FORECASTS of a rapidly expanding economy in 2024 have placed Milton Keynes among the most attractive locations for foreign investors seeking to channel billions of pounds into the UK.
The city’s exceptional growth potential, driven by the fastest-growing economy next year, is expected to boost job creation, productivity, competitiveness, and innovation throughout the region.
The in-depth study into foreign direct investment (FDI) by law firm Irwin Mitchell and economics consultancy the Centre for Economics and Business Research has analysed the 50 largest cities in the UK and ranked their current investment attractiveness according to a newly created index based on eight economic indicators in three different categories:
- Growth potential;
- Local skills;
- Local infrastructure.
Milton Keynes’ overall index score of 38.0 place it 14th for FDI attractiveness. However, the city is boosted by its growth potential score of 76.3, which is the fourth highest across the UK. A major contributor to this is the prediction by Cebr that the size of the city’s economy will experience 2.5% year-on-year growth in 2024 – the fastest in the UK.
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.
Bryan Bletso, director of strategic growth for Irwin Mitchell’s international team, said: “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.”
The report makes three recommendations for improving economic development and increasing FDI in the UK:
- Provide quality infrastructure. Good transport and digital infrastructure are key to attracting investment from various industries.
- 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, the report says.
- Support sustainable economic growth. Ensuring a stable economic environment will encourage foreign investors to engage in FDI in the UK.
The report has ten of the 25 top places occupied by cities in London and the South East. However, others such as Manchester also feature prominently. Josie Anderson, managing economist at Cebr, said: “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.”
- 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 the USA was £676 billion – 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.