Greater Manchester: Top Foreign Investment Magnet Outside London and South East

Greater Manchester's booming economy and highly skilled workforce have made it the most attractive location for foreign investors outside of London and the South East, according to a new joint report by law firm Irwin Mitchell and Cebr.

The in-depth study into Foreign Direct Investment (FDI) has analysed the 50 largest cities in the UK and ranked their current investment attractiveness according to a newly created index* which is based on eight economic indicators in three different categories: growth potential; local skills; and local infrastructure.

According to the latest data, the UK economy has attracted £2,000 billion of FDI and in addition to creating jobs, it helps enhance productivity, competitiveness, and innovation.

Greater Manchester’s overall index score of 45.6 is boosted by it being amongst the top scoring city for the growth potential with Cebr forecasting a 2.2% GVA** growth for the city in 2024. The report also highlights the high number of new businesses relative to the size of the population.

The city's high FDI attractiveness is further supported by its local skills, ranking fourth in this category. Greater Manchester boasts a large, economically active population, making it more attractive for investment due to the vast pool of workers available for hire. The city's numerous universities also provide easy access to skills development and education for the local population.

Top 10 for FDI attractiveness (IRWIN MITCHELL / CEBR)

London is the top city for investment attractiveness, with inner London leading the way with an index of 79.8 boosted by local skills, a large economically active population, many well-respected universities, and public transport infrastructure.

Liverpool ranks 24th with an index score of 31.6, while Stockport's score of 26.8 places it outside the top 30.

Deborah Walker, Head of Inward Investment for Financial and Professional Services at MIDAS, Greater Manchester’s Inward Investment Agency said:

“Irwin Mitchell’s research demonstrates the power of Greater Manchester’s offer as a major international investment location. Businesses in the city-region continue to flourish thanks to a dynamic approach to local infrastructure and transport, a collaborative ecosystem that sees those in our industries work together to inspire growth and our devolution deal that enables us to develop skills and nurture talent.

“Our focus at MIDAS has been to create quality, meaningful roles to ensure the impact of foreign direct investment is felt for years to come, in line with our goals to create a greener, fairer and more inclusive place to live, work and invest.”

Expert Opinion

“Inward FDI is widely considered to be a key factor in promoting the domestic economy, having the potential to raise productivity and facilitate the transfer of technology. Therefore, promoting the UK as a location for FDI can help promote growth.

"In order to attract more foreign direct investment, the UK Government must focus on providing quality infrastructure, offering businesses good access to credit, and supporting sustainable economic growth. This will create an attractive environment for international investors and help the UK become a global leader in FDI.” Bryan Bletso, partner and director of strategic growth (international)

The report concludes with three recommendations for improving economic development and increasing FDI in the UK:

1. Provide quality infrastructure – Good transport and digital infrastructure are key to attracting investment from various industries.
2. Offer businesses good access to credit – A business-friendly financial system is essential for attracting FDI and supporting the UK's world-leading financial services sector will benefit all businesses.
3. Support sustainable economic growth – Ensuring a stable economic environment will encourage foreign investors to engage in FDI in the UK.

Josie Anderson, Managing Economist at Cebr, said: “Our league table of the most attractive UK cities to invest in saw London and the South East dominate, accounting for 10 of the top 25 spots. However, the North West also saw a number of high-performing cities, with Greater Manchester coming in sixth place, due to its strong growth potential. While the success of London and the South East in attracting investment is beneficial for the UK economy, a more even distribution across other regions would help drive economic growth across the country”.

FDI refers to investments made by foreign investors in a company located in a different country. It can take the form of greenfield investments or Mergers & Acquisitions. In 2021, the UK's inward FDI position was £2,002 billion, slightly higher than the previous year's £1,919 billion.

The USA is the biggest source of FDI flowing into the UK. In 2021, the inward stock of FDI in the UK from United States was £676 billion, accounting for 34% of the total UK inward FDI stock.

The French investment position in the UK increased in 2021, to stand at £101 billion, up by £5 billion on 2020 levels. This puts it as the fourth largest country investor into the UK.

Irwin Mitchell provides full-service advice to overseas businesses and individuals looking to invest in the UK and has experts across jurisdictions including the US, France, India, Germany, Singapore, Israel, and China - all of which are mentioned as countries leading FDI into the UK.