The North West has jumped two places in the UK rankings for Foreign Direct Investment projects. EY’s latest UK Attractiveness Survey, which was published on June 19 2023, has revealed that the region has jumped from fifth place in 2021, to third place in 2022.
The survey reveals that the North West attracted 88 FDI projects in 2022, up 19% from a total of 74 the year before. Meanwhile, overall UK projects fell by 6%, from 993 to 929. Only London (299) and Scotland (126) attracted more FDI projects than the Northwest in 2022.
While the UK as a whole saw projects in Digital Technology fall by almost a quarter, the North West bucked this trend, with Digital Technology projects in the region up by 25% year-on-year.
The region’s strong performance in 2022 was also underpinned by significant growth in project numbers for the Electronics & IT and Finance sectors, while Sales and Business Services, Manufacturing and Research & Development were the North West’s most prominent FDI activities.
The North West’s share of all UK projects increased to 9.5%, surpassing its recent peak of 8.7% in 2020.
Excluding London, Manchester attracted more FDI projects than any other UK city in 2022 with a total of 45, up from 31 in 2021.
Stephen Church, EY’s North market leader, said: “The North West delivered a strong FDI performance in 2022, cementing its place as one of the most attractive regions for foreign investment in the UK.
“The increase in digital tech projects in the region, amid a nationwide decline in project numbers, is particularly notable.
“This growth aligns with the continuing appetite our transactions teams in the North have seen for investment into digital technologies and capabilities in the Mergers and Acquisitions market in recent months.
“The North West’s diverse sector mix also played a key role in 2022’s performance, with growth supported by significant year-on-year gains in the Finance and Transportation Manufacture and Supply sectors.
“The excellent results across the North also demonstrate how regional and local leaders can help create business-friendly environments that align with an area’s specific strengths, challenges and needs.
“By empowering local areas to make decisions and implement policies that both support and encourage inward investment, the UK can take further advantage of its regional strengths and unique selling points to attract diverse investment opportunities.”
Of England’s nine regions, respondents ranked the North West as the fourth most likely destination for planned FDI projects, with 5% saying they were planning to expand or establish operations in the region, compared with 43% for top-ranked London. The East of England and Yorkshire and the Humber were just ahead of the North West on 6%.
The region’s top three sectors (Digital Technology, Finance and Electronics and IT) contributed a combined total of 32 FDI projects in 2022, with a total combined growth of 11 extra projects year-on-year.
Digital Technology was the North West’s frontrunner, accounting for 20 projects, up from 16 in 2021. Meanwhile the Electronics and IT and Finance sectors were joint second, accounting for six projects each.
Sales and Marketing was the top activity driving the North West’s FDI projects in 2022, with 41 projects, followed by manufacturing on 19 – up from 12 last year. Research & Development was the third most common activity in 2022, with 14 projects, up from 11 in 2021.
Despite encouraging growth in project numbers, the region had the third lowest number of jobs per project in England at 42 – although this was well ahead of London’s 32 jobs per project.
Nationally, more than half of the UK’s nations and regions attracted more Foreign Direct Investment (FDI) projects in 2022 than they did in 2021. The UK hosted 929 FDI-backed projects in 2022, the second highest project total in Europe, albeit down 6.4% from 993 projects in 2021.
London (299 projects) was still home to the most FDI projects out of any UK nation or region in 2022, but its share of all UK projects has fallen to 32% from a high of 49% in 2019.
Scotland (126 projects), the North West (88) and West Midlands (74) recorded the most projects outside London, while the biggest gains in England from 2021 were seen in the North East (33%), Yorkshire and the Humber (28%) and the East Midlands (23%).
The strong results across the North – all three regions saw double-digit growth – were underpinned by resilience in the digital sector and growth across a range of key activities, including manufacturing, sales, research and development, logistics, and headquarters projects.
Meanwhile, declines in the digital sector were the biggest drag on performance for the South of England. Digital projects in London almost halved, from 194 in 2021 to 107 in 2022, with significant falls also seen in the South East and South West. Despite this, the UK still led Europe for tech FDI.
Across Europe, France held onto top spot for total project numbers for a fourth consecutive year, although the UK once again ranked highest in Europe for new projects and continued to deliver more total jobs and jobs per project than Germany and France – trends consistent with the UK’s pivot in strategy to focus on value over volume when attracting FDI.
Hywel Ball, EY’s UK chair, said: “The strong FDI performance of Scotland, Wales and England’s regions in 2022 is a clear success for the UK.
“Notably, when asked to identify the policy area in which improvements would most increase the UK’s attractiveness, the investors we surveyed were most likely to pick the geographic rebalancing of the UK economy. While London’s attractiveness will endure, despite ups and downs, policymakers need to build on the clear interest in investment outside the capital.”