Manchester ranked UK’s third best performing city outside London for attracting Foreign Direct Investment, EY report reveals

Manchester ranked UK’s third best performing city outside London for attracting Foreign Direct Investment, EY report reveals 

• The North West attracted a total of 68 Foreign Direct Investment (FDI) projects in 2023, down 23% from 88 in 2022
• The region is now ranked fourth in the UK for attracting FDI, down from third in 2022
• The Software and IT Services sector was the North West’s biggest driver of FDI projects in 2023, with a total of 12 projects
• The North of England as a whole recorded a 22% fall in FDI projects in 2023, despite the UK’s overall UK FDI project total increasing by 6%.

North West, 11 July 2024: Manchester was ranked the UK’s third-best performing city outside of London for attracting Foreign Direct Investment (FDI) projects in 2023, according to EY’s 2024 UK Attractiveness Survey.

Manchester attracted a total of 31 FDI projects last year, with only Edinburgh (32), Birmingham (67) and London (353) surpassing the city’s total. However, this was a lower total than the 45 FDI projects Manchester attracted in 2022, representing a 31% fall.

Liverpool was the UK’s sixteenth-best performing city for attracting FDI in 2023 with a total of nine projects, up from seven in 2022.

The North West was ranked the UK’s fourth-best performing region for attracting FDI with a total of 68 projects in 2023. Regionally, only Greater London (359), Scotland (142) and the West Midlands (127) attracted more FDI projects than the North West last year.

However, the region attracted 23% fewer projects in 2023 compared to the year before, when it attracted 88 projects. In contrast, overall UK projects increased by 6% last year, from 929 to 985.

Manchester continues to attract tech investment and high-value projects

FDI projects in the North West created a total of 3,344 jobs in 2023, down from 3,694 in 2022. However, despite this year-on-year fall, the North West region ranked fifth in the UK for FDI-related employment in 2023, up from sixth the previous year.

The Software and IT Services sector was the region’s biggest driver of FDI in 2023, with a total of 12 projects. Meanwhile, the region’s second-biggest sector for attracting FDI was Business Services, with a total of 11 projects, more than double the 2022 total (5).

Examining the North West’s FDI projects by activity reveals a prevalence of high-value areas. While Business Services was the activity that drove the North West’s largest volume (27) of FDI projects in 2023, this was followed by Manufacturing projects (11) and Research and Development (R&D) projects (10).

Twelve per cent of respondents to EY’s latest UK Attractiveness Survey said they had plans to pursue FDI projects in the North West in 2023.

Stephen Church, EY’s North Market Leader, said: “Despite persistent economic challenges nationally and globally, the North West remains one of the UK’s top regions for attracting FDI and has also continued to attract the strategically important, high-growth investment activity that policymakers have prioritised in recent years. This, together with Manchester’s enduring performance as one of the UK’s leading cities for investment, is a testament to the resilience of the wider region’s business community and the calibre of its talent.

“However, the decline in overall FDI projects and jobs in the North West should not be overlooked, especially given its contrast to the national growth seen in 2023. The North West has distinct, long-standing advantages, such as significant expertise in digital technology which has previously driven substantial inward investment. The new government can support the North West in regaining its momentum by collaborating with local policymakers to nurture the region’s strengths and promote them to a global investor audience. Every part of the country should have the opportunity to capitalise on the UK’s strong standing among global investors and share in the jobs, prosperity and growth that inward investment projects bring.”

Peter Arnold, EY UK Chief Economist, comments: “Last year proved challenging for the North West and Manchester slipped down the rankings after a fall in investment numbers. However, this doesn’t necessarily reflect a unique issue for the city, as digital FDI declined across much of Europe in 2023 as companies investing in tech contended with tighter borrowing conditions. There are grounds for optimism, as the North West was the UK’s third best performing region outside Greater London for attracting Research and Development projects, behind only the South East and the East of England. Local policymakers will be keen to build on that and attract more high-value, strategically important investment in the future.”

UK’s regional FDI gap widens

Greater London, Scotland, the West Midlands and the South West were the only UK regions to see FDI project numbers increase in 2023. Project numbers in the South East (67) and the East of England (44) were consistent with the previous year, while every other region and devolved administration in the UK saw a decline.

The biggest declines were seen in Wales, Northern Ireland and the East Midlands. Wales saw FDI projects fall by 52%, while Northern Ireland recorded a drop of 35%. The East Midlands recorded 31 FDI projects in 2023, down 35% from the year before.

The North of England as a whole recorded a 22% fall in FDI projects in 2023. Yorkshire and the Humber, and the North East saw project numbers decline by 33% and 5% respectively.