trends in foreign direct investment in great britain’s …...britain’s towns and cities from...

Trends in foreign direct investment in Great Britain’s townsEY Attractiveness Survey

UK

May 2020

In collaboration with Centre For Towns

Executive summary

Methodology

1 Foreign direct investment into Great Britain’s cities and towns in 2019

Foreign direct investment into Great Britain’s cities and towns by region

Region by region; town by town

04

01

32

33

16

20

Contents

About Centre For Towns and the EY Attractiveness Program

2

3

This report uses data from the 2020 EY UK Attractiveness Survey to summarize how that investment has been distributed in towns and cities across Great Britain. The data covers all announced FDI projects in Great Britain for the period from 1997 to 2019 and has been geocoded by the Centre For Towns to pinpoint the destination of these investments.

ey.com/attractiveness

Foreign direct investment (FDI) continues to be a vital source of economic activity and employment in the United Kingdom (UK). This joint report by Ernst & Young LLP (UK) and the Centre For Towns, a non-partisan think tank dedicated to providing research and analysis of our towns, presents the results of our investigation into the distribution of inbound FDI projects announced across Great Britain’s towns and cities from 1997 to 2019. The report continues EY’s long history of sponsorship of research into regional trade — including FDI projects — and economic development, reflecting our desire to encourage an open dialogue between business leaders, investors and policymakers on how to maximize regional and national economic performance.

As the 2020 EY UK Attractiveness Survey1 has outlined, foreign investors are attracted to a location by certain criteria, most importantly a strong local skills base and excellent transport and technological infrastructure. At the Centre For Towns, we know those characteristics are not equally shared in towns and cities across Great Britain. Do the patterns of FDI projects reflect these underlying structural factors?

Main findings• In 2019 almost seven in ten (67%) of all FDI

projects went to one of Great Britain’s twelve Core Cities. In 1997 less than a third (31%) of FDI projects were in those Core Cities.

• London has been the destination for 6,421 FDI projects between 1997 and 2019. In 2019, London accounted for exactly half of all FDI projects coming into Great Britain and three-quarters of FDI projects going to Core Cities.

• FDI in the Core Cities has increased three-fold since 1997 while FDI in Great Britain’s towns has for the most part remained flat or declined.

• Over four-fifths (81%) of FDI projects in 2019 took place either in a Core City or within 30km of one.

Executive summary

• 2019 saw an increase in FDI projects in Core Cities with all other place types seeing reductions. 87% of all FDI went to either Core Cities or large towns.

• FDI in Great Britain’s university and coastal towns has declined sharply since 2017.

• FDI in Great Britain’s small and medium towns and rural communities has not changed over the last twenty years, falling well below the scale of investment of that seen in Core Cities.

• Since around 2004 FDI in sales and marketing has taken off, now far surpassing any of the other sectors in the number of projects. However, FDI in sales and marketing has fallen somewhat since 2017 also.

• London (69%) and the Core Cities (83%) dominate FDI in the digital sector. Over nine in ten (91%) FDI projects in this sector took place within 50km of a Core City.

• FDI in manufacturing has fallen since 2017 both in total and as a share of all projects, although the number of manufacturing projects has risen overall since 2008.

• London and the South East accounted for almost a half of all FDI projects since 1997. Sales and marketing investment has powered this growth.

These findings point to a continued structural imbalance between London and the South East and the rest of Great Britain in terms of the investment they receive from overseas. Not only that, but there are within-region disparities between the scale of investment in Core Cities and the largest towns compared with small, medium towns and rural communities.

Foreign investors favor a skilled local workforce and excellent transport infrastructure amongst other criteria1. These criteria appear to favor those places with a plentiful supply of those characteristics and disadvantage towns and places with a weak skilled workforce and under-investment in transport. In these circumstances it is perhaps unsurprising to see Core Cities receiving the lion’s share of FDI projects.

1 EY Attractiveness Survey UK May 2020

EY Attractiveness Survey: Trends in foreign direct investment in Great Britain’s towns May 2020 1

1997

2019

31% 67%

In 2019 almost seven in ten (67%) of all FDI went to one of Great Britain’s twelve Core Cities. In 1997 less than a third (31%) of FDI were in those Core Cities.

FDI in Core Cities has increased

three-fold since 1997 while FDI in towns has for the most part remained flat or declined.

FDI between 1997 and 2019

6,421

81%Over four-fifths of FDI in 2019 took place either

in a Core City or within 30km of one.

87%

2019 saw FDI in Core Cities with all other place types seeing reductions.

87% of all FDI went to either

Core Cities or large towns.

1

5

3

2

4

Executive summary

50%

In 2019, London accounted for exactly half of all FDI coming into Great Britain and three-quarters of FDI going to Core Cities.

London has been the destination for

EY Attractiveness Survey: Trends in foreign direct investment in Great Britain’s towns May 20202


LondonCore Cities

69% 83%

London (69%) and the Core Cities (83%) dominate FDI projects in the

digital sector.

FDI in university and coastal towns has declined sharply since 2017.

20 years=FDI in small and medium

towns and rural communities

has not changed over the last twenty years, falling well below the scale of investment of that seen in the Core Cities.

Since around 2004 FDI in sales and marketing has taken off, now far surpassing any of the other sectors in the number of projects ...

