‘Outstanding’ year for overseas investment in the East - but Brexit clouds future outlook
- Credit: PA
Last year was the East of England's most successful in terms of securing investment from overseas since 2008, according to figures compiled by professional services firm EY.
But, in its latest Attractiveness Report, EY warns that the outlook for future investment is less positive, following last June's vote for Brexit.
A total of 39 foreign direct investment (FDI) projects were confirmed in the region during 2016, an increase of nearly two-fifths compared with the 2015 total of 28 and the highest since 2008 when 46 FDI projects were announced – before the financial crisis struck towards the end of that year.
Investment in the East of England was led by Peterborough, which attracted four FDI projects, and Cambridge, with three, including expansion at the headquarters of chip designer ARM Holdings following its acquisition by Japanese multinational SoftBank.
Manufacturing dominated FDI investment in region, accounting for a total of 25 projects, including six in the food industry, followed by the energy sector which saw four projects announced during the year.
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The United States was the biggest investor in the East of England with 11 projects, followed by France and Germany with four projects each. In total, the East of England secured FDI from 15 different countries.
Among last year's investments highlighted in the EY report are German confectionery company Kinnerton's expansion of chocolate production at Fakenham and plans by United States-based publisher Penguin Random House to extend its distribution operation near Colchester, each creating around 100 new jobs.
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Also during 2016, the announcement of a new call centre at the UK headquarters of South African facilities management group Servest near Bury St Edmunds offered the prospect of 50 new jobs and US food group Mars unveiled plans for a new production line at its King's Lynn plant, creating 28 additional roles.
The offshore wind sector brought two investments to the region, with German manufacturer Siemens creating a new turbine assembly operation in Great Yarmouth (the number of jobs has not been disclosed) and energy firm Innogy, also from Germany, planning to employ 20 people at a new operations and maintenance centre at Harwich. Both schemes are linked to the Galloper offshore wind farm, currently under construction.
Nick Gomer, managing partner at EY in Cambridge said: 'It's been an outstanding year for inward investment, with the region attracting 39% more FDI projects than in 2015.'
London remained the UK's dominant location for FDI, followed by Scotland, which retained second place, and the Northern Powerhouse and Midlands Engine 'super-regions' also continued to do well, attracting roughly double the number of projects they secured at the beginning of the last decade.
However, the outlook for future investment from overseas is mixed, says EY. Although nearly a third (32%) of global investors surveyed by the firm in March and April this year said they expect the UK's attractiveness for FDI to improve over the coming three years, nearly as many (31%) expect it to decline. Both figures are significantly worse than the long-term averages of 53% and 8% respectively.
Nick Gomer added: 'The research suggests that the EU referendum vote and its aftermath may be having an influence on global perceptions of the UK's medium to long-term attractiveness. Western European investors are twice as negative as Asian and North American investors.
'Decisions on the majority of investments made in 2016 would have been made up to three years ago, which helps to explain the UK's solid performance last year, but signs of a slowdown are on the horizon.'