LONDON (Reuters) – London overtook Paris as Europe’s top region for new foreign direct investment last year, but many other British areas saw foreign direct investment fall, according to data underlining the challenge the new government faces in boosting development across the country spread country.
Accounting firm EY said regional figures from its annual FDI survey show London has attracted 359 projects, a 20% increase from 2022 and the highest annual total since 2019, led by technology and financial services.
That made the British capital Europe’s top region for new FDI projects in 2023, ahead of Paris and surrounding areas by 300.
Scotland – helped by the growth of the wind energy industry – and the West Midlands saw increases of 14% and 72% in the number of FDI projects.
In contrast, Wales, Northern Ireland and the East Midlands saw large declines and regions in the north of England also attracted less new investment from abroad than in 2022.
Peter Arnold, chief UK economist at EY, said a 6% increase in foreign direct investment in Britain – a previously released figure – could reflect the easing of political unrest in 2023, after Great Britain -Britain would have three different Prime Ministers in 2022.
New British leader Keir Starmer has said his government will increase the investment needed to boost slow economic growth through a combination of stability, reforms to the often restrictive planning system and targeted state aid.
Arnold said the new government must consider the impact of incentives, subsidies and skills building on attracting foreign direct investment to different parts of Britain.
“Increasing the attractiveness of diverse regions will be crucial to improving Britain’s national investment profile,” he said. “Progress in Scotland and the West Midlands shows that there is a clear need to invest outside London.”
