Action demanded on disparity
North-South gap widens as foreign money pours into London
Sir Sandy Crombie with Callum Murray (right) whose Amiqus business has benefited from overseas investment
Britain’s north-south divide is widening as smaller towns increasingly lose out to overseas investment, according to a new report.
Research reveals a “stark and deepening disparity” of foreign direct investment (FDI), with the UK’s largest cities attracting an ever-greater share and few signs of spillover benefit for other areas.
The EY Attractiveness Survey produced jointly with the Centre For Towns points to a continued structural imbalance between London and the South East and the rest of the UK in terms of the inflows of investment from overseas.
It aims is to encourage dialogue between business leaders, investors and policymakers on how to maximise regional and national economic performance.
On a brighter note, Scotland has bucked the trend by having a more even spread of investment across communities compared to the UK pattern.
London and the Core Cities swallow far too much of the investment coming into the country.– Lisa Nandy, Centre for Towns
It has managed to attract the highest number of projects to its small towns, communities and villages with manufacturing, research and development, and sales and marketing topping the list of investment projects across the country. This may in part be due to the nature of its economy with food and drink prominent and spread across the nation.
Economy Secretary Derek Mackay said: “These results demonstrate that more investments are being made across the length and breadth of Scotland and are testament to Scotland’s approach to promoting inclusive growth.
“We will build on this success and we set out our plans to increase FDI in our Programme for Government, including a new FDI Growth Plan by next summer.”
Across the UK the share of FDI accounted for by ‘core cities’ has increased from 31% in 1997 to 59% in 2018, with more than half of all projects over the past two decades going to major population centres. At a UK level, this reflects an increasing focus of policy on cities – especially large cities – in recent years.
Bristol, Edinburgh, Leeds, Manchester and Newcastle upon Tyne all more than doubled the number of projects between 1997 and 2017. Nevertheless, London’s 5,875 projects in the period dwarfs the 419 secured by second placed Manchester. This trend continued in 2018, with London accounting for 457 (73%) of the total of 624 FDI projects secured.
Lisa Nandy MP and co-founder of the Centre For Towns, said: “This report lays out how unfair the current economic model is. London and the Core Cities swallow far too much of the investment coming into the country.
“Those places which are best placed to attract inward investment secure it, whilst towns with creaking infrastructure, a hollowed-out skills base and ageing populations simply cannot compete for investment on a level playing field.
“The government rightly talks about levelling up disparities between towns and cities. This excellent report outlines one reason why this needs to happen now.”
EY’s UK chief erconomist, Mark Gregory said: “Scotland has bucked the trend and demonstrates the most evolved split compared to the rest of the UK.
“If an inclusive agenda and sustainable economic growth is the main aim then geography has to be part of that story and, arguably, Scotland is ahead of the curve in spreading opportunities across the regions.”