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Driving Midlands Growth

Never has the Midlands Engine been in such a prime position for growth: massive investments in transport; global events; large commercial developments; drives to build tens of thousands of homes; a revolution in our skills base. The Midlands’ economic structure will also evolve considerably over the coming years as it undergoes fundamental change through devolution.

The Midlands Engine covers a considerable area, and with an output of £220bn GVA, accounts for 16% of UK exports and almost 25% of its manufacturing output. From 2017 to 2018, Foreign Direct Investment (FDI) secured across the Midlands rose by 8% taking the project count to 140, creating a total of 10,606 jobs. The region is expected to see growth of 1.7% in its Gross Value Added (GVA) each year until 2020. Birmingham ranks 4th in the top 20 UK cities attracting FDI.

EY’s Driving Midlands Growth programme provides knowledge, analysis and insight to help businesses understand the economic environments they operate in, and plan accordingly. We work with both the private and public sectors, facilitating the debate between business and government, supporting economic development, growth and regeneration. For more information, please visit EY: Serving the Midlands.

EY Midlands Engine Survey

22% feel we need more clarification of the term ‘Midlands Engine’

The EY Midlands Engine Devolution Survey provides the views of executives from across the East and West Midlands. We asked local businesses what they believe the region’s focus areas should be.

Infrastructure is the key priority, with 88% suggesting it requires more investment, and roads identified as needing ‘urgent’ improvement. Skills are also seen this way, with many suggesting that links between schools, universities and industry need improvement.

84% said inward investment should be a top priority, and that more should be done to attract FDI. Almost 42% felt much more effort is needed to help local businesses expand globally by promoting overseas trade.

Read the survey results


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Our findings from the Midlands Engine survey

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EY - Simon O’Neill

Simon O’Neill
Office Managing Partner
Midlands
+44 (0)121 535 2489
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EY - Stephen Clark

Stephen Clark
Government and Public Sector Partner
Midlands
+44 (0)161 333 3280
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EY - Paul Brown

Paul Brown
Government & Public Sector Director
+44 (0)121 535 2917
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EY - Susan Sanhi

Susan Sanhi
Assistant Director
Brand, Marketing
and Communications
+44 (0)121 535 2514
+44 (0)7808 884486
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Meet EY’s Midlands Leadership team, go to EY: Serving the Midlands.

 
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EY - What do you think should be done to develop skills and eradicate the skills gap in the Midlands?

 

140
FDIs across the Midlands Engine in 2018

Investment in the Midlands engine

 

Leading sectors: increases in projects across the board…

The broad-based nature of the rise in FDI projects across the Midlands in 2015 is underlined by the fact that every single one of the ten leading sectors for Midlands FDI recorded an increase in projects over their 2014 performance.

The Midlands Engine is unusual among UK regions in that 2015’s three leading sectors were all in manufacturing – automotive assembly, machinery and equipment, and fabricated metals.

Together, these accounted for 40% of all 2015 Midlands FDI projects, compared to just 12% of FDI projects across the UK as a whole. This contrasts starkly with the UK-wide position, where business services and software are the largest sectors, accounting for 32% of all FDI across the UK in 2015 – as against just 12% in the Midlands.

Sources of FDI: strong project flows from Germany and India…

In 2015, the top six countries of origin for FDI into the UK as whole are the same as the top six for FDI into the Midlands – but in a different order. As with the UK as a whole, the US was the biggest single source of Midlands projects (27%), against a UK-wide figure of 31%. However, after that there were significant differences.

EY’s Global Investment Monitor shows German investment was more important to the West Midlands in 2015 (16% of projects) than to the UK as a whole (7%), as was Indian investment – which represented 9% of Midlands FDI projects in 2015, compared to 6% for the whole of the UK.

These differences show that the Midlands Engine differs from other regions outside London in terms of FDI, with a strong track record with Indian and Chinese investors that Scotland and the Northern regions do not have.

FDI activities: manufacturing and R&D set the pace

Looking across the various activities that were the focus of Midlands FDI projects in 2015, there was a sharp increase in manufacturing projects, which rose 28% on 2014, reflecting the sector trends mentioned above. The Midlands also secured a high number of R&D-based projects in 2015 – with 17 projects representing a 2.5-fold increase on 2014.