Another opportunity for the UK is shifts in supply chains. Some 39% of 2022 respondents — including 79% of manufacturers — plan to change their supply chain model. 31% of UK manufacturers are planning to invest more in UK facilities and operations.
Country fundamentals remain important for policy
Asked how they choose between countries, investors’ top three criteria are the quality of infrastructure, how countries dealt with the pandemic, and the capacity to deal with future shocks. Whilst these were also the top three last year, infrastructure is now first, and the role of government has risen from sixth to fourth.
Investors have many expectations from the UK Government, and are interested in ‘levelling up’
Asked what domestic priorities the UK should focus on given their evolving criteria, respondents put telecoms, and transport and energy infrastructure first (47%). They also want government support (33% versus 34% last year) and access to new international markets (32%, up from 14%). Additionally, investors voice growing interest in the opportunities the ‘levelling up’ agenda may generate. In 2021, 61% of investors had heard of levelling up. In 2022, 59% say this policy now influences their location decisions.
Policy must support specific needs by geography
Turning to the criteria investors apply when considering UK regions outside of London, skills and infrastructure (both technology and telecoms) have historically topped their priorities. In 2022, infrastructure remains important at 32%, whilst skills are up from 21% to 27% and labour costs have doubled in importance to 24%.
There is a local flavour to the support investors require within a region. Their top six factors include the strength of business networks locally, support from regional economic development bodies, and access to regional grants. This layering of priorities requires devolved power to foster local ecosystems.
Sector support is vital — with digital, cleantech and supply chains as priorities
Correct sector focus is key — and digital investments will be pivotal. Asked where the UK Government should focus to support the UK’s transformation to a digital economy, investors have shifted away from digital technologies and infrastructure (down to 36% in 2022 from 48% in 2021), and towards digital R&D (up from 35% to 50%) and strengthening data protection (up from 36% to 48%).
Within cleantech, investors’ primary focus is electric vehicles and battery technology, followed by areas, including heat networks, carbon capture, green consumer products and low-carbon housing. This wide diversity underlines the policy opportunities — as does the 39% of UK investors planning to revamp their supply chains.