North West matches pre-pandemic FDI performance
The North West matched its pre-pandemic levels of Foreign Direct Investment (FDI) in 2021, with 74 projects hosted in the region.
According to the 2022 EY Attractiveness Survey, the 2021 performance was one up on the 73 projects delivered in 2019, although down on 2020’s 85 projects.
This left the North West’s share of the UK FDI market at 7.5% – down from 8.7% in 2020, but above the 6.6% share in 2019 and 2018, and still the fifth highest share for the region in the past decade.
Excluding London, the North West had the third highest number of projects in 2021 out of any English region, behind only the South East (82 projects) and the West Midlands (78).
Meanwhile, Manchester shared the spoils with Edinburgh as the top FDI location outside of London, with both cities hosting 31 projects. Warrington also featured in the top-20 UK locations outside of London, with five projects.
Despite the decline in overall project number of FDI projects, the North West did see some improvements in key sectors and investment activities. Digital technology remained the region’s leading sector in 2021, with 16 projects, while health, life sciences and social work was responsible for nine – up from four in 2020, one in 2018 and none in 2017. Transportation and logistics projects increased from one project in 2020 to seven in 2021.
For the first time, business services was the key activity in the North West (28 projects), followed by sales and marketing and manufacturing (both 12 projects), and Research & Development (11). R&D projects in the North West were at their highest level in the last decade, while the region’s share of all UK R&D projects rose from 7.9% in 2020 to 9.9% in 2021.
Stephen Church, North market leader and Manchester office managing partner, says: “The North West – and the North as a whole – had a challenging year for FDI in 2021. But beyond the headline figures, there are reasons to be optimistic. The North West has done well in high value areas, particularly Research & Development and health. These sorts of activities and sectors tend to involve higher value projects, which bring more investment and jobs.
“The reasons for the shortfall in projects from 2020 are mixed: sales and marketing projects continued their recent decline, while significant gains in leading sectors were outweighed by declines in a number of smaller ones. Positively, the North West has held onto the FDI gains it made prior to the pandemic, and a decline on 2020 needs to be seen in that context. There’s a track record of FDI success for the North West to build on, and the impact of the pandemic has added some volatility to FDI numbers.
“However, 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 in its economy will help the North West build its attractiveness to investors.”
