City's Rapid Economic Growth in 2024 and Solid Infrastructure Drive Investment Appeal

Southampton's fast-paced economic growth in 2024 and robust infrastructure position it as a prime destination for foreign investors seeking to channel billions of pounds into the UK, according to a new joint report by law firm Irwin Mitchell and Cebr.

The comprehensive analysis of Foreign Direct Investment (FDI) assesses the 50 largest cities in the UK, ranking their current investment appeal based on a new index* that incorporates eight economic indicators across three categories: growth potential, local skills, and local infrastructure.

Latest data reveals that the UK economy has attracted £2,000 billion in FDI, which not only generates jobs but also enhances productivity, competitiveness, and innovation.

Southampton's overall index score of 37.3 lands it in the joint 15th position in the report's investment attractiveness index. The city's growth potential pillar score of 51.9, bolstered by Cebr's prediction of a 2.1% year-on-year economic growth in 2024, significantly contributes to its appeal.

Compared to other south coast locations, Southampton outshines Portsmouth, Bournemouth, and Plymouth in terms of FDI attractiveness. However, Brighton's impressive index score places it near the top of the league table, making it the most attractive FDI destination outside of London. 

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.

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)

The report offers three recommendations to boost economic development and FDI in the UK at both national and regional levels. These include providing quality infrastructure for transport and digital connectivity, ensuring businesses have good access to credit through a supportive financial system, and promoting sustainable economic growth to create a stable environment that attracts foreign investors.

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.