New Research Says Interest In Region’s Firms Amongst Investors Fell Last Year By 14%

Specialist business lawyers at Irwin Mitchell are calling on the government to continue its support for Investment Zones and Freeports following new figures which reveal that interest from overseas corporate investors in Yorkshire’s businesses has stalled.

The law firm has analysed industry data and says although the UK continues to drive significant interest from foreign buyers, the number of UK firms which were targeted in an overseas deal, such as an acquisition or management buyout, fell to 39 last year compared to 44 in 2022.

The research says London and the South East accounts for four out of 10 foreign investment deals into the UK and also reveals that its dominance has increased in last five years. It says in 2019, 35% of the companies targeted by foreign investors were based in the capital or the wider region, but by 2023 this stood at 42% of total deals.

partner at Irwin Mitchell and a specialist in advising overseas businesses that are looking to invest in the UK, said:

“Despite the dynamic nature of global investment patterns, this data underscores the enduring economic significance of London and the South East in attracting international business interest. Our research does however also highlight that investment activity in this traditional FDI hotbed is increasing whilst in other regions, such as the Yorkshire, deal activity has been rising steadily over the last five years but reduced in the most recent 12 months.”

Foreign Direct Investment (FDI) refers to an investment in an enterprise operating in a foreign economy, where the purpose is to have an ‘effective voice’ in the management of the organisation. According to the latest ONS data, FDI into the UK has increased year-on-year for a decade to stand at over £2 trillion by 2021.

Last November, Conservative peer Lord Harrington published a report which called for a change of approach by the government in terms of attracting FDI. The report made several recommendations and the government accepted in its response that it needed to work more collaboratively with local government and public and private stakeholders.

The UK Government also say that Freeports and Investment Zones are a part of their FDI strategy.

Announced in 2023, Freeports are designed to boost economic activity and the ‘levelling up’ agenda by fostering trade, investment, and job creation around maritime ports and airports.  Companies operating within freeports can enjoy reduced property taxes and national insurance rates.

The government is committed to establishing 13 Investment Zones across the UK, including two in Yorkshire. The expectation is that many of the zones and tax sites within them will go live in Spring 2024 but so far Liverpool is the only one to have officially done this, announcing details of its proposition at MIPIM.

Bletso added: “Government initiatives such as freeports and investment zones could be a gamechanger for providing favourable conditions for businesses based in Yorkshire, attracting more interest and investment in the UK from abroad, and levelling up the economy.

“Making the UK the top investment destination in Europe, attracting new investment into communities and helping to level-up the country, is one of five key priorities for the Department of Business & Trade. Providing tailored support for each investment zone and promoting our offering in this area on an international stage is a crucial part of this.”

Irwin Mitchell published a report last summer which examined the most attractive locations in the UK for FDI. Inner London secured top spot due to its local skills, large economically active population, and many well-respected universities.

In the report’s ‘FDI Attractiveness’ league table, Leeds came 21^st, followed by York (36), followed by Doncaster (42), Hull (45), Wakefield (47), Rotherham (48) and Bradford (49).

About the research

Irwin Mitchell analysed deals recorded on Experian’s MarketIQ database. The type of deals were Acquisitions, Development Capital, Employee Buy-Ins, Employee Buy-Outs, Investor Buy-Ins, Investor Buy-Outs, Leveraged Buy-Outs, Management Buy-Ins, Management Buy-In / Buy-Out, Management Buy-Outs, Mergers, Public to Private, Reverse Takeovers, Secondary Buy-Outs, and Startup Fund Raising.

About Yorkshire’s Investment Zones

The West Yorkshire Investment Zone initiative, confirmed by the government on November 20, 2023, is set to concentrate on Life Sciences and digital sectors. This strategic focus is expected to yield significant benefits for communities throughout West Yorkshire, including Huddersfield, Leeds, and Bradford. With anchor investments from Paxman Scalp Cooling and Dedalus totalling £26 million, the Investment Zone aims to catalyse over £220 million in investment. This financial injection is projected to generate upwards of 2,500 new jobs within the next five years, marking a substantial economic boost for the region.

South Yorkshire's £50 million investment plan aims to enhance advanced manufacturing, targeting development in Sheffield, Rotherham, Doncaster, and Barnsley. It includes funding for early-stage businesses and infrastructure to support innovation and decarbonisation, with the goal of creating 8,000 jobs and attracting £1.2 billion investment in 10 years.

Yorkshire’s Humber Freeport is centred around the Humber Estuary. Designed to boost economic activity and drive the ‘levelling up’ agenda by fostering trade, investment, and job creation around maritime ports and airports. Freeports allow goods to be imported without the usual tariffs. Additionally, companies operating within freeports can enjoy reduced property taxes and national insurance rates, further incentivising business growth and new employment within these zones.