Birmingham Boasts Top 10 Ranking for Foreign Investment Allure

Birmingham has been ranked as the seventh most attractive UK city for foreign investors, thanks to its thriving economy, high start-up numbers, and vast talent pool, according to a new report by law firm Irwin Mitchell and Cebr. The study analysed the 50 largest UK cities based on a newly created index*, which considers growth potential, local skills, and infrastructure.

With £2,000 billion of FDI pouring into the UK economy, Birmingham's FDI attractiveness index of 45.4 has been bolstered by its top 10 ranking for growth potential, with Cebr forecasting a 2.3% GVA growth for the city in 2024. The city's high FDI attractiveness is also credited to its relatively high number of new businesses per 10,000 people and large economically active population, which provides numerous workers for businesses looking to invest in the city.

Top 10 for FDI attractiveness (IRWIN MITCHELL / CEBR)

Recent FDI examples in Birmingham include the acquisition of a 1,000 sq ft space at the Innovation Birmingham campus by robotics manufacturer Quicktron and the growth of Firstsource Solutions Limited's Birmingham office to 500 employees in just one year.

London leads the pack in investment attractiveness, with Inner London's index of 79.8 boosted by local skills, a large economically active population, reputable universities, and public transport infrastructure. The next best Midlands city is Derby with an index score of 30.7.

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.

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)

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 in the report as countries leading FDI into the UK.