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Surge in inward investment in the region led by new digital projects

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The number of foreign direct investment projects in the East of England rose by nearly a half to a record 59 last year, helped by more digital sector projects and a doubling in the number of overseas-backed ventures in Cambridge.

According to EY’s 2018 UK Attractiveness Survey, 59 foreign direct investment (FDI) projects were recorded in the East in 2017, up from 40 in the previous year, lifting the region up to 7th place out of the 12 UK regions. Cambridge, where the number of FDI projects increased to 14 from seven previously- now ranks as the joint 8th most attractive city for attracting overseas investment.

The number of digital FDI projects jumped to 15 in 2017 from three previously and now accounts for a quarter of inward investment locating in the region. Nine pharmaceuticals and six agri-food inward investment projects were recorded in the region. Two large German retail/distribution investments in  Peterborough (where Lidl is opening a new distribution centre) and Bedford created 900 jobs in total. FDI has now increased in the East every year since 2014 although the number of jobs created by overseas investments in the region fell by 4 per cent to 2,800 jobs in 2017.

Nick Gomer, managing partner at EY in the East, said: “These figures are great news for the East – not only has Cambridge doubled the number of FDI projects, but the East region has attracted 48 per cent more investment than in 2016. Furthermore, while Peterborough and Bedford did not make the top 20 ranking in terms of volume of investment deals, they too have seen sizeable and significant investment, winning projects that have resulted in hundreds of jobs for the local area.”

 

“The fact that 25% of investments came from the digital sector does not surprise me, given it is a particular strength for the East. The region’s outstanding performance in 2017 gives us solid foundations as we continue to work towards rebalancing the UK economy, however, it remains crucial that we find ways to share the benefits of FDI more evenly across the country.”

Attractive location

The UK remains the number one destination for FDI in Europe, ahead of Germany and France, despite a decline in sentiment from foreign investors towards the UK as a place to invest. The UK attracted 1,205 FDI projects in 2017, a 6% increase when compared to 2016 (1,138).

Investors expressed clear concerns surrounding Brexit, which contributed to the UK’s waning attractiveness and a decline in FDI projects in certain sectors, including, financial services, business services and logistics. A 22% increase in digital investments into the UK helped to cushion the hit and push the UK into growth territory.

According to the report, there was a marked increase in UK outbound investment by 35% in 2017 to a new high. 110 of those investments went into Germany and 79 to France, as UK businesses appear to be accelerating their activity to position themselves for a post Brexit environment.

Digital drive

Nick Gomer concludes: “The UK’s FDI performance shows an economy in transition, influenced by Brexit and the force of technological change. In 2017 a swell of digital projects flowed into Europe, changing the shape of FDI and bringing new dynamic businesses to the continent. Digital projects increased by 33% across Europe – three times the rate of overall market growth – and quadrupled in the East, but only increased by 22% across the UK as a whole.

“At a time when investor sentiment towards the UK as an attractive destination is weakening, opportunity arises in the shape of digital. An urgent digital drive is needed with a renewed focus on digital skills, infrastructure, and investment in research and development will help to shape the UK as an attractive environment, to maintain its competitiveness in a post-Brexit world."

Last Updated ( Wednesday, 13 June 2018 08:21 )