Birmingham second best performing UK location outside of London for attracting foreign investment

Birmingham secured 30 Foreign Direct Investment (FDI) projects in 2019, a 36% year-on-year increase, placing the city as the second best performing UK location outside of London.

It also closes the gap behind Manchester which had 34 projects. according to the EY 2020 UK Attractiveness Survey.

Birmingham’s performance is despite the West Midlands as a whole seeing a 23% decline in FDI projects in 2019 (64 projects) compared to 2018 (83 projects) – the lowest number of FDI projects since 2014.

The EY report examines the performance and perceptions of Europe, the UK and its regions as destinations for FDI, and this year includes a survey of 800 international investors looking at the impact of COVID-19 on investment.

In addition to Birmingham, Coventry also ranked in the Top-20 best performing locations in the UK for FDI projects, with eight projects – enough to put the city in 13th place.

Solihull and Malvern also secured three each. Burton upon Trent, Hereford, Nuneaton and Telford secured two each, whilst Atherstone, Brierley Hill, Bromsgrove, Cannock, Dudley, Elmdon, Kidderminster, Redditch, Rugby, Tamworth and Warwick secured one each.

Like all other UK regions, the West Midlands saw the largest proportion of its investment (30%) come from the US. The region also secured 11% of its investment from Germany, and 3% each from India, Japan and China.

Investment in the West Midlands led by digital, machinery & equipment, and transport manufacture sectors

Mirroring the UK picture, the digital sector was responsible for the largest number of projects (15) in the West Midlands – the second highest number of digital projects for the region in the last decade. Two thirds of the region’s digital projects (10) were in Birmingham.

The machinery & equipment and transport manufacture sectors were jointly responsible for the second largest number of projects for the region at 13 projects each. However, the number of FDI projects in transport manufacture sector fell by two when compared to the previous year – the lowest number of projects recorded by the sector since 2012.

EY’s managing partner in the Midlands, Simon O’Neill, said: “Whilst it’s great to see Birmingham had a strong year for FDI in 2019, it can’t be ignored that the West Midlands had the largest decline of inward investment compared to any other region.

“Whilst manufacturing has always been the backbone of the region, it is clear from analysing foreign investment that the region is continuing to grow its strength in digital. However, in order to share this success more equally across the region, thought must be given to how locations outside of Birmingham can attract overseas digital investors.”

Biggest projects for job creation

Coventry secured three of the biggest investments in terms of job creation (an estimated average of over 100 jobs per project), including: a logistics project which created an estimated 400 jobs; a manufacturing project which created an estimated 175 jobs; and an electronics and IT project which created an estimated 100 jobs. A manufacturing project in Solihull and a transportation and logistics project in Birmingham also created an estimated 400 and 100 jobs respectively.

Better geographic balance needed

Additional research for EY by the Centre For Towns, also published today, finds that the share of FDI going to the capital cities in England, Scotland and Wales and other ‘Core Cities’ in Great Britain has increased from 31% of the total in 1997 to 67% in 2019. In 2019, Birmingham attracted nearly half of all FDI projects in the West Midlands. This is in contrast to 1997, when 22% of projects went to Birmingham and 41% to ‘Large Towns’ in the region.

The UK-wide picture overall

The UK missed out on first place in the European rankings for total inbound foreign direct investment (FDI) projects in 2019. This is the first time the UK hasn’t occupied top spot since the survey started in 1997. The UK (1,109 projects in 2019) now sits second behind France (1,197 projects in 2019). Germany is ranked in third place with 971 projects.

Despite losing the lead for total project numbers, 2019 was a strong year for the UK with a 5% increase in projects in a European market that grew by less than 1%. This meant the UK’s share of projects increased to 17.4%, up from 16.6% in 2018. This ends three years of declining market share for the UK since the 2016 EU referendum.