US, Japan and Germany the prime investors in East of England region
Cambridge has been listed as the eighth best performing UK location for attracting Foreign Direct Investment (FDI) projects for a second year running.
This is despite seeing a 29 per cent year-on-year decline in FDI in 2018 to 10 projects from 14 projects in 2017.
The East of England recorded a 40 per cent drop in the number of projects in 2018 from the previous year – down from 59 to 36.
However, inward investment for the region still remains relatively high when compared with previous years, as prior to 2016 the number of projects was much lower – reaching no more than 21 projects (in 2015).
According to EY’s 2019 UK Attractiveness Survey, the UK remained the number one destination for foreign direct investment in Europe in 2018, ahead of Germany and France, with 1,054 projects.
However, analysis of the FDI projects recorded in 2018 showed that the performance of the UK’s regions was very different to 2017, with much greater variation across the country compared to the national picture driven primarily by the 35 per cent decline in manufacturing FDI projects.
The South East (down 2.2 per cent), Wales (down 6.1 per cent) and the East Midlands (down 7 per cent) all experienced a fall in volumes of only single digit percentages.
Much like the East of England, the rest of the country saw significant declines in project volumes, particularly Yorkshire and the Humber (down 40 per cent), the North West (down 33 per cent) and the North East (down 25 per cent).
Cambridge secured the highest number of projects (10) in the East of England, followed by Peterborough with three projects in 2018. Biggleswade, Hemel Hempstead, Lowestoft, Stamford and Thetford each secured two projects.
The East of England saw most of its investment come from the US, representing 19 per cent of the investment into the region – lower than the UK average of 32 per cent. The region also secured 14 per cent of its investment from Japan and 11 per cent from Germany.
Job creation in 2018
The number of jobs secured by investments in the East of England in 2018 fell by 30 per cent from 2,835 in 2017 to 1,971 – the lowest number of jobs since 2015. However, this is still a substantial figure when compared to previous years. Prior to 2016 the number of jobs created did not exceed 1,073 (the number of jobs recorded in 2013).
The largest investments in the East of England in terms of jobs creation were generated by a wholesale, retail and distribution company from Germany based in Luton, which created 1,000 jobs; an electronics and IT company from Japan based in Cambridge, which created over 350 jobs; and a wholesale, retail and distribution company from the US also based in Cambridge, which created nearly 200 jobs.
Agri-food, machinery & equipment and digital investment
The East of England recorded the highest number of agri-food projects and machinery & equipment projects in a decade, with the agri-food sector responsible for six projects in 2018 (matching 2017) and the machinery & equipment sector responsible for five projects in 2018 (up from four in 2017).
Whilst the UK’s leading sector in terms of FDI projects was digital for the sixth year running, the East of England had only four digital projects – a significant drop from 16 digital projects secured in 2017. This meant that digital was the third most popular sector for generating FDI projects in the region in 2018.
Nick Gomer, managing partner at EY in the East of England, said: “Our latest report demonstrates a mixed picture for the East of England in terms of foreign direct investment.
“It’s fantastic to see Cambridge as a top 10 UK location for attracting inward investment, with many other key locations in the East attracting a large number of FDI projects. However, whilst inward investment in the region remains high when comparing 2018 to years prior to 2016, a 40 per cent year-on-year drop in the number of projects cannot be ignored.
“This acts as a warning sign that our region must fight harder to ensure that it’s not losing out to other UK regions such as Greater London or the South East.
“At a time when concerns over Brexit appear to be reducing the UK’s appeal currently and are hampering its ability to attract capital, it becomes increasingly important for the East of England to play to its strengths.
“The region must continue to invest in its own future – such as working hard to attract and retain high-skilled talent and continuing to build its existing strengths in areas such as life sciences.”