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EY UK

Attractiveness survey 2016

A record year for the UK

The UK gave an outstanding performance attracting Foreign Direct Investment in 2015, bringing in a record 1065 FDI projects and creating over 42,000 jobs, the most in any year since the Attractiveness programme’s launch in 1997.

This 20% growth in projects achieved in a European market that grew 14% means the UK increased its market share from 19.9% to 20.9%, confirming it as Europe’s clear FDI leader.

Mark Gregory: Postiive rebalancing – the story of the UK's FDI in 2015

 

Mark Gregory: Can the regions power the UK's FDI growth?

EY - Economics for business

Economics for Business

Knowledge, analysis and insight to help businesses understand the economic environments in which they operate.

Reality

 

Driven by the regional powerhouses

The most striking feature of this year’s report is the performance of the UK’s regions, with most English regions seeing significant increases in projects, and Scotland enjoying its best year on record.

Over 90% of the UK’s total growth came from the regions outside London and the South East.

With investors voicing solid support for the UK’s agenda to devolve power to a regional level, it now seems devolution is starting to work, and foreign investors are helping rebalance economic activity across the country.

The North West led the way with a 118% increase in projects. Yorkshire increased 66%, Scotland 51% and the West Midlands 46%.

The Northern Powerhouse has recorded 127% growth in the 2 years since the term was coined.

... creating a platform for future growth

The UK also made progress in several other important areas:

  • 172% increase in key strategic investments – such as headquarters – giving the UK a 53% share of the European market. R&D project numbers increased 37% in 2015.
  • Manufacturing continues to do well, with the UK attracting more manufacturing FDI projects than Germany for the second year running.
  • Good balance across the sectors, with financial and business services posting healthy growth
  • 79% increase in projects from China, and 58% increase in projects from India
  • Investment from the European Economic Area (EEA) grew significantly, with a higher number of projects than the North American Free Trade Area (NAFTA) for the first time since 1997.

 

EY - UKAS

Perception

 

Good news about the UK’s position in future fast growth sectors:

  • London moved from fourth to second place in the world as the city most likely to produce the next tech giant.

     

    Listen to Caroline Artis’ viewpoint:

     

     

  • The top 2 sectors likely to drive Europe’s growth were Information and Communications Technology (ICT) and Financial Services – the UK was the European FDI leader for both in 2015, and appears extremely well-positioned to perform strongly in the future.

Infrastructure and skills are the key drivers of regional attractiveness:

  • Over 40% identified London airports as key elements, followed closely by regional airports with 34%
  • The UK must remain competitive by driving infrastructure investment and resolving the issue over London’s next airport.

 

But there are worrying signs for the future…

Investors are much less optimistic about the UK’s future attractiveness than they were 12 months ago:

  • When asked how likely they were to invest in the UK next year, 23% responded positively, compared to 27% last year
  • When asked how the UK’s FDI attractiveness will change in the next 3 years, only 36% say they expect it to improve, in comparison to 54% last year – the lowest score since 2004
  • The UK’s ranking as Europe’s most attractive FDI location has also declined relative to Germany, with the UK now 2% further behind.

Listen to Amanda Clack’s viewpoint:

 

 

1065
FDI projects in 2015 – 20% up from 2014

Recommendations

 

Priorities for action

  • Develop an integrated trade strategy covering exports and FDI and the linkages across Government at both national and regional levels.
  • Make investors aware of the devolution story: only 38% of foreign investors have heard of the policy, but those who have are very positive about it.
  • Deliver on promised skills and infrastructure improvements such as digital skills, roads and London airports. This will require national and regional co-ordination.
  • Be more ambitious on manufacturing: geographic rebalancing will only succeed in the UK if manufacturing prospers.

 

 

Infographics

EY - Attracting key strategic investments into the UK in 2015

EY - Jobs created by FDI projects in 2015

EY - UK remains the clear European leader of FDI in 2015