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London leads Europe on new FDI while much of UK sees drop, survey shows

Published 07/10/2024, 07:06 PM
Updated 07/10/2024, 07:12 PM
© Reuters. FILE PHOTO: A drone view of London's skyline after daybreak, in London, Britain July 7, 2023. REUTERS/Yann Tessier/File Photo

LONDON (Reuters) - London overtook Paris last year as Europe's top region for new foreign direct investment but many other UK areas saw FDI fall, according to data that underscores the challenge facing the new government to spread 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.

That made the UK capital Europe's leading region for new FDI projects in 2023, edging ahead of Paris and its surrounding areas which recorded 300.

Scotland - helped by the growth of the wind power industry - and the West Midlands saw increases of 14% and 72% in the number of FDI projects.

By contrast, Wales, Northern Ireland and the East Midlands saw big falls and regions across the north of England also attracted less new investment from abroad than in 2022.

Peter Arnold, UK chief economist at EY, said a 6% increase in FDI into the UK overall - a figure previously released - could reflect the easing of the political turmoil in 2023 after Britain had three different prime ministers in 2022.

Britain's new leader Keir Starmer has said his government will increase the investment needed to boost slow economic growth through a combination of stability, reforms of the often restrictive planning system and targeted state support.

© Reuters. FILE PHOTO: A drone view of London's skyline after daybreak, in London, Britain July 7, 2023. REUTERS/Yann Tessier/File Photo

Arnold said the new government should consider the impact of incentives, grants and skills-building on attracting FDI to different parts of the UK.

"Enhancing the attractiveness of its diverse regions will be key to elevating the UK's national investment profile," he said. "The progress of Scotland and the West Midlands shows that there is a clear appetite for investing outside London."

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