020 to 12 in 2021.
Coventry, with six projects, was the third location from the region in the UK top 20.
The performance means the West Midlands has overtaken the North West as the home of the most FDI projects outside London, the South East and Scotland.
It had a 7.9 per cent share of all UK projects in 2021, up from 5.8 per cent in 2019, and the key sectors were digital technology (21 projects), machinery and equipment (13), and business services (eight).
The East Midlands showed similar progress with 39 projects in 2021, up by 2.6 per cent from the 38 projects in 2020 and the same number of projects as 2019. Its key sectors were transportation and logistics, agri-food and machinery and equipment.
Simon O’Neill, EY’s office managing partner at EY in the Midlands, said: “The Midlands has been a UK FDI success story in 2021, with both the west and east bouncing back from the impact of the pandemic on inward investment or, in the case of the West Midlands, charging ahead of where things were before the pandemic started.
“The two regions’ successes have been built on a diverse mix of sectors whether it’s digital technology in the West Midlands or logistics in the East Midlands.
“Looking ahead, there are reasons for optimism.
“Across Europe, there is a swing towards investment in manufacturing, a sector in which the Midlands has historically excelled.
“Combined with the growing importance of ‘cleantech’, the Midlands has an opportunity to establish itself as a European centre for developing and building the green technologies needed for the UK to reach its net zero targets.
“Notably, manufacturing projects tend to bring investment to towns rather than cities which means they can help levelling up within regions, not just between them.
“One thing which is consistently very clear from investors is that the strength of local business networks matters when they’re choosing where to site their projects within a country.
“Local skills and infrastructure, support from regional development bodies and access to regional grants are also part of the mix too, reinforcing the importance of devolving power and fostering local ecosystems. Building a unique sense of place from its economy will help the West and East Midlands build their attractiveness to investors.”
There are reasons for optimism. There is a swing towards investment in manufacturing, in which the Midlands has excelled.