... however, FDI in sales and marketing has fallen somewhat since 2017 also.

FDI in manufacturing has fallen since 2017 both in total and as a share of all projects ...

... although the number of manufacturing projects has risen overall since 2008.

of all FDI since 1997. half Sales and marketing

investment has powered this growth.

London and the South East accounted for almost a

6

8

10

11

7

9

91%Over nine in ten FDI in this sector took place within 50km of a Core City.


1Foreign direct investment into Great Britain’s cities and towns in 2019

FDI projects were announced in Great Britain in 2019.

increase from 2018.

1,081 6%

4 Trends in foreign direct investment in our towns4


Project numbers edge up but not equally everywhere …

Since 1997, there have been 16,418 FDI projects made to Great Britain. There were 1,081 FDI projects to Great Britain in 2019, a 6% increase from last year. Tables 1 and 2 show the total number of FDI projects between 1997 and 2019 broken down by Centre For Towns place types. The Centre For Towns uses two broad place types (see the Methodology).

This investment is not spread equally across Great Britain’s towns and cities. In 2019, almost seven in ten (67%) of FDI projects went to one of the Core Cities***. As the chart below shows, between 1997 and 2018 foreign investment into the Core Cities has far outpaced FDI projects into any other place types.

Table 1: Total number of FDI projects by place type, 1997–2019

Core City

Large towns

Medium towns

Small towns

Communities Villages Other Total*

8,713 3,587 1,822 1,193 365 629 109 16,418

53% 22% 11% 7% 2% 4% 1%

Table 2: FDI projects by place type, 2019

Core City

Large towns

Medium towns

Small towns

Communities Villages Other Total**

720 177 70 38 6 25 76 1,081

67% 16% 6% 4% 1% 2% 4%

* 109 places could not be categorized in one of the place types. ** 45 places could not be categorized in one of the place types. *** Leeds, Liverpool, Manchester, London, Bristol, Sheffield, Cardiff, Glasgow, Edinburgh, Nottingham, Birmingham and Newcastle Upon Tyne.

Figure 1: FDI projects by place type, 1997–2019

Core City Medium townLarge town Small town Community Village

1997 2003 2005 2007 2009 2011 2013 2015 2017 2019

700

600

500

400

300

200

100

01999 2001

Num

ber o

f FDI

pro

ject

s

Source: EY European Investment Monitor (EIM), 2020




In 1997, Great Britain’s Core Cities accounted for less than a third (31%) of all FDI projects, but since around 2004 have consistently been the destination of choice for investors (Figure 2 below).

Foreign investment in Core Cities has grown three-fold (298%) since 1997, while FDI in other place types has remained flat or fallen altogether. Worryingly, 2019 saw this disparity process intensify further.

While the Core Cities have outpaced towns in the number of projects, it is fair to say that London has accounted for the bulk of the growth in investment in Core Cities over this period. London accounted for 539 (75%) of the 720 FDI projects directed at Core Cities in 2019.

Since 1997, London has accounted for between two-thirds and three-quarters of all FDI projects coming in to Core Cities each year. The table (right) shows the number of projects in each of the twelve Core Cities as well as the growth in each over the period.

Table 3: Number of FDI projects in Core Cities, 1997–2019

City 1997 2008 2018 2019 Growth (n) since 1997

Birmingham 16 9 22 30 +14

Bristol 2 8 10 15 +13

Cardiff 2 4 8 10 +8

Edinburgh 7 8 20 22 +15

Glasgow 9 9 19 23 +14

Leeds 6 3 21 20 +14

Liverpool 7 4 8 8 +1

London 159 264 457 539 +380

Manchester 19 20 37 34 +15

Newcastle Upon Tyne

3 6 6 6 +3

Nottingham 4 6 4 6 +2

Sheffield 8 3 6 7 -1

Figure 2: FDI projects by place type, 1997–2019


1997 2003 2005 2007 2009 2011 2013 2015 2017 20191999 2001

70%

60%

50%

40%

30%

20%

10%

0%

Prop

ortio

n of

all

FDI p

roje

cts





London has powered the growth in FDI projects in the Core Cities over this period, with much smaller increases in the other Core Cities. Equally, proximity to a Core City has also invoked more FDI in 2019 (Table 4 below). Four in every five FDI projects take place either in a Core City or within 30km of that Core City.

Table 4: Proximity to the nearest Core City and the number of FDI projects, 2019

Core City Within 30km 30km to 50km 50km to 75km 75km to 100km Over 100km

720 113 60 60 37 39

67% 11% 6% 6% 4% 4%

of FDI projects in 2019 went to the Core Cities.

67%



... and not equally between the characteristics of places

The Centre For Towns has also created bespoke categorizations of places based on their context, and uses six distinct place types: coastal towns, university towns, ex-industrial towns, new towns, market towns, and commuter towns.

Figure 3: Number of FDI projects by place characteristics, 1997–2019

Ex-industrial Market New town Core CityUniversity CommuterCoastal

Num

ber o

f FDI

pro

ject

s

2003 20052001 2007 2009 2011 2013 2015 2017 201919991997

750

650

550

450

350

250

150

50



Again, we can see that all place types have received far fewer FDI projects than Great Britain’s

Core Cities. The table shows how many projects each place type has received since 1997.

