New record for West Midlands foreign investment

More than 50 per cent coming of the projects from the manufacturing sector and 53 per cent of the projects were announced before last June's referendum vote in favour of Brexit.

The new record followed a landmark year in 2015 when a surge in FDI saw 92 projects locating in the region – the highest number recorded in a decade.

According to Ernst and Young’s annual Attractiveness Report, in 2016 the majority of UK regions saw an increase in projects, with just four seeing a decline when compared with the previous year, but investors predict a decline in the UK’s future attractiveness as a destination for foreign investment.

Birmingham continued to dominate the West Midlands region in terms of attracting FDI, by securing 36 projects in 2016. Coventry secured 15 and Solihull six

Of the Black Country projects, Wolverhampton saw two and the others were in Brierley Hill, Dudley, Smethwick, Tipton, Wednesbury, West Bromwich and Willenhall.

Among the Staffordshire schemes were two in Stafford and one each in Burntwood, Cannock, Fradley and Gailey.

In Worcestershire Kidderminster also had one FDI project with three in Redditch and one in Bromsgove,

Across the West Midlands strong growth was seen in 2016 from the financial and business services sector which secured 23 projects – 20 per cent of the total number.

Sara Fowler, senior partner at EY in the Midlands said: “It’s been another outstanding year for inward investment, with the West Midlands now the third best performing UK region for attracting FDI.

"The implementation of the Midlands Engine strategy should serve to attract more businesses and skilled people to the region, which in turn will boost employment and productivity.

“With the appointment of Andy Street as Mayor of the West Midlands Combined Authority to head up our regional growth strategy, and the creation of the West Midlands Growth Company to promote our region on a global stage, we’re looking for these authorities to champion the Midlands Engine to ensure it remains attractive, competitive and connected.”

The majority of investment in the region originated from Europe, with 61 projects coming from European countries. On an individual country basis, the United States was the biggest investor in the West Midlands with 23 projects, followed by Germany with 21. In total, the FDI secured in the West Midlands was generated from 26 different countries across the globe.

London remained the UK’s dominant location for FDI, followed by Scotland, which maintained its second place.

“Overall, the regional FDI figures for 2016 suggest that the strong ‘super regions’ are thriving whilst more geographically peripheral regions – for instance Wales, the North East, North West and South West of England – are slipping behind. Finding ways to share the benefits of FDI more evenly across the country is a critical challenge that future policy needs to address," added Mrs Fowler.

Global investors had mixed views when asked about the future attractiveness of the UK with 32 per cent of respondents, surveyed between March and April 2017, saying they expect the UK’s attractiveness to FDI to improve over the coming three years, while 31 per cent expect it to decline. Both figures are significantly worse than recorded long-term averages of 53 per cent and eight per cent respectively. I

Since March 2016 the share of investors with a negative view of the UK’s medium term prospects for FDI have almost doubled.

"The research suggests that the EU Referendum vote and its aftermath may be having an influence on global perceptions of the UK’s medium to long-term attractiveness. Western European investors are twice as negative as Asian and North American investors.

“Decisions on the majority of investments made in 2016 would have been made up to three years ago, which helps to explain the UK’s solid performance last year, but signs of a slowdown are on the horizon," added Mrs Fowler.

Nine per cent of investors surveyed said leaving the European Single Market will prompt them to change their investment plans or relocate from the UK to Europe in the next three years.