London is still the centre for foreign investment in the UK, but Scotland’s flag is flying high and the English regions are growing fast. Good news for the Tories’ plans to ‘rebalance’ the economy away from the capital, even as they rue another opportunity for the SNP to crow about how great things are north of the wall.
The capital topped the UK charts by a long way, with 381 foreign direct investment (FDI) projects in 2014 out of the UK's record total of 887, according to EY’s annual UK attractiveness survey. But London’s growth lagged far behind the English regions and Scotland actually slipped from 82 to 80 projects last year. Meanwhile, Yorkshire attracted 140% more projects, the south east 49% and the west Midlands 38%.
‘In the midst of glory, London’s share of inward investment stagnated in 2014, whilst English regions made large gains – a trend starkly represented when comparing the market share of ‘new’ projects, which surged in the English regions and devolved administrations, but fell significantly in London,’ EY chief economist Mark Gregory said.
The UK's record FDI catch was up 11% on the previous year. That growth was ahead of Europe, which attracted 4,341 projects, another record and a 10% rise on 2014.
Our fate is inextricably tied to the continent, though. Access to the single market was ‘important’ for 72% of more than 400 investors surveyed by EY and 31% said they were freezing or reducing investment until after the promised in-out EU referendum. Actions speak louder than words, of course, so we’ll have to wait and see whether that actually impacts FDI in the next couple of years.
We’re actually more dependent on the Americans for investment at the moment: 36% of projects came from the US, a huge proportion considering France, Germany, Japan and China accounted for 42% between them. But given the value foreign investors place on the UK’s place in the single market, MT wouldn’t bet against all of those taking a bad hit from a Brexit.