Table 5: Number of FDI projects by place characteristics, 1997–2019

Year University Coastal Commuter Ex-industrial Market New town Core City

1997 119 59 21 69 43 57 242

1998 106 24 10 52 31 39 227

1999 70 26 13 33 19 32 194

2000 87 31 15 24 22 43 244

2001 60 15 8 10 26 24 148

2002 63 25 5 19 14 18 160

2003 71 41 6 28 20 28 172

2004 108 47 12 29 27 26 215

2005 94 36 15 18 26 26 243

2006 94 32 14 11 37 34 339

2007 94 33 20 22 26 24 388

2008 81 39 16 30 24 28 344

2009 84 41 16 21 25 21 347

2010 88 39 9 27 21 21 409

2011 80 25 17 17 25 16 397

2012 83 30 14 24 21 16 398

2013 73 32 10 18 16 28 487

2014 114 40 17 35 30 27 492

2015 124 41 13 46 28 31 620

2016 129 36 12 51 41 31 656

2017 180 37 14 54 26 41 646

2018 97 6 18 35 47 24 624

2019 92 10 12 40 37 18 720



Table 6: The share of all FDI projects by each place type by year

Period Core City Large town Medium town Small town Community Village

1997 31% 26% 20% 12% 4% 7%

2008 52% 21% 12% 8% 3% 4%

2016 59% 20% 9% 6% 2% 4%

2018 61% 17% 9% 6% 2% 5%

2019 67% 17% 7% 4% 1% 2%

Similarly, each of the place types based on characteristics now account for smaller proportions of all FDI projects than they did in 1997.

Coastal towns have seen a number of FDI projects collapse in the last two years. Foreign investments in university towns have also fallen by half over the same period but still receive more FDI projects than the other place types.

Core Cities outstrip them all, with them receiving three and a half times more FDI projects than the other place types combined.

Over the last two decades Core Cities have gone from accounting for 31% of FDI projects to 67% in 2019. All the other place types have seen a reduction in their share of FDI projects since 1997 (see table below).


Table 7: The share of FDI projects based on place characteristics by year

Year University Coastal Commuter Ex-industrial Market New town Core City

1997 20% 10% 3% 11% 7% 9% 31%

2008 22% 5% 2% 11% 6% 8% 52%

2016 18% 7% 3% 9% 5% 8% 59%

2018 11% 1% 2% 4% 6% 3% 61%

2019 10% 1% 1% 4% 4% 2% 67%




Sectoral investment has increasingly focused on sales and marketing ...

Sales and marketing investments have powered the growth in FDI projects since around 2004, with a five-fold increase in the number of sales and marketing investment projects over that period. However, the last three years have seen declines in the number of sales and marketing FDI projects. With the exception of FDI headquarters projects, investment in other activities has also slowed.

2003 2005 20092001 2007 2011 2013 2015 2017 201919991997

700

600

500

400

300

200

100

0

Num

ber o

f FDI

pro

ject

s

IDC Logistics Manufacturing

R&D

Contact center HeadquartersEducation and training

Shared services centerSales and marketing Testing and servicing

Figure 4: FDI projects by activity, 1997–2019



… and sales and marketing investment has mostly been concentrated in cities and large towns

Three-quarters (n = 5,776; 75%) of all sales and marketing investment has gone to one of the Core Cities for the whole period since 1997, with large towns accounting for most of the remainder (n = 1,134; 15%) (Table 8).

FDI has mostly concentrated in Great Britain’s Core Cities and large towns, and sectorally within sales and marketing. Core Cities and large towns dominate FDI in most activity types.

Table 8: FDI projects by type of place and activity, 1997–2019*

Activity Core City Large town Medium town Small town Community Village Total

Contact center 201 156 65 35 19 11 487

Education and training

57 40 19 17 4 10 147

Headquarters 1187 396 147 80 29 41 1880

Internet data center

100 40 11 1 0 1 153

Logistics 241 322 164 124 38 72 961

Manufacturing 429 958 733 572 180 270 3142

R&D 490 389 176 90 18 81 1244

Sales and marketing

5776 1134 427 232 56 117 7742

Shared services 98 32 17 2 1 3 153

Testing and servicing

133 117 63 40 20 22 395

Total 8711 3587 1822 1193 365 629 16307

* A total of 109 projects could not be categorized under place types, and 5 projects did not have activity markers. They were excluded from this table.




FDI in manufacturing varies by type of place …

Until 2017 – in terms of the characteristics of place which receive manufacturing investment – it had been university towns which had seen the largest recent increases in manufacturing investment (more than trebling since 2008).

However, that has fallen considerably since 2017 as Figure 6 shows below. In 2019, Core Cities received more FDI in manufacturing than the other place types.

Figure 5: FDI projects in manufacturing by place type, 1997–2019


1997 2003 2005 2007 2009 2011 2013 2015 2017 20191999 2001

100%

80%

60%

40%

20%

0%

Num

ber o

f FDI

pro

ject

s

Figure 6: FDI projects in manufacturing by place characteristics, 1997–2019

University CommuterCoastal Ex-industrial Market New town Core City

1997 2003 2005 2007 2009 2011 2013 2015 2017 20191999 2001

50

40

30

20

10

0

Num

ber o

f FDI

pro

ject

s

While the Core Cities, and particularly sales and marketing, have powered the growth in FDI projects, it is also true to say that sectoral investment in manufacturing alone has been spread more evenly across place types. However, since

2017 FDI projects in manufacturing in large towns have fallen but shows tentative signs of recovery in 2019. It remains to be seen how the impact of COVID-19 changes this trend (Figure 5 below).




