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Trends in foreign direct investment in the UK’s towns

EY Attractiveness Survey UK

Our regional UK Attractiveness Survey report, in association with the Centre For Towns, reveals the stark and deepening disparity of foreign direct investment (FDI) flows into the UK, with its largest cities attracting an ever-greater share of inward investment and little signs of spillover benefit for the areas surrounding them.

This joint report, which captures detailed analysis on where FDI has located across the UK’s cities, towns, communities and villages over the last twenty-one years, also points to a continued structural imbalance between London and the South East and the rest of the UK in terms of overseas investment inflows.

The towns and conurbations on the periphery of the UK’s Core Cities are facing unprecedented economic challenges, but what is particularly worrying is how deep the economic disparity between cities, towns and smaller communities has become over the last 12 months. Core Cities have been far more successful attracting FDI, while levels of investment in other locations has, at best, flatlined over the past 20 years.

UK economic policy has tended to be based around Core Cities and this is likely to have exacerbated the geographic disparities in attracting FDI. With Brexit one of a range of challenges facing the UK economy it is vital that a new approach to FDI policy, centred on geography, is developed as a priority.”

Mark Gregory

UK Chief Economist, EY


Key findings

  • 59% of all FDI went to the 12 Core Cities in 2018 compared to less than a third (31%) in 1997
  • 20 years of static FDI leaves small and medium towns, and rural communities, falling way below the scale of investment across Core Cities
  • University and ex-industrial towns saw a 50% fall in manufacturing FDI projects in 2018
  • UK policy-making must put towns and communities at the centre of the Industrial Strategy and deliver on infrastructure promises

Those places which are best placed to attract inward investment secure it, whilst towns with creaking infrastructure, a hollowed-out skills base and ageing populations simply cannot compete for investment on a level playing field. The Government rightly talks about levelling up disparities between towns and cities. This excellent report outlines one reason why this needs to happen now.”

Lisa Nandy

MP and Co-founder of the Centre For Towns


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