Foreign investment in the East soars by a third and leads UK
The East of England recorded the largest increase in inbound Foreign Direct Investment projects out of all parts of the UK in 2020, with the number of overseas-backed projects in the region rising 35 per cent to 54 from 40 in 2019, according to EY.
Its latest survey is based on the most recent available figures. EY says the region’s strong performance was driven by success in key sectors, including digital technology (12 projects in 2020, up from seven in 2019), transport and logistics (10 projects, up from seven), and agri-food (eight projects, up from one).
The East of England outperformed the UK as a whole: the country saw project numbers decline 12 per cent from 1,109 in 2019 to 975 in 2020, while UK digital projects declined by 25 per cent overall, from 432 to 322. As a result, the East of England increased its share of the UK’s FDI market from 3.6 per cent in 2019 to 5.5 per cent in 2020.
The East of England and the North West (16 per cent) were the only English regions to register double-digit percentage improvements in project numbers from 2019. Only London and the South East registered double-digit declines. Out of all UK regions and constituent nations, the East of England recorded the seventh highest number of projects. Cambridge and Peterborough are the key locations for FDI in the East of England.
Among the region’s towns and cities, Cambridge, which has long been a centre for research and development and life sciences, recorded a 20 per cent annual increase in the number of FDI projects, from 10 in 2019 to 12 in 2020.
Meanwhile, Peterborough may have benefited from a pandemic-accelerated shift to online commerce and a need to boost capacity – it recorded 10 projects in 2020, up from just one in 2019.
Cambridge was ranked as the joint ninth best city in the UK for FDI projects in 2020 (with Bristol), while Peterborough was ranked joint 12th (with Coventry and Nottingham). London attracted the most projects, with 383 – down from 538 in 2019.
Projects in the region were most likely to involve sales and service activities (20 projects, up from 11 in 2019), logistics (15 projects, up from six) and R&D (seven projects, holding steady from 2019).
Seven per cent of investors surveyed by EY as part of the research said that the East of England was the most attractive UK region in which to invest – up from just one per cent in 2019.
Stuart Wilkinson, office managing partner at EY in the East of England, said: “The East of England has a diverse regional economy, and some of its sectors have seen an impact from global economic and business shifts linked to Brexit and the pandemic.”
“With increasing focus on sectors and activities in which the East of England excels – including logistics and research – the region is one of the best positioned to thrive in a changing economy. It’s not a surprise that the region is much more attractive to investors than it was just two years ago.”
The UK’s life sciences sector – including pharmaceuticals and medical technology companies – enjoyed a strong performance, with projects in the sector bucking the overall national trend and growing from 2019 to 2020. There were 47 FDI life sciences projects in the UK in 2020, a 62 per cent increase from the 29 projects in 2019.
The strength of the life sciences sector is mirrored by the growth of research & development activities in the UK in recent years. The sector achieved a 12 per cent market share and 114 projects, up 12 per cent from 2019’s 102 projects, and placing the UK just behind market-leading France’s 115 projects.
As a mark of the UK’s progress, France attracted almost double the number of R & D projects than the UK as recently as 2018 (144 projects to 74).
Wilkinson adds: “The life sciences sector is going to be increasingly important for the UK economy and the region is at the forefront of that, particularly the knowledge cluster around Cambridge.”