West Midlands secures major foreign investments
THE West Midlands has been named as one of the top regions in the UK for attracting foreign investment.
Only London and the South East are more popular in terms of securing foreign direct investment projects, business advisor Ernst & Young said today.
The advisor’s latest European Attractiveness Survey, which is published today, shows that the UK has retained its position as the most attractive destination for inward investment in Europe.
Within the West Midlands, last year saw 51 foreign direct investment projects located in the region, which compares with 37 in 2008.
Of these, 11 located in Birmingham, five in Coventry, five in Solihull and eight Warwick. The bulk of projects originated from investors in the United States (7), Germany (5), Sweden (5), France (4) and India (3).
Despite the recession and a general decline in the industry, the region’s strength as a major manufacturing centre is considered the single most important actor in attracting investment.
Of the investments, 28 came from businesses operating in the manufacturing sector, while 19 came from businesses in finance and business services underlining the region’s significance as a major financial centre.
When judged against the performance of Europe as a whole, the region’s economy has held up strongly – despite what might seem apparent.
As a whole, the annual report, which examines figures for international investments into Europe, new projects or expansions, revealed that Europe secured 3,303 investments, down from 3,718 in 2008. The number of jobs created was 124,923, also down on 2008’s 148,333, although the downward employment trend can be traced back to 2004.
Retaining its ranking as the most popular European location for Foreign Direct Investment (FDI), the UK attracted 678 investment projects in 2009 – just 1% less than in 2008.
These projects produced 20,017 jobs, ranking the UK as the number one European location, with 16% of the total jobs created across Europe by FDI. The largest investor in the UK was the US (243 projects), followed by France (50), Germany (49) and India (38).
The UK’s continuing strength in financial services underpinned its receipt of 30% of business service projects, 36% of software projects and 27% of financial service projects in Western Europe. Together, these sectors secured 42% of the jobs created in the UK.
“When seen in the context of 12 months during which the European economy suffered a deep recession, the resilience of the UK in securing FDI is a remarkable economic success story,” said James Close, partner at Ernst & Young.
“The reason for the strong performance is not, however, the emergence of exciting new origins for investment or previously unforeseen sectors. In fact, the UK continues to achieve because of the strengths of London as a business and financial services centre, the underlying strengths of the UK in securing service sector investment and, crucially, the continuingly special corporate relationship between the UK and the US.
“Indeed, the principal reason why the UK is the leader in the attraction of FDI is that the UK is the location of choice in securing US investment, and the US is the main origin of FDI into Europe. Investment from BRIC economies are yet to emerge as major trends. This is perhaps not surprising as new streams for investment need to gain maturity before they internationalise.”
The largest European economies held up relatively well. In addition to the UK’s strong performance, project numbers in France, Italy and Germany were up 1%, 4% and 7% respectively.
Others to have fared well were Russia, Ukraine and Turkey, which all posted increases in the number of projects in 2009.
With a 4% decline in European GDP there were some big losers in 2009 as well. The Spanish and Irish economies were hit hard, as were those in Eastern Europe, particularly Poland, Hungary, Romania and the Czech Republic, where project numbers fell collectively by 40% as investors sought the stability of the larger Western economies.
There were also some dramatic shifts in where the projects into Europe originated from. The United States, which continues to account for roughly a quarter of all projects into Europe, saw a 16% decline in 2009. This contrasts with China, whose investments into Europe surged by nearly 30%, with project numbers increasing from 87 to 111.
As well as analysing project data for 2009, the survey looks at future investment patterns and the prediction for 2010 remains one of modest growth and flat job creation.