… as does investment in research and development ...

In 2019 there were ninety-two research and development (R&D) projects.

This was a 42% increase on 2018 but once again these projects were almost all to be found in Core Cities or large towns (Figure 7, below). Core Cities and large towns now account for over three-quarters (77%) of all FDI projects.Almost a third (32%) were in London.

Figure 7: FDI projects in R&D by place type, 1997–2019


1997 2003 2005 2007 2009 2011 2013 2015 2017 20191999 2001

50

40

30

20

10

0

Num

ber o

f FDI

pro

ject

s




... and investment in the digital sector

As Table 9 shows, FDI in the digital sector was dominated by the Core Cities in 2019.

Table 9: FDI projects in the digital sector by place type, 2019

Core City Large towns Medium towns Small towns Communities Villages Total

349 40 7 5 0 7 419

83% 10% 2% 2% 0% 2%

Table 10: FDI projects in the digital sector by proximity to a Core City

Core City Within 30km 30km to 50km 50km to 75km 75km to 100km Over 100km

349 22 11 19 10 7

83% 5% 3% 5% 2% 2%

1 Centre For Towns (2019), The Digital Sector in Our Towns And Cities ( https://www.centrefortowns.org/reports/digital-briefing).

Of the 349 FDI projects in the digital sector in our Core Cities, 291 were made in London. London therefore represents almost seven in ten (69%) of all digital sector FDI. In a previous report the Centre For Towns1 demonstrated how London continues to dominate the digital sector, so this finding is further evidence of a worrying trend.

Nine out of every ten (91%) FDI projects in the digital sector take place within 50km of a Core City (Table 10).




2Foreign direct investment into Great Britain’s cities and towns by region

of FDI projects in the last year were in the South East.

of total FDI projects since 1997 were in the South East.

58% 49%

Trends in foreign direct investment in our towns16


Regional investment

Figure 8: FDI projects by region or nation, 1997–2019

East Midlands North EastEast of England North West Scotland

South East

1997 2003 2005 2007 2009 2011 2013 2015 2017 20191999 2001

600

500

400

300

200

100

0

South West West MidlandsWales Yorkshire and the Humber

Num

ber o

f FDI

pro

ject

s

Figure 8 shows FDI projects by region or nation between 1997 and 2019. The South East dominates with over half (58%) of all FDI projects in the last year and almost half (49%) of all FDI projects since 1997.

The South East accounted for nearly half of total FDI projects since 1997.



Over four-fifths (81%) of these projects were in London. No other Core City accounts for such a large proportion of a region’s FDI projects as London. Although half of all FDI projects in the North West were in the Core Cities, this is because the region has two Core Cities in Liverpool and Manchester.

Table 11: FDI projects by region and place type (total since 1997)*

Region Core City Large town Medium town Small town Community Village Total

East Midlands 88 233 125 60 52 66 624

East of England na 498 100 107 20 75 801

North East 125 279 142 166 9 30 751

North West 590 280 165 88 10 35 1,168

Scotland 603 217 346 190 92 115 1,563

South East 6,421 822 405 186 35 106 7,975

South West 184 242 55 76 27 49 633

Wales 101 119 170 138 79 53 660

West Midlands 327 492 270 93 23 70 1,275

Yorkshire and the Humber

273 405 44 89 18 30 859

Total 8,713 3,587 1,822 1,193 365 629 16,309

* A total of 109 projects could not be categorized under place types.




There is a better balance between investment in Core Cities and other place types in the other regions. Core Cities account for a much smaller proportion of all FDI projects outside of the South East. Table 12 below shows the regional breakdown of FDI projects in 2019. London (the Core City in the South East region) accounts for exactly half (n=539; 50%) of all FDI projects coming into Great Britain in 2019.

However, even in the regions and nations of Great Britain, albeit with smaller numbers, the Core Cities receive the largest numbers of FDI projects. Newcastle in the North East, Liverpool and Manchester in the North West, Glasgow and Edinburgh in Scotland, Bristol in the South West, and Cardiff in Wales, all receive the most FDI projects by quite a margin over their towns.

London accounts for exactly half of all FDI projects coming into Great Britain in 2019.

** Rows will not add to the Total column as there are 45 FDI projects in 2019 which could not be categorized by place type.

Table 12: FDI projects by region or nation and place type, 2019

Region Core City Large town Medium town Small town Community Village Total**

East Midlands 6 15 8 2 2 4 39

East of England 24 1 8 2 49

North East 6 13 4 5 30

North West 42 13 13 2 73

Scotland 45 19 16 8 1 3 101

South East 539 45 12 5 2 7 621

South West 15 7 1 3 30

Wales 10 3 3 3 1 1 24

West Midlands 30 17 10 1 1 64


27 19 2 3 4 56

Total 720 175 69 38 6 25 1,078



3Region by region, town by town

of all FDI projects went to one of Great Britain’s twelve Core Cities in 2019.

of FDI projects were in those Core Cities in 1997.

