Foreign investment slumps in Yorkshire

Premier Farnell's investment at Logic Leeds was one of the few FDI highlights in Yorkshire in 2018

The number of foreign direct investments (FDI) into Yorkshire and the Humber slumped to a five-year low last year.

Only a resilient performance by Leeds, which was the fourth-best performing UK city, masked some dreadful figures for the region.

While Leeds attracted 21 FDI projects in 2018 – up two on a year earlier – the number in the rest of Yorkshire and the Humber fell by 56%, down from 63 to just 28.

The latest data from EY’s annual UK attractiveness survey has highlighted the significant drop in international investment seen in the regions. It also showed a sharp drop in the number of jobs created or secured in the region, although some of that change was due to a shift in methodology that counted only actual figures rather than including some estimates.

Suzanne Robinson, managing partner for EY in Yorkshire & Humber, said: “In this region the number of FDI projects being soaked up by one city, Leeds, is marked – and the shift of investment to larger cities is a UK-wide trend.

“What we in Yorkshire & Humber need to see next is more of that investment spilling over from Leeds, Sheffield and Hull and flowing into towns.”

Projects that were reliant on foreign direct investments were badly hit in the regions last year, stoking further concerns about the UK’s ability to rebalance its economy.

The number of FDI projects in the UK outside London fell by 20% in 2018 – higher than in any year during the last recession – as 150 fewer investments were secured than a year earlier.

But Greater London had an almost identical year, with its 458 projects just one below 2017’s total.

Mark Gregory, EY’s chief UK economist added: “The relatively strong performance of London and the South East suggests that attempts to rebalance the UK geographically may be harder to realise given the challenges posed by Brexit.”

EY’s data also highlights the growing two-tier nature of the regional economies around the UK, with the larger cities typically performing more resiliently than the rest of the region.

For example, Birmingham had 22 FDI projects in 2018, which was one project and 5% higher than a year before. But the West Midlands without Birmingham was down 20%.

In the North West both Manchester and the region as a whole saw a significant fall in the number of FDI projects. Manchester was down 18%, although the North West excluding Manchester fell by 28%.

“It appears that uncertainty over Brexit has not only reduced the UK’s overall appeal, but it is also having a much greater negative impact in the UK’s towns as investors concentrate on what they see as ‘safer’ investments in the larger cities,” added Gregory.

But overall the attractiveness of the UK is in decline among investors, according to a survey by EY.

It found that while 42% of investors expect the UK’s attractiveness for FDI to decline over the coming three years, only 26% of them expect it to improve – the worst-ever result in the decade that the annual survey has been running.

Close