Foreign investors eye the East’s digital, food and logistics sectors
- Credit: Ian Burt
The East of England is one of regions best placed to thrive in a changing economy and is attracting more foreign investment, research suggests.
Accountancy giant Ernst and Young (EY) looked at Foreign Direct Investment (FDI) activity across the UK and found this region’s rose by a third in 2020 while overall UK activity fell.
The number of FDI projects in the region rose by 35% from 40 in 2019 to 54 in 2020 – making it the second strongest year for FDI projects in the East of England in a decade, the EY 2021 UK Attractiveness Survey found.
Across the UK as a whole, projects dropped from 1,109 to 975 while Europe’s figures fell from 6,412 to 5,578 over the same period.
Of the investors polled, London was deemed the most attractive to them with 25% putting it in top place, and Scotland came second at 15%.
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But 7% of investors said the East of England was the most attractive UK region in which to invest – up from just 1% in 2019.
The East of England’s strong performance last year meant it increased its share of the UK’s FDI market from 3.6% in 2019 to 5.5% in 2020.
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The rise was driven by success in key sectors, including digital technology (12 projects in 2020, up from seven in 2019), transport and logistics (10 projects, up from seven), and agri-food (eight projects, up from one).
Stuart Wilkinson, office managing partner at EY in the East of England, said: “The East of England has a diverse regional economy, and some of its sectors have seen an impact from global economic and business shifts linked to Brexit and the pandemic.
“With increasing focus on sectors and activities in which the East of England excels – including logistics and research – the region is one of the best positioned to thrive in a changing economy. It’s not a surprise that the region is much more attractive to investors than it was just two years ago.”
He added: “Our research suggests the UK’s ‘levelling up’ message has landed effectively with investors, with almost two-thirds aware of the policy.
There is scope to build on these foundations, with almost half of investors planning to change their supply chains in future and a fifth considering reshoring to the UK. With the manufacturing and logistics opportunities this will create, likely to fall outside of London and major cities, this may be a one-off chance to reshape the UK’s economic geography.”
Alison Kay, managing partner for client services at EY UK & Ireland, said given the impact of the pandemic, a shrinking FDI market, and what was then an uncertain future trading relationship with the European Union, the UK delivered a “positive” FDI performance in 2020.
“The UK has demonstrated resilience and adaptability in attracting investment,” she said. “However, its former dominance of the FDI market has been replaced by a competitive three-way tussle with Germany and France.”