Record year for overseas investment into East Midlands
The East Midlands secured a record 44 foreign direct investment (FDI) projects in 2016; 65% of which were first time investments in the region from international investors.
This follows a landmark year in 2015 when a surge in FDI saw 37 projects locating in the region and the second highest number recorded in a decade.
Some 48% of all FDI projects in the East Midlands region were announced before the EU Referendum vote in June 2016, with 52% announced after this date.
Nottingham continued to dominate the region in terms of attracting FDI by securing seven projects in 2016, up from four in 2015. Derby closely followed with five projects. Strong growth was reported in the East Midlands in the manufacturing sector, with 48% of projects (21).
Sara Fowler, senior partner at EY in the Midlands said: “2016 was an outstanding year for inward investment, with the East Midlands attracting nearly 20% more FDI projects than in 2015. The implementation of the Midlands Engine strategy should serve to attract more businesses and skilled people to the region, which in turn will boost employment and productivity, and ensure the region remains attractive, competitive and connected.”
The majority of investment in the East Midlands originated from Europe, with 24 projects coming from European countries. On an individual country basis, the USA was the biggest investor in the East Midlands with 14 projects, followed by Germany with 10. In total, the FDI secured in the East Midlands was generated from 17 different countries across the globe.
London remained the UK’s dominant location for FDI, followed by Scotland, which maintained its second place. The ‘super regions’, the Midlands Engine and the Northern Powerhouse, continued to do well attracting roughly double the number of projects they secured at the beginning of the last decade.
Fowler added: “Overall, the regional FDI figures for 2016 suggest that the strong ‘super regions’ are thriving whilst more geographically peripheral regions – for instance Wales, the North East, North West and South West of England – are slipping behind. Finding ways to share the benefits of FDI more evenly across the country is a critical challenge that future policy needs to address.”
According to EY’s latest annual Attractiveness Report, in 2016 the majority of UK regions saw an increase in projects, with just four seeing a decline when compared with the previous year: Wales, North East, North West and the South West. However, investors predict a decline in the UK’s future attractiveness as a destination for foreign investment.
Global investors had mixed views when asked about the future attractiveness of the UK. 32% of respondents, surveyed between March and April 2017, say they expect the UK’s attractiveness to FDI to improve over the coming three years, while 31% expect it to decline. Both figures are significantly worse than recorded long-term averages of 53% and 8% respectively. In fact, since March 2016 the share of investors with a negative view of the UK’s medium term prospects for FDI have almost doubled.
Fowler said: “The research suggests that the EU Referendum vote and its aftermath may be having an influence on global perceptions of the UK’s medium to long-term attractiveness. Western European investors are twice as negative as Asian and North American investors.
“Decisions on the majority of investments made in 2016 would have been made up to three years ago, which helps to explain the UK’s solid performance last year, but signs of a slowdown are on the horizon.”
Some 9% of investors surveyed said leaving the European Single Market will prompt them to change their investment plans or re-locate from the UK to Europe in the next three years.