65% 31%

Trends in foreign direct investment in our towns20


There were just 39 FDI projects in the East Midlands in 2019, down just 1 from last year. The region accounts for a small fraction of the total FDI projects in Great Britain since 1997 (n=628; 4%) (Table 13). Within the East Midlands, large towns have received the greatest number of FDI projects since 1997 (n=233; 37%).

Manufacturing accounts for just over a third (37%) of all FDI projects in the East Midlands since 1997, with Leicester, Nottingham, Derby, Lincoln and Burton-upon-Trent having the most projects. Sales and marketing accounts for almost a quarter (22%) of all FDI projects in the East Midlands since 1997 with Nottingham, Leicester, Derby, Northampton and Lincoln having the most projects. Logistics accounts for almost a fifth (19%) of all FDI projects in the East Midlands. The region has significant logistics operations in Magna Park (Lutterworth) and around Daventry, Crick and Castle Donington due to their rail and road proximities.

Table 14 shows the FDI projects in the region by activity type in 2019.

East Midlands

Table 13: FDI projects in the East Midlands by activity and place type, 1997–2019

Table 14: FDI projects in the East Midlands by activity and place type, 2019


Source: EY European Investment Monitor (EIM), 2020projects in the East Midlands between 1997-2019 were in manufacturing.

of FDI37%

Activity Core City

Large town

Medium town

Small town

Community Village Total*

Contact center 8 16 1 3 1 29

Education and training 2 1 3 1 2 9

Headquarters 7 17 12 4 5 3 48

Logistics 6 36 25 13 18 21 119

Manufacturing 16 66 57 23 15 28 205

R&D 11 17 6 4 2 5 45

Sales and marketing 37 65 20 7 8 3 140

Shared services 2 2

Testing and servicing 3 12 3 3 2 4 27

Total 88 233 125 60 52 66 624

Activity Core City

Large town

Medium town

Small town

Community Village Total**

Headquarters 1 1 2

Logistics 1 2 3 1 1 8

Manufacturing 1 3 2 1 1 2 10

R&D 1 1 2

Sales and marketing 3 8 1 1 13

Testing and servicing 1 1 2

Total 6 15 8 2 2 4 37

* Four places could not be categorized and are thus excluded from the table.** Two places could not be categorized and are thus excluded from the table.


There were 40 FDI projects in the East of England in 2019, up 4 from last year but down from a high of 59 in 2017. The region accounts for a small fraction of the total FDI projects in Great Britain since 1997 (n=814; 5%). Within the East of England, large towns have received the greatest number of FDI projects since 1997 (n=498; 61%) (Table 15).

Since 1997, over a third of FDI projects in the region were in sales and marketing in Cambridge (n=269; 34%) while around a fifth of projects in the East of England were in either R&D or manufacturing.

In 2019, 11 of the 40 FDI projects were in sales and marketing, with 7 in R&D or manufacturing (Table 16).

Table 15: FDI projects in the East of England by activity and place type, 1997-2019

Table 16: FDI projects in the East of England by activity and place type, 2019

East of England

in the East of England between 1997-2019 were in large towns.

of FDI projects61%



Activity Large town

Medium town

Small town


Contact center 21 2 23

Education and training 4 2 1 7

Headquarters 53 14 6 1 3 77

Internet data center 3 1 4 8

Logistics 36 14 18 2 7 77

Manufacturing 61 20 47 6 26 160

R&D 119 10 9 2 14 154

Sales and marketing 185 34 19 8 23 269

Shared services center 3 2 5

Testing and servicing 13 3 6 1 1 24

Total 498 100 107 20 75 800

Activity Large town

Medium town

Small town

Community Village Total**

Contact center 1 1

Headquarters 1 1 1 3

Logistics 2 2 1 5

Manufacturing 5 1 6

R&D 5 2 7

Sales and marketing 7 3 10

Shared services center 1 1

Testing and servicing 2 1 1 4

Total 24 1 8 2 2 37

* Fourteen places could not be categorized.** Three places could not be categorized.



There were 30 FDI projects in the North East in 2019, down 6 from last year and down 21 from 2017. The region accounts for a small fraction of the total FDI projects in Great Britain since 1997 (n=762; 5%). Within the North East, large towns have received the greatest number of FDI projects since 1997 (n=279; 37%). The North East also sees foreign investment shared more equally between its Core City (Newcastle) and its large towns (Table 17). Manufacturing accounts for a half of all FDI projects in the North East over this period (n=381; 50%).

In 2019, sales and marketing or manufacturing accounted for most FDI projects (Table 18).

