LONDON (Reuters) – London overtook Paris last year to become the biggest region in Europe for new foreign direct investment but many other parts of the United Kingdom saw FDI fall, according to data that highlights the challenge facing the new government in spreading development across the country.
Accountancy firm EY said regional figures from its annual FDI survey showed London attracted 359 projects, up 20% from 2022 and its highest annual total since 2019, led by technology and financial services.
This makes the British capital the leading region in Europe for new FDI projects in 2023, ahead of Paris and its surrounding regions which recorded 300 projects.
Scotland – helped by the growth of the wind energy industry – and the West Midlands saw a 14% and 72% increase in the number of FDI projects.
In contrast, Wales, Northern Ireland and the East Midlands saw significant declines, and areas in the north of England attracted less new investment from abroad than in 2022.
Peter Arnold, EY’s chief UK economist, said the 6% increase in UK FDI overall – a previously released figure – could reflect an easing of political turmoil in 2023 after Britain had three different prime ministers in 2022.
Britain’s new Labour leader Keir Starmer said his government would boost investment needed to boost sluggish economic growth through a combination of stabilisation, reforms to the often restrictive planning system and targeted government support.
Arnold said the new government should look at the impact of incentives, grants and skills building on attracting foreign direct investment to different parts of the UK.
“Enhancing the attractiveness of diverse regions of the UK will be key to boosting national investment in the UK. The progress made by Scotland and the West Midlands shows there is a clear appetite for investment outside London,” he added.