Billions of people are watching the UK as the Olympics continue to raise our profile across the globe – giving us a golden opportunity to showcase the country as a place to visit and invest in.
Indeed, the Government is aiming to leverage the event to attract some £1 billion of inward investment this summer – with nearly 4,000 world leaders, policy makers and investors expected to visit London during the Games.
But while the UK remains the most attractive location for inward investment in Europe, uncertainty across the markets has made it more competitive than ever for locations to attract investment.
UK Trade & Investment’s Inward Investment Report for 2011/12 highlighted that, while levels of employment created by foreign direct investment (FDI) increased by 19 per cent on the preceding year to over 112,000 jobs, the number of projects declined by two per cent.
That fewer projects are creating more jobs is partly due to a marked increase in large-scale manufacturing investments into the UK. As the heartland of British advanced manufacturing, this region already has a strong proposition for these investors; 65 per cent of all investments across the West Midlands during 2011/12 were in this sector. This has enabled Birmingham to buck the national trend, attracting 37 per cent more overseas investment projects during 2011/12 compared with the previous year, according to analysis by the Marketing Birmingham Regional Observatory. It is also reflected across the wider West Midlands region, which recorded an 18 per cent increase.
As with the Olympics, the USA and China are taking the lead when it comes to FDI. The USA remains the biggest investor in the West Midlands, with 25 investment projects in the last financial year – with the world’s largest architect Gensler, food giant Kraft, aerospace supplier Goodrich and online retailer Amazon all committing to the region. While the UK recorded a 13 per cent decline in projects from the USA, Regional Observatory data indicates that the West Midlands enjoyed a 47 per cent increase.
Across Birmingham, the Black Country and Solihull, Chinese manufacturers NVC Lighting and Shanghai Automotive have made significant investments, along with Tata Group of India, through Jaguar Land Rover. The latter announced the creation of 1,000 new jobs in Solihull and 750 jobs at its proposed engine plant near Wolverhampton – and the momentum has continued into this financial year, with 1,100 new jobs generated in Castle Bromwich to support the launch of new Jaguar models.
By working with several of these investors, Business Birmingham has directly supported the creation of some 2,750 new jobs since launching in April last year. Targeting specific sectors – business, financial and professional services, digital media, food and drink, advanced manufacturing, and life sciences – is paying dividends, with financial services and advanced manufacturing performing particularly well in creating new employment opportunities for the area. In addition to the recovery of advanced manufacturing, we are benefitting from an increase in demand from growing or developing economies such as India, while the weakness of the pound has given us an advantage in international trade.
However, we must recognise the challenges to attracting further inward investment. The previous recession affected the West Midlands more than most other UK regions, and this is in part responsible for the significant growth of FDI last year. While the increase in projects is encouraging, demand for office space remains low, domestic confidence needs to recover and the Eurozone continues to be fragile. The English regions are also unable to provide the scale of financial incentives offered to potential investors by the UK’s devolved administrations of Scotland, Wales and Northern Ireland.