You are currently viewing Foreign direct investment rockets in the north
Transporter Bridge, Tees Valley

Foreign direct investment rockets in the north

Foreign direct investment (FDI) into the north of England has risen by 72% in the last five years despite dropping across the rest of the UK, according to new analysis by the Northern Powerhouse Partnership (NPP).

FDI into the north rose from $25.4bn between 2012-16 to $43.7bn between 2017-21. By contrast, FDI into Greater London dropped 23% over the same period, from $43.4bn to $33.4bn.

Tees Valley comes in for special mention as a success story in attracting FDI in the NPP report ‘The Internationalisation of the Northern Powerhouse’, which also found that the north increased its share of overall FDI into England from 19% in 2012-16 to 33% in 2017-21.

This rise means that the NPP region – covering the North East, North West and Yorkshire & the Humber and making up roughly 28% of England’s population – is now punching above its weight and drawing in more inward investment on a per capita basis, according to the report.

The number of jobs created in the north from inward investment rose from roughly 52,600 in 2012-16 to 62,100 in 2017-21 – an 18% uplift. The rest of England saw a rise of just 1% over the same time period, while Scotland, Wales and Northern Ireland saw drops of 19%, 41% and 37% respectively.

Foreign investment into renewable energy in the north of England increased from $6.95bn between 2012-16 to $20.25bn 2017-21 – a 193% rise – in a major win for the net zero transition, says he report.

Other industries which saw growth over the same period were electrical components (799%), chemicals (269%) and biotechnology (694%), reflecting northern comparative advantages in sectors such as advanced manufacturing and materials.

The north’s success in attracting inward investment, according to the report, can be largely attributed to policies in George Osborne’s original Northern Powerhouse strategy, which saw a much bigger focus on promoting northern projects to foreign investors, with the then Chancellor leading trade delegations overseas, including to Asia, with northern city leaders.

Greater Manchester has performed consistently well, with the North East and South Yorkshire seeing significant upsurges in recent years, according to the NPP. Singling out Tees Valley, it says: ‘When it comes to the most significant megaprojects, it is notable how successful the metro mayoral devolved region of the Tees Valley has been’.

NPP is calling for central and regional government, alongside the private sector, to collaborate better and deliver a five-fold increase in investment to promote northern projects overseas. It says metro mayors should be given the automatic ability to create at least one freeport or other investment-based enterprise zone following the success of tax incentives in projects such as Teesworks in the North East.

Lord Jim O’Neill, vice-chair of the Northern Powerhouse Partnership, said: ‘The mission to put the Northern Powerhouse on the world map has been a resounding success and a huge amount of credit should go to the genuine cross-party effort between central government and northern civic leaders to make this happen’.

Jonathan Reynolds, shadow business secretary, said: ‘There are fantastic industries and opportunities across the north of England but the government are failing to make the most of the successful innovation that is happening here.

‘This report is great news, but we must build on this success with long term consistent plans that businesses can invest alongside. Labour’s Industrial Strategy will support investment, innovation and offer the certainty northern business needs to prosper.’