The Midlands delivered a strong performance for foreign direct investment (FDI) projects last year, according to newly published research out today.
The 2022 Attractiveness Survey, produced by financial services firm EY, said both the West and East Midlands saw their number of FDI-backed projects growing at a faster rate than the rest of the UK.
The West Midlands hosted 78 FDI projects in 2021, up 27.9 per cent from the 61 projects located in the region in 2020.
The West Midlands even improved on its immediate pre-pandemic performance, with only 64 projects taking place in 2019.
Meanwhile, the East Midlands hosted 39 projects in 2021, up 2.6 per cent from the 38 projects in 2020 and the same number of projects as 2019.
By comparison, UK project numbers grew just 1.8 per cent from 975 in 2020 to 993 in 2021.
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The leading Midlands location for FDI was Birmingham with 17 projects, making it the sixth highest number for a city outside of London, while Warwick was a stand-out location in the country as a whole with growth in the digital sector boosting projects from two in 2020 to 12 in 2021.
Coventry, with six projects, was the third Midlands location in the UK top 20.
The performance means the western half of the Midlands has overtaken the North West as the home of the most FDI projects outside London, the South East and Scotland.
The region has a 7.9 per cent share of all UK projects, up from 5.8 per cent in 2019, and the key sectors were digital technology (21 projects), machinery and equipment (13), and business services (eight).
The East Midlands has 3.9 per cent share of all projects, up from 3.5 per cent in 2019, and the key sectors were transportation and logistics (nine projects), agri-food (seven), and machinery and equipment (seven).
Both transportation and logistics and machinery and equipment projects were at their highest level in the last five years.
The East Midlands’ 2021 project total of 39 was above its ten-year average of 34.6 and more than double the 17 projects in the region in 2012.
The region also has good reasons for optimism about future growth, with 8.6 per cent of investors surveyed by EY describing the East Midlands as the most attractive UK region for investment, behind only London, Scotland and the South East.
Simon O’Neill, EY’s office managing partner at EY in the Midlands, said: “The Midlands has been a UK FDI success story in 2021, with both the West and East bouncing back from the impact of the pandemic on inward investment or, in the case of the West Midlands, charging ahead of where things were before the pandemic started.
“The two regions’ successes have been built on a diverse mix of sectors whether it’s digital technology in the West Midlands or logistics in the East Midlands.
“Looking ahead, there are reasons for optimism. Across Europe, there is a swing towards investment in manufacturing, a sector in which the Midlands has historically excelled.
“Combined with the growing importance of ‘cleantech’, the Midlands has an opportunity to establish itself as a European center for developing and building the green technologies needed for the UK to reach its net zero targets.
“Notably, manufacturing projects tend to bring investment to towns rather than cities which means they can help levelling up within regions, not just between them.
“One thing which is consistently very clear from investors is that the strength of local business networks matters when they’re choosing where to site their projects within a country.
“Local skills and infrastructure, support from regional development bodies and access to regional grants are also part of the mix too, reinforcing the importance of devolving power and fostering local ecosystems.
“Building a unique sense of place from its economy will help the West and East Midlands build their attractiveness to investors.”