Levels of Foreign Direct Investment (FDI) in the North West fell in 2021 - but the region's FDI levels stayed at broadly pre-pandemic levels while Manchester remained an investment hotspot.
The 2022 EY Attractiveness Survey showed 74 projects were hosted in the North West in 2021 - down on 2020’s 85 projects but one up on the 73 projects delivered in 2019.
That left the North West’s share of the UK FDI market at 7.5% – down from 8.7% in 2020, but above the 6.6% share in 2019 and 2018.
London remained top for FDI investments, followed by the South East (82 projects), the West Midlands (78) and the North West.
Manchester was level with Edinburgh as the top FDI location outside of London, with both cities hosting 31 projects. Warrington also featured in the top 20 UK locations outside London, with five projects.
Stephen Church, North Market Leader and Manchester office managing partner, said: “The North West – and the North as a whole – had a challenging year for FDI in 2021. But beyond the headline figures, there are reasons to be optimistic.
"The North West has done well in high value areas, particularly research & development and health. These sorts of activities and sectors tend to involve higher value projects, which bring more investment and jobs.
“The reasons for the shortfall in projects from 2020 are mixed: sales and marketing projects continued their recent decline, while significant gains in leading sectors were outweighed by declines in a number of smaller ones.
"Positively, the North West has held onto the FDI gains it made prior to the pandemic, and a decline on 2020 needs to be seen in that context. There’s a track record of FDI success for the North West to build on, and the impact of the pandemic has added some volatility to FDI numbers.
“However, 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 in its economy will help the North West build its attractiveness to investors.”
London remains Europe's leading FDI destination. Its figure of 394 FDI projects in 2021 was up 2.9% on the previous year but still down on the 538 projects it recorded in 2019.
Other nations and regions in the UK saw strong recoveries, with the number of projects in Scotland rising 14% to 122 and the South East seeing its number rise 14% to 82. But other areas saw steep declines, with the number of FDI projects in Yorkshire and the Humber down 27% at 40 and the East of England down 26% at 40.
Mr Church said: “Levelling-up as a policy idea has cut through, with almost two-thirds of investors we surveyed having heard of it last year.
"Awareness has turned into engagement this year, with a similar proportion saying levelling-up influences their location decisions and that they’ll look to invest where government support is available – although project numbers are yet to reflect this.
"Almost three-quarters of manufacturing and wellbeing investors are interested in the opportunities geographic rebalancing offers."
