Foreign direct investment (FDI) levels in the North West fell in 2021 – but the region’s FDI levels overall remained at pre-pandemic levels while Manchester remained an investment hotspot.
The 2022 EY Attractiveness Survey showed 74 projects hosted in the North West in 2021 – down from 85 projects in 2020, but one more than the 73 projects delivered in 2019.
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.
London continued to lead in FDI investment, followed by the South East (82 projects), the West Midlands (78) and the North West.
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Manchester was on par with Edinburgh as the top location for FDI outside London, with the two cities hosting 31 projects. Warrington was also among the top 20 UK locations outside London, with five projects.
Stephen Church, Northern Market Leader and Managing Partner of the Manchester office, said: “The North West – and the North as a whole – had a difficult year for FDI in 2021. But beyond the headline figures, there are reasons for optimism.
“The North West has done well in high-value areas, particularly research and development and healthcare. These types of activities and sectors tend to involve higher-value projects, which bring more investment and jobs.
“The reasons for the lack of projects from 2020 are mixed: sales and marketing projects continued their recent decline, while significant gains in major sectors were offset by declines in a number of smaller .
“Positively, the North West has retained the FDI gains it had made before the pandemic, and a decline from 2020 should be seen in this context. There is a track record of FDI success on which the North -West can lean on, and the impact of the pandemic has added some volatility to FDI numbers.
“However, one thing that is always very clear to investors is that the strength of local business networks is important when choosing where to locate their projects in a country.
“Local skills and infrastructure, support from regional development agencies, and access to regional grants are also part of the mix, reinforcing the importance of decentralizing power and fostering local ecosystems. Building a unique sense of place from its economy will help the Northwest strengthen its attractiveness to investors.
London remains the first destination for FDI in Europe. Its figure of 394 FDI projects in 2021 is up 2.9% from the previous year but still down from the 538 projects recorded in 2019.
Other countries and regions in the UK saw a strong recovery, with the number of projects in Scotland increasing by 14% to 122 and the South East seeing its number increase by 14% to 82. But other regions experienced steep declines, with the number of FDI projects in Yorkshire and the Humber down 27% at age 40 and the East of England down 26% at age 40.
Mr Church said: “Leveling as a policy idea has caught on, with nearly two-thirds of the investors we surveyed having heard of it in the last year.
“Awareness has turned into engagement this year, with a similar proportion saying upgrading influences their location decisions and that they will seek to invest where government support is available – although the number of projects does not yet reflect this.
“Nearly three-quarters of manufacturing and wellness investors are interested in the opportunities that geographic rebalancing presents.”