North East

Table 17: FDI projects in the North East by activity and place type, 1997–2019

Table 18: FDI projects in the North East by activity and place type, 2019

projects in the North East in 2019 were in manufacturing.

of FDI50%



Activity Core City

Large towzn

Medium town

Small town

Community Village Total

Contact center 15 35 6 6 62




Logistics 3 16 10 7 3 39

Manufacturing 18 121 83 128 7 17 374

R&D 15 25 13 8 3 64


Shared services center 3 1 1 5


Total 125 279 142 166 9 30 751

Activity Core City

Large town

Medium town

Small town

Total

Contact center 1 1

Education and training 1 1

Headquarters 1 1

Logistics 4 1 5

Manufacturing 1 4 3 8

R&D 1 2 3

Sales and marketing 4 3 1 8

Testing and servicing 1 1

Total 6 13 4 5 28


There were 73 FDI projects in the North West in 2019, up 3 from last year but down by 30% since 2017. Since 1997 there have been 1,175 FDI projects in the North West. A half (n=590; 50%) have been in one of its two Core Cities, Liverpool or Manchester (Table 19). Half again (n=290; 25%) have been in large towns. Over a third (37%) of all FDI projects in the North West have been in sales and marketing, while over a quarter (27%) have been in manufacturing projects.

In 2019, over half of FDI projects in the North West was in sales and marketing, with manufacturing making up just one in six of all FDI projects.

North West

Table 19: FDI projects in the North West by activity and place type, 1997–2019

Table 20: FDI projects in the North West by activity and place type, 2019

projects in the North West between 1997-2019 were in one of its two Core Cities.

of FDI50%



Activity Core City

Large town

Medium town

Small town


Contact center 33 17 6 56

Education and training 6 3 2 1 12

Headquarters 53 29 5 3 90


Logistics 41 35 23 6 3 108

Manufacturing 82 86 82 50 8 8 316

R&D 45 15 11 6 1 10 88




Total 590 280 165 88 10 35 1168

Activity Core City

Large town

Medium town

Small town

Total*

Contact center 1 1


1 1

Headquarters 2 2

Logistics 2 3 1 6


R&D 3 2 1 6

Sales and marketing

30 5 2 37

Shared services center

1 1


3 1 4

Total 42 13 13 2 70

* Three places could not be categorized.



There were 101 FDI projects in Scotland in 2019, up 7 from last year. Scotland now has almost twice as many FDI projects as it did just a decade ago. Since 1997, almost four in ten (n=603; 38% of FDI projects in Scotland between 1997-2019 were in the Core Cities of Edinburgh or Glasgow.

Manufacturing has accounted for almost a third (n=469; 29%) of all FDI projects in Scotland since 1997 while sales and marketing accounts for over a quarter (n=426; 27%), with Edinburgh, Glasgow and Aberdeen seeing over four in five of these projects. R&D projects have also been strongly concentrated in Glasgow and Edinburgh.

In 2019, manufacturing (32%) and sales and marketing (32%) made up two-thirds of FDI projects in Scotland.

ScotlandTable 21: FDI projects in Scotland by activity and place type, 1997–2019

Table 22: FDI projects in Scotland by activity and place type, 2019

projects in Scotland between 1997-2019 were in the Core Cities of Edinburgh or Glasgow.

of FDI38%



Activity Core City

Large town

Medium town

Small town


Contact center 57 3 32 10 13 6 121

Education and training 6 6 5 4 1 2 24


Internet data center 4 1 2 1 8

Logistics 18 20 19 18 3 6 84

Manufacturing 62 34 156 86 55 66 459

R&D 132 34 63 30 3 16 278


Shared services center 24 3 6 1 2 36


Total 603 217 346 190 92 115 1563

Activity Core City

Large town

Medium town

Small town


Education and training 2 1 3

Headquarters 4 4 8

Internet data center 1 1

Logistics 3 3

Manufacturing 7 5 7 3 1 2 25

R&D 10 2 2 14



Testing and servicing 1 3 1 1 6

Total 45 19 16 8 1 3 92


There were 82 FDI projects in the South East in 2019 (not including London), down 8 from last year. There have been 1,583 FDI projects in the South East since 1997. FDI projects in the South East are predominantly in medium and large towns, which together account for over three-quarters of all investment (79%).

Between 1997 and 2019 sales and marketing accounted for over two-fifths (n=674; 43%) of all FDI projects while a fifth (n=299; 19%) in headquarters.

In 2019, almost two-thirds (63%) of FDI projects in the South East were in large towns and almost half (n=33; 46%) were in sales and marketing.

South East (excluding London)

Table 23: FDI projects in the South East by activity and place type, 1997–2019

Table 24: FDI projects in the South East by activity and place type, 2019

projects in the South East in 2019 were in large towns.

of FDI63%



Activity Large town

Medium town

Small town




Headquarters 167 70 41 6 15 299


Logistics 41 19 17 5 5 87


R&D 89 34 14 2 18 157




Total 822 405 186 35 106 1554

Activity Large town

Medium town

Small town


Contact center 1 1

Headquarters 6 1 1 1 9


Logistics 6 2 8


R&D 9 1 2 12



Total 45 12 5 2 7 71

* Eleven places could not be categorized.



We also looked at London itself. There were 539 FDI projects in London in 2019, a rise of 22% from last year and representing an increase of 104% since 2008. Since 1997, almost three-quarters (n=4,747; 74%) of FDI projects in the capital have been in sales and marketing, with the bulk of the remainder being invested in company headquarters (n=1,008; 16%).

London (extracted from the South East)

increase in FDI projects in London between 2008-2019.

104%


There were just 30 FDI projects in the South West in 2019, down 5 from last year and down 15 from 2017. Since 1997 there have been 645 FDI projects in the South West, over a quarter (n=184; 29%) of which were in the Core City of Bristol. 32% of FDI projects in the South West between 1997-2019 were in manufacturing, with a further 31% in sales and marketing (n=197).

