Foreign Direct Investment (FDI) projects into the Yorkshire and the Humber region increased by 28% year-on-year in 2022, despite the UK seeing a 6% fall in project numbers, according to EY’s latest UK Attractiveness Survey.
Yorkshire and the Humber was the host of 51 FDI projects in 2022, up from a total of 40 in 2021. The region was the UK’s sixth-best performing in 2022, up from seventh in 2021, while its share of UK FDI projects increased to 5.5% from 4.0%.
Building on the region’s encouraging FDI growth in 2022, Yorkshire and the Humber was also ranked as England’s joint-second most popular region for planned investment (alongside the East of England), with 6% of investment decisionmakers surveyed by EY saying that they plan to expand or establish operations in the region. London led the way on 43%.
The region’s strong 2022 performance was driven by growth in key sectors, including Machinery and Equipment, Utility Supply, and Health and Social Work. Sales and Business Services, Manufacturing and Logistics were the region’s key FDI activities.
With 15 projects, Leeds was the UK’s joint-fifth best city for FDI projects in 2022. Hull meanwhile was ranked thirteenth with eight projects, and Sheffield was joint-fourteenth, with seven projects.
Stephen Church, EY’s North Market Leader, said: “Amid a strong year for the North on FDI, Yorkshire and the Humber’s results stand out as exceptional. After a few years of falling project numbers, it’s very encouraging to see the region deliver a significant increase in projects and a strong performance on investment attractiveness relative to the rest of the UK. A positive performance on FDI-supported jobs in 2022 suggests Yorkshire has been able to do well not just on project volume, but on project value too.
“With sustainability and climate change high on investors’ agendas, clean technology is an increasingly important investment focus, providing the UK with the opportunity to play to its regional strengths. Expertise in manufacturing and utilities – key sectors here in Yorkshire – will be crucial to any efforts by the UK to establish itself as a place where clean technology is not just deployed, but also developed and built too.
“The excellent results across the North demonstrate how regional and local leaders can help create business-friendly environments that align with an area’s specific strengths, challenges and needs. By empowering local areas to make decisions and implement policies that both support and encourage inward investment, the UK can take further advantage of its regional strengths and unique selling points to attract diverse investment opportunities.”
Positive results across the board for progressive Yorkshire and the Humber region
Despite a year-on-year decline in projects, in line with the national trend, Digital Technology remained Yorkshire and the Humber’s biggest sector for FDI projects, with a total of eight in 2022, down 10 in 2021. However, this small fall was more than offset by gains in the Machinery and Equipment (four projects to six), Utility Supply (none to six) and Health and Social Care (one to six) sectors.
As with the rest of the UK, Sales and Business Services were Yorkshire and the Humber’s most common type of FDI project activity in 2022, with 19 projects. Manufacturing was the region’s second most common activity (12 projects), followed by logistics (8 projects).
Notably, Yorkshire and the Humber had the UK’s best performance for jobs per project, based on job figures linked to project announcements. The region’s projects in 2022 were expected to lead to 89 jobs each, ahead of the South West (88) and the West Midlands (84).
UK second in Europe for FDI, while over half the UK sees FDI growth
Nationally, Over half of the UK’s nations and regions attracted more Foreign Direct Investment (FDI) projects in 2022 than they did in 2021. The UK hosted 929 FDI-backed projects in 2022, the second highest project total in Europe, albeit down 6% from 993 projects in 2021.
London (299 projects) was still home to the most FDI projects out of any UK nation or region in 2022, but its share of all UK projects has fallen to 32% from a high of 49% in 2019.
Scotland (126 projects), the North West (88) and West Midlands (74) recorded the most projects outside London, while the biggest gains in England from 2021 were seen in the North East (33%), Yorkshire and the Humber (28%) and the East Midlands (23%).
The English regions joining London and the South East in seeing project declines from 2021 were the South West (down 17%) and the West Midlands (down 5%).
The strong results across the North – all three regions saw double-digit growth – were underpinned by resilience in the digital sector and growth across a range of key activities, including manufacturing, sales, research and development, logistics, and headquarters projects.
Meanwhile, declines in the digital sector were the biggest drag on performance for the South of England. Digital projects in London almost halved from 194 in 2021 to 107 in 2022, with significant falls also seen in the South East and South West. Despite this, the UK still led Europe for tech FDI.
Across Europe, France held onto top spot for total project numbers for a fourth consecutive year, although the UK once again ranked highest in Europe for new projects and continued to deliver more total jobs and jobs per project than Germany and France – trends consistent with the UK’s pivot in strategy to focus on value over volume when attracting FDI.
Hywel Ball, EY’s UK Chair, said: “The strong FDI performance of Scotland, Wales and England’s regions in 2022 is a clear success for the UK. Notably, when asked to identify the policy area in which improvements would most increase the UK’s attractiveness, the investors we surveyed were most likely to pick the geographic rebalancing of the UK economy. While London’s attractiveness will endure, despite ups and downs, policymakers need to build on the clear interest in investment outside the capital.”