The North East has seen an increase in foreign direct investment (FDI) projects, despite the UK attracting fewer overall.
New research from accountancy firm EY shows the region was the fastest growing in England for projects, which totalled 40 in 2022 - up from 30 the year before. It now means the North East ranks ninth of 12 UK regions, up from 11th previously, in a move that came in contrast to the UK experiencing a 6% fall in projects.
Utility supply accounted for the largest share of North East FDI projects, as manufacturing, sales, business services and research and development were the most prominent activities driving FDI projects in the North East last year. Newcastle was identified by the EY UK Attractiveness Survey as the ninth best location in the country for foreign investment, coming in behind Manchester - the frontrunner outside of London.
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Michael Scoular, EY’s Newcastle office managing partner, said: "The North East’s strong FDI performance is a real testament to the region’s resilience, especially given the recent economic headwinds the UK has faced over the last 18 months. The fact the region’s growth comes amid a fall in the UK’s overall project numbers also emphasises the crucial part that the North East can play in supporting the wider UK economy.
"With sustainability and climate change high on investors’ agendas, clean technology is an increasingly important investment focus, providing the UK with the opportunity to play to its regional strengths. Expertise in manufacturing and utilities – key sectors here in the North East – will be crucial to any efforts by the UK to establish itself as a place where clean technology is not just deployed, but also developed and built too."
EY said the North East delivered the UK’s fifth-best performance on jobs connected to FDI projects, with an average 68 jobs per project - more-than double the figure for London (32).
One of those projects was the setting up of a European head office in Newcastle by US cyber security firm Artic Wolf. Speaking to BusinessLive recently, Clare Loveridge, vice president and general manager EMEA at Arctic Wolf, who leads the base, said the decision to set up in the city was driven by accessibility and environment.
She explained: "Like Arctic Wolf did in the US, they moved from Silicon Valley - perceived as being the tech hub of North America - to Minnesota, which really wasn't. And moving to Newcastle has so many benefits. It wasn't a budget-based decision, which was a really nice position for us to be in with the economic times that we're in, it was around culture.
"As I started thinking about the previous experience of hiring and living in London, typically you'd go out on a Thursday night, that was like Friday night in the city. But people would come into town but they may go home after work because it was a train journey away - some people had long commutes. For us - building the culture of the business and something that would attract people and create an Arctic Wolf community and family - creating something in Newcastle would be really special."
The FDI findings come hot on the heels of a cross-party parliamentary report which said the Government should be doing more to entice foreign investors into the North amid "baked in" economic bias towards London. MPs in the Commons Public Accounts Committee accused the Government of "flying blind" when it comes to the impact the Department for Business & Trade's work and pointed to 39% of projects supported being in the capital and the wider South East - figures also borne out by EY's survey.
The report made a series of recommendations including closer working with the Department for Levelling Up to target areas that could most benefit from investment; encouraging civil servants overseas to better promote the whole UK and reviewing deals supported in the last five years to learn more about impacts.
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