EY Attractiveness Survey 2023 - West Midlands and the UK
- In 2023, the UK landed 985 FDI projects
- Over a quarter of digital FDI projects in Europe landed in the UK
- The West Midlands was the leading UK City-Region outside of London, with 127 FDI projects in 2023
The EY UK Attractiveness Survey reports on a huge amount of data important to those looking to expand into new markets and scale their businesses in foreign countries. The report revealed a lot about the choices past decision-makers have committed to, and highlights investment hotspots.
The UK and the West Midlands have once again outclassed other countries and regions as the go-to choice for Foreign Direct Investment (FDI).
EY UK Attractiveness Survey 2023
The EY UK Attractiveness Survey is a widely recognised report that catalogues the opinions of global decision-makers while looking at the number of investment projects that landed in the country, giving a holistic snapshot of the year.
The survey covers the previous calendar year, making this report one of great importance to the West Midlands, as it documents continued successes even after the Commonwealth Games 2022.
(Data is based on the European Investment Monitor, which follows over 10,000 news sources to find international investments, excluding investments such as portfolio or hospitality investments to leave a clear indication of companies investing on foreign soil and scaling in foreign markets.)
The UK is a prime market for new investments
Investing in a foreign country is a decision based on an uncountable number of factors, so it is good to see that the UK continues to be a top location of choice for investors. Not only is the country landing large numbers of projects, but that number is growing year-on-year, highlighting the lucrative opportunities in the UK.
According to EY, during 2023, the UK saw 985 FDI projects land.
This is an increase of 6% compared to 2022. The country ranked second in Europe for landed projects, closely following France. This increase flies in the face of the pattern seen by the rest of the continent, with Europe seeing a decline of 4.5% in the number of new projects.
While also leading on the average number of jobs per project in Europe (possibly indicating that investors see it as a location to make a bigger swing, or that larger companies are seeing the opportunities that can be capitalised on here), the UK is also the leading country for the largest number of projects by first-time investors. 736 of the projects that landed in the UK in 2023 were brand-new investments, and not expansions on existing properties or operations.
This likely represents an attractiveness to a dynamic segment of investors, those looking to directly capitalise on a new market, the capabilities, and the talent of the country.
Greater London, unsurprisingly the UK region with the highest number of projects, saw a huge increase from 2022, rising 20% to 359 FDI projects in 2023.
This figure looks good for 2024, as a record 69% of investors surveyed as part of EY’s report stated their intent to invest in the UK.
A digital investment hotspot
Digging further into the data, we can see that the UK is an incredible global hotspot for digital investment.
Digital has become a goliath in the global economy. Over the last decade, the digital sector has continuously generated the most FDI projects each year for Europe than any other sector. There’s a clear need for companies in the digital sector, and they are flocking to Europe, recognising it as a market that can support their needs. The top choice within that market though, is the UK.
Impressively, 255 digital FDI projects landed in the UK in 2023, accounting for over a quarter (27%) of the total digital investments coming into Europe. This is an increase of 8.9% compared to 2022.
It shows that the UK’s expertise in digital technology is working to attract companies from across the world. The UK market has seen the development of more tech unicorns than both Germany and France combined over the last ten years.
Whether it is the lowest corporation tax rate in the G7, the $31billion of Venture Capital funding received by UK start-ups in 2022, or any other number of benefits for those entering the UK market, it is undeniable that the country is a global hub of creative and digital tech.
India and UK partnerships
India and the UK are connected by a vast variety of economic ties.
Many Indian companies have established in the UK, so much so that EY found India to be the second biggest investor in the UK in 2023. The Indian and UK economies complement each other, creating opportunities for R&D, manufacturing and scaling that a company with a foot in only one of the countries would miss out on.
Perceived obstacles for investing in the UK economy
The last few years have seen a rather unstable economic climate in the UK, as reflected in EY’s findings.
According to the global investors surveyed by EY, the two biggest perceived risks for the UK were high inflation (56%) and high interest rates (59%).
However, the country is hopefully now turning to more stable times, with the newly elected government proposing legislation to improve how public finances are developed and analysed, in an attempt to prevent a repeat of the impact the mini-budget had on the economy.
The new UK government will focus on a set of distinct missions and a transparent approach to the challenges it faces, as part of its commitment to a clear programme of leadership.
This should reassure investors wanting to take advantage of the benefits of setting up a business in the UK but who are wary of the recent economic history of the country.
Why is the West Midlands attracting a high number of FDI projects?
As an economic powerhouse in the UK, it is no surprise that the West Midlands is a top choice for investors. What is bringing people to the region?
It’s the expert talent, bolstered by 60,000 graduates a year. It’s the strategic, central location that connects it to London and the rest of the world with rail and air links. It’s the economic scale of the region that is the fastest-growing tech sector in the UK, a hotbed for creativity and innovation. It’s the cost-effective overheads compared to the capital coupled with the higher quality of life for employees relocating here. It’s the thousands of other factors that make the West Midlands one of the most lucrative, unique and welcoming locations to be.
A demand for talent
35% of investors surveyed stated that a need for talent is a significant driving force behind their choices. This put the availability and skills of the local workforce as the second biggest consideration when looking at locations outside of London.
As stated, the West Midlands sees a high number of graduates complete their degrees annually. The 2021/22 academic year saw just under 63,450 people graduate from local universities.
Birmingham’s population alone includes 298,000 people qualified to a degree level or above, more than any other regional city. The wider West Midlands Combined Authority is home to over one million people educated to a degree level or above.
Plus, with a very young population (31.1% under 25), the region has a bright, ambitious, educated workforce eager to kickstart careers and begin solving companies’ big problems.
Outpacing national growth
The West Midlands is an economic giant of a region, not only in the UK but in Europe too. The three-city region and the surrounding boroughs have continuously proven themselves the places to innovate.
Despite not being a capital centre, the West Midlands held its own on the European scale. It was the seventh best-performing region for growth of FDI projects across the continent, with 127 projects in 2023.
This shows a huge amount of growth for the area, increasing projects landed by 72% year on year.
Focussing on Birmingham in particular, the city was the UK’s second most successful for FDI projects. According to EY, there were 67 projects in Birmingham in 2023, the highest recorded for the city over the last decade. This was more than twice the amount of any other UK city other than London.
The West Midlands’ official Investment Promotion Agency
The West Midlands Growth Company (WMGC) has worked tirelessly to promote the region over the last seven years. It works with investors looking to establish or scale in the UK, offering local expertise, connections with a wide network of partners, and fully funded soft-landing support packages.
In the year to April 2024, WMGC delivered 77 inward investment projects and 6,453 new jobs, proving an ability to ease the transition into the UK market for international companies.
To get in touch with local experts and find out how they can help establish your company in the UK market, get in touch today.