In 2019, just under a third of FDI projects were in sales and marketing.

South West

Table 25: FDI projects in the South West by activity and place type, 1997–2019

Table 26: FDI projects in the South West by activity and place type, 2019

projects in the South West between 1997-2019 were in manufacturing.

of FDI32%



Activity Core City

Large town

Medium town

Small town






Logistics 12 16 2 5 2 12 49

Manufacturing 20 100 26 25 15 22 208

R&D 26 18 5 5 2 4 60




Total 184 242 55 76 27 49 633

Activity Core City

Large town

Small town

Village Total*

Headquarters 1 1

Logistics 1 1 1 3


R&D 4 4


Testing and servicing 3 3

Total 15 7 1 3 26

* Four places could not be categorized.



Since 1997 there have been 668 FDI projects in Wales. These projects have been distributed equitably between the different place types in Wales. Cardiff accounted for 15% of FDI projects in Wales.

Manufacturing accounts for over half (n=356; 53%) of all FDI projects in Wales while sales and marketing accounts for 13% (Table 27).

In 2019, there were 24 FDI projects in Wales, down 7 from last year. Over two in five (42%) were in Cardiff.

Wales Table 27: FDI projects in Wales by activity and place type, 1997–2019

Table 28: FDI projects in Wales by activity and place type, 2019

projects in Wales in 2019 were in Cardiff.

of FDI42%



Activity Core City

Large town

Medium town

Small town


Contact center 10 11 6 4 2 1 34

Education and training 4 2 6


Internet data center 1 2 3

Logistics 3 9 8 7 2 1 30

Manufacturing 15 46 113 96 51 35 356

R&D 13 14 12 9 5 4 57




Total 101 119 170 138 79 53 660

Activity Core City

Large town

Medium town

Small town


Headquarters 1 1

Logistics 1 1

Manufacturing 2 3 5

R&D 3 1 4

Sales and marketing 5 2 7



Total 10 3 3 3 1 1 21


West Midlands

Table 29: FDI projects in the West Midlands by activity and place type, 1997–2019

Table 30: FDI projects in the West Midlands by activity and place type, 2019

There were 64 FDI projects in the West Midlands in 2019, down 19 from last year and down 41% from 2016. There have been 1,289 FDI projects in the region since 1997 with large towns taking up the largest proportion of FDI projects (n=492; 38%). Over a third (n=441; 34%) were in manufacturing while just under a third (29%) were in sales and marketing.

In 2019, over half of all FDI projects in the West Midlands were in Birmingham. A third were in sales and marketing.

projects in the West Midlands between 1997-2019 were in manufacturing.

of FDI34%



Activity Core City

Large town

Medium town

Small town


Contact center 10 4 5 2 1 1 23


Headquarters 26 47 23 3 2 4 105


Logistics 30 63 39 16 2 10 160

Manufacturing 68 189 100 49 12 27 445

R&D 29 36 20 4 1 6 96


Shared services center 6 6 12


Total 327 492 270 93 23 70 1275

Activity Core City

Large town

Medium town

Small town

Village Total*


1 1

Headquarters 5 4 1 10

Logistics 2 3 5


R&D 3 1 4

Sales and marketing

14 5 2 21


1 1


4 1 5

Total 30 17 10 1 1 59

* Five places could not be categorized.



There were 56 FDI projects in Yorkshire and the Humber in 2019, an increase of 7 from last year but a 43% reduction from 2016. Since 1997 there have been 862 FDI projects in the region. Large towns account for the most FDI projects by place type (n=405; 47%) with the Core City of Leeds accounting for almost three in ten.

Manufacturing accounts for the largest number of manufacturing projects (n=350; 41%), followed by sales and marketing (n=222; 26%).

In 2019, almost half (n=27; 46%) of the total FDI projects in the Yorkshire and the Humber were in Core Cities of Leeds or Sheffield. Sales and marketing was the most likely activity associated with FDI projects.


Table 31: FDI projects in Yorkshire and the Humber by activity and place type, 1997–2019

Table 32: FDI projects in Yorkshire and the Humber by activity and place type, 2019

projects in Yorkshire and the Humber in 2019 were in the Core Cities of Leeds or Sheffield.

of FDI46%



Activity Core City

Large town

Medium town

Small town


Contact center 14 13 8 1 36


2 4 1 2 1 10


Internet data center

3 2 1 1 7

Logistics 18 50 5 17 4 4 98

Manufacturing 62 197 24 41 9 15 348

R&D 19 22 2 1 1 45

Sales and marketing

118 75 7 14 2 6 222


4 1 1 6


8 17 2 1 28

Total 273 405 44 89 18 30 859

Activity Core City

Large town

Medium town

Small town

Village Total

Contact center 1 1

Headquarters 4 1 5

Logistics 1 3 2 6


R&D 1 1




Total 27 19 2 3 4 55


Methodology

Our evaluation of the reality of FDI the UK is based on the EY European Investment Monitor (EIM), EY proprietary database, produced in collaboration with OCO Global. This database tracks the FDI projects that have resulted in the creation of new facilities and jobs. By excluding portfolio investments and M&A, it shows the reality of investment in manufacturing and services by foreign companies across the continent.

