North-west FDI returns to pre-pandemic levels

Foreign Direct Investment (FDI) into the North-west of England has returned to pre-pandemic levels, Big Four accountancy firm EY has found, with Manchester the leading city for investment outside London in 2021.

The 2022 EY Attractiveness Survey has revealed that the region hosted 74 FDI projects in 2021, one more than the North-west delivered in 2019. The region now represents 7.5% of the UK FDI market, with the fourth-highest number of projects behind the West Midlands (78 projects), South-east (82), and London, which continues to attract the lion’s share of overseas investors.

EY’s report also found that Manchester, tied with Edinburgh, (both hosting 31 projects each) was the top FDI location outside of London, with Warrington (five projects) the only other North-west location to make the top-20.

Stephen Church, EY’s 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 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 continues:

“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.”