The number of foreign direct investment (FDI) projects secured by Yorkshire grew 145 per cent to 49 in 2014, compared with 20 in 2013, representing the region’s best year for inward investment since 1998 and the highest rate of growth recorded amongst the UK’s 12 regions.
According to EY’s UK Attractiveness Survey, Yorkshire was the fourth most successful of the 12 regions analysed in attracting FDI projects in 2014 and boosted its national share of projects to 5.5 per cent from 2.5 per cent in 2013. London topped the rankings with 381 projects, followed by Scotland (80), the South East (70) and the West Midlands (65).
Yorkshire’s performance was buoyed by Leeds, which became the joint fourth most successful UK city outside of London in attracting FDI in 2014, with 14 projects. Leeds was not placed in the top 10 rankings in 2013.
The UK retained its leading position in Europe for FDI. The total volume of projects in the country rose by 11 per cent to 887 in 2014 – the largest national total since the survey began in 1997.
Stuart Watson, Yorkshire and Humber senior partner at EY, said: “Yorkshire began to punch its weight in terms of FDI in 2014 following a number of challenging years. The region looks to have developed a good offer to investors which has driven significant growth in FDI, but there’s more work ahead to develop this proposition and make Yorkshire even more competitive on the global stage.”
Although London remains the single most important location for FDI in the UK, attracting 381 projects last year, the English regions collectively secured 345 projects in 2014 – their highest aggregate total since 1998. And the outlook is positive; 48 per cent of investors surveyed as part of the report viewed an increase in devolution of power to the UK regions as a positive development.
Mr Watson added: “The UK must continue to broaden its appeal outside of London to maintain its position as Europe’s number one destination for inward investment. Major regions like Yorkshire – which in time could have more autonomy over how they invest to support businesses – have an important role to play.”
Manufacturing was the most popular sector in Yorkshire for FDI projects in 2014, adding 21. It was followed by finance and business services on 18, with retail and hospitality on five, and transport and communications with three.
Mr said: “With a targeted effort, the UK grew its FDI manufacturing base in selected sectors in 2014 and it’s clear that Yorkshire, already a centre of excellence for different types of manufacturing, played its part in this revival.
“The region has also balanced this manufacturing specialism with investment in its finance and business services industry. Large business services providers are increasingly driving job and wealth creation in Yorkshire’s towns and cities.”
The US was the top source of FDI projects in Yorkshire in 2014 with 13, followed by Germany (seven) and Spain (four). The region secured FDI projects from 18 different countries during the period including European nations, as well as Bermuda, India, Japan, South Korea and Jordan.
Mr Watson said: “Yorkshire already has a diverse range of inward investment sources – the fact the region secured FDI from 18 different countries is encouraging and shows its strong appeal worldwide. However, internationalisation will continue to be vital for expanding FDI. Efforts to build links with high growth overseas markets in Asia and Africa must continue, whilst maintaining relationships in Europe and North America.”
West Yorkshire was the most successful area of the region in 2014 for attracting FDI. The volume of projects secured in the area grew from nine in 2013 to 23 last year. Meanwhile, FDI in South Yorkshire trebled from four projects in 2013 to 12 in 2014.
North Yorkshire secured eight projects last year, up from two in 2013, while Humberside secured six projects in 2014, up by one compared with 2013.
The uncertainty caused by a UK EU Referendum will be disruptive and is a risk to the UK’s FDI performance. 31 per cent of investors stated they would either reduce or freeze their planned investments up to 2017. Nevertheless investors are clear that reform of the EU is required. Access to the European market is important for 72 per cent of investors surveyed.
Mr Watson added: “2014 saw an encouraging improvement in FDI in Yorkshire from which to build on. As momentum continues around the Chancellor’s Northern Powerhouse vision, and plans for improved transport links and additional infrastructure investments across the North of England become clearer, Yorkshire’s popularity amongst investors could improve – driven by the prospect of an even more productive, better connected region.
“Autonomy over how the region invests to encourage inward investment through devolution could also help to support more FDI in the long term, while recent EY research noted that Yorkshire could be amongst the top UK regions to benefit from the positive impact reshoring could have on the country’s economy over the next 10 years.
“However, it will be interesting to see what impact the debate around the EU referendum has on inward investment in Yorkshire over the coming years.”