Leeds within top five UK cities for foreign direct investment

Leeds has been ranked as the fifth best performing city in the UK for attracting foreign direct investment (FDI), with 19 FDI projects locating in the city in 2017 – a 23% share of all projects locating in Yorkshire & Humber last year.

In 2017, Yorkshire & Humber recorded 80 inward investment projects, a slight decrease on 2016 (82). In the last three years the region has maintained this high level of inward investment, attracting 80 projects or more. Interestingly, before 2015 the region struggled to secure more than 50 projects in the last decade.

According to EY’s 2018 UK Attractiveness Survey, the number of jobs created by overseas investors into Yorkshire & Humber has increased by 14% compared to the previous year (from 4,988 in 2016 to 5,665 in 2017) and marks the highest number of jobs secured in the region over the last decade.

Top rated cities and towns in Yorkshire & Humber 

Five Yorkshire towns or cities make the top 20 ranking by volume of investments, with Leeds, Barnsley, Sheffield, Hull and Doncaster all making the cut.

Leeds continued to dominate Yorkshire & Humber in terms of attracting FDI with 19 projects in 2017, up by 18.8% on 2016. Barnsley ranked joint 13th and Sheffield, Hull and Doncaster all came in joint 20th.

The Wholesale, retail and distribution sector provided two of the largest investments in the region – one from the US into Knottingley creating 1,400 jobs and one from Germany into Rossington creating 500 jobs. Rotherham secured two of the largest investments in business services and transport manufacturing, with over 700 jobs secured from both projects.

Investment led by manufacturing, sales and marketing and logistics

The largest number of projects recorded in the Yorkshire & Humber region were in manufacturing. The sector saw 38 projects attracted to the region, representing 46% of the total number of investment projects in 2017 (up from 40% in 2016).

The second largest number of projects, by activity type, were in sales and marketing, with 22 projects representing 27% of the region’s total number of projects. Projects from the logistics sector saw the third highest number of investments, but at 10 projects in 2017 it represented a decline on 2016 (19 projects), although the total still represented the second highest total in the decade.

In the UK as a whole, the sector generating the largest number of projects was digital. In Yorkshire & Humber, digital accounted for six projects in 2017 – a rise of 14% on 2016.

Investment is great news for Yorkshire 

Suzanne Robinson, Managing Partner at EY in Yorkshire said: “These figures are great news for Yorkshire – not only is Leeds one of the top five cities for inward investment in the UK, but the region has a total of five towns and cities in the top 20. Furthermore, while Knottingley and Rossington did not make the ranking in terms of volume of investment deals, they too have seen sizeable and significant investment, winning projects that have resulted in nearly 2,000 jobs for the local area.

“The fact that 46% of investments came from manufacturing related industries does not surprise me given it is a particular strength for this region and a sector where we already have a solid footprint. However, I’m also heartened by the breadth of activity type across the investments – from sales and marketing to logistics to digital – a sector which in particular saw an increase in activity on last year.”

UK retains its position as the most attractive location in Europe

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 to focus future competitiveness post-Brexit

Suzanne Robinson 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 – but only 22% across the UK as a whole, and 14% in Yorkshire.

“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.”