Data on FDI is widely available. An investment in a company is normally included in FDI data if the foreign investor acquires more than 10% of the company’s equity and takes a role in its management. FDI includes equity capital, reinvested earnings and intracompany loans.

But our figures also include investments in physical assets, such as plant and equipment. And this data provides valuable insights into:

• How FDI projects are undertaken

• What activities are invested in

• Where projects are located

• Who is carrying out these projects

The EY EIM is a leading online information provider that tracks inward investment across Europe. This flagship business information tool is the most detailed source of data on cross-border investment projects and trends throughout Europe. The EY EIM is frequently used by government bodies, private sector organizations and corporations looking to identify significant trends in employment, industry, business and investment.

The EY EIM database focuses on investment announcements, the number of new jobs created and, where identifiable, the associated capital investment. Projects are identified through the daily monitoring of more than 10,000 news sources. To confirm the accuracy of the data collected, the research team aims to directly contact more than 70% of the companies undertaking these investments.

The following categories of investment projects are excluded from the EY EIM:

• M&A and joint ventures (unless these result in new facilities or new jobs being created)

• License agreements

The “real” attractiveness of the UK for foreign investors

• Retail and leisure facilities, hotels and real estate*

• Utilities (including telecommunications networks, airports, ports and other fixed infrastructure)*

• Extraction activities (ores, minerals and fuels)*

• Portfolio investments (pensions, insurance and financial funds)

• Factory and other production replacement investments (e.g., replacing old machinery without creating new employment)

• Nonprofit organizations (charitable foundations, trade associations and government bodies)

* Investment projects by companies in these categories are included in certain instances: e.g., details of a specific new hotel investment or retail outlet would not be recorded, but if the hotel or retail company were to establish a headquarters facility or a distribution center, this project would qualify for inclusion in the database.

The perceived attractiveness of the UK and its competitors by foreign investorsWe define the attractiveness of a location as a combination of image, investors’ confidence and the perception of a country’s or area’s ability to provide the most competitive benefits for FDI.

We have adapted our regular investor survey this year, to provide more insight into the impact of COVID-19 on the perceptions and aspirations of investors into the UK and Europe as a whole.

· European field research was conducted by the CSA Institute in January and February 2020 via telephone interviews, based on a representative panel of 504 international decision-makers.

· A second perception survey for Europe was conducted from 15 April to 29 April to reflect decision-makers’ perception changes due to the COVID-19 crisis. This online survey was led by Euromoney, based on a representative panel of 113 international decision-makers.

· A final perception survey for the UK was conducted by Longitude from 10 April to 30 April to reflect decision-makers’ perception changes due to the COVID-19 crisis. The survey was conducted by telephone and email and based on a representative panel of 200 international decision-makers.



* Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester, Newcastle-upon-Tyne Nottingham, Sheffield.** Christina Beatty and Steve Fothergill. (2018). ‘The contemporary labor market in Britain’s older industrial towns.’ Centre for Regional Economic and Social Research,

Sheffield Hallam University Working Paper, p. 7.

The Centre For Towns is an independent non-partisan organisation dedicated to providing research and analysis of our towns. While our cities receive a good deal of attention, we believe that there should be equal attention paid to the viability and prosperity of our towns.

The Centre has created a database of around seven thousand places across the United Kingdom, ranging in size from villages to small towns to large towns and cities. Those towns have been further categorized where possible into types of towns.

We aim to use our research and analysis to advocate for policy and practical solutions to the challenges faced by our towns.

Centre For Towns

Typologies of place based on population size (Centre For Towns)

Typologies of place based on characteristics of place (Centre For Towns)

Village Place with a population of less than 5,000 people

Community Place with a population of between 5,000 and 10,000 people

Small town Place with a population between 10,000 and 30,000 people

Medium town Place with a population between 30,000 and 75,000 people

Large town Place with a population above 75,000 people but not a Core City

Core City One of twelve Core Cities* identified by Pike at al. (2016)

University town Town with a university and at least 5% of the population as students

Market town Hub towns as defined by Defra

New town Designated new town status post-war

Ex-industrial town Town under the remit of the Industrial Communities Alliance**

Commuter town Town with over 10,000 people within commuting distance of Core Cities

Coastal town Town with over 10,000 people and a substantial coastline

EY Attractiveness Surveys are widely recognized by clients, media, governments and major public stakeholders as a key source of insight into FDI. Examining the attractiveness of a particular region or country as an investment destination, the surveys are designed to help businesses make investment decisions and governments remove barriers to growth. A two-step methodology analyzes both the reality and perception of FDI in the country or region. Findings are based on the views of

representative panels of international and local opinion leaders and decision-makers.

The program has a 19-year legacy and has produced in-depth studies for Europe, a large number of European countries, Africa, the Mediterranean region, India, Japan, South America, Turkey and Kazakhstan.

For more information, please visit: ey.com/attractiveness #EYAttract

About the EY Attractiveness program


EY contacts

Mark Gregory EY UK Chief [email protected]

Annabel Banks Media Relations Manager

[email protected]

Shelley Marchant UK Brand Programs [email protected]

Centre For Towns contact

Ian Warren Director

[email protected]

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation is available via ey.com/privacy. For more information about our organization, please visit ey.com.

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