Brighton Remains The Highest-Ranking City Outside London, Excelling In Business Creation And Local Skills

A new study reveals that most UK cities are less attractive to foreign direct investment (FDI) than a year ago – demonstrating the need for a comprehensive strategic plan to kickstart economic growth throughout the UK.

Published by law firm Irwin Mitchell, the Investment Attractiveness Index has been compiled by a team of experts at the Centre for Economics and Business Research (Cebr), who have analysed the UK’s 50 largest cities according to eight indicators related to Growth Potential, Local Infrastructure, and Local Skills*.

Highlighting the challenges facing the new Labour government’s pledge to fix the foundations of the economy and make every part of the country better off, the study says lower growth forecasts in 2024 mean over 95% of cities are less attractive to overseas investors than a year ago.

The Irwin Mitchell report does however say all locations are performing well in other areas with all cities in the study improving their local infrastructure, and 88% scoring higher than 12 months ago in terms of skills.

Other key findings from the report are:

• London Leads the Way: London retains its top position as the most attractive city for investment. Its highly skilled workforce and world-renowned universities continue to drive FDI interest
• Brighton Excels: Brighton remains the highest-ranking city outside London. Its strong performance in business creation and local skills contributes to its appeal.
• Edinburgh’s Strength: Edinburgh ranks as the leading city outside London and the South East. Robust local skills and infrastructure bolster its attractiveness to investors.
• Coventry’s Leap: In a year-on-year comparison between 2023 and 2024, Coventry stands out as the only city with improved overall Investment Attractiveness.
• Notable Improvements: Stockport, Bradford, Doncaster, and Kirklees also demonstrate growth potential, highlighting the diversity of investment opportunities across regions.

  Expert Opinion

  “The results in our report point to challenging conditions and mirror the sentiment amongst both businesses and overseas investors we are speaking to.
  
  “Although the widespread fall in forecasted GVA growth is impacting overall FDI attractiveness scores, the improvements in local skills and infrastructure will pay dividends longer term.
  
  “The new Government has said that it will be taking immediate action to fix the foundations of the economy and according to our findings, this is going to be crucial if the UK is to enhance its attractiveness to foreign investment. There are promising signs already with the Chancellor announcing the creation of a £7.3 billion National Wealth Fund to catalyse private sector investment.
  
  “The recent King’s Speech, and the proposed introduction of an English Devolution Bill, is vital also for the creation of a modern, dynamic economy that is attractive to foreign investors. We certainly welcome legislation that will give new powers to metro mayors and combined authorities.”
  Bryan Bletso, partner and Head of International at Irwin Mitchell           

Pushpin Singh, Senior Economist at Cebr, said: “Despite the challenging economic environment reflected in the recent decline of the Investment Attractiveness Index for most UK cities, the improvements in local infrastructure and skills are encouraging. The resilience seen in cities like Coventry, which managed to improve its ranking, showcases the potential benefits of targeted investments and strategic planning.

“The Index shows that cities which make themselves attractive for investment, such as Brighton and Oxford, will reap the rewards, with the South East seeing a high number of FDI projects in the most recent data for 2021/22. With FDI remaining crucial for economic growth, driving innovation and creating jobs, local and national governments should work together to make improving attractiveness to investment a key priority over the coming years.”

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.

EY’s 2024 UK Attractiveness Survey recorded 985 FDI projects in 2023, up 6% from 2022. It also revealed the UK recorded an average 60.9 jobs per FDI project.