Cambridge listed as 8th best performing UK location for attracting FDI projects

Nick Gomer

Cambridge has been listed the 8th best performing UK location for attracting Foreign Direct Investment (FDI) projects for a second year running,  despite seeing a 29% year-on-year decline in FDI in 2018 to 10 projects from 14 projects in 2017.

    Overall, the UK demonstrates its resilience as it retains the number one spot in Europe for FDI.

The East of England as a whole recorded a 40% drop in the number of projects in 2018 from the previous year – down from 59 to 36 projects. However, inward investment for the region still remains relatively high when compared with previous years, as prior to 2016 the number of projects was much lower – reaching no more than 21 projects (in 2015).

According to EY’s 2019 UK Attractiveness Survey, the UK remained the number one destination for foreign direct investment (FDI) in Europe in 2018, ahead of Germany and France, with 1,054 projects. However, analysis of the FDI projects recorded in 2018 showed that the performance of the UK’s regions was very different in 2018 to that of 2017, with much greater variation across the country compared to the national picture driven primarily by the 35% decline in manufacturing FDI projects. The South East (down 2.2%), Wales (down 6.1%) and the East Midlands (down 7%) all experienced a fall in volumes of only single digit percentages. Much like the East of England, the rest of the country saw significant declines in project volumes, particularly Yorkshire and the Humber (down 40%), the North West (down 33%) and the North East (down 25%).

Cambridge secured the highest number of projects (10) in the East of England, followed by Peterborough with three projects in 2018. Biggleswade, Hemel Hempstead, Lowestoft, Stamford and Thetford also secured two projects each.

The East of England saw most of its investment come from the US, representing 19% of the investment into the region – lower than the UK average of 32%. The region also secured 14% of its investment from Japan and 11% from Germany.

Job creation in 2018

The number of jobs secured by investments in the East of England in 2018 decreased by 30% from 2,835 in 2017 to 1,971 – the lowest number of jobs since 2015. However, this is still a substantial figure when compared with previous years. Prior to 2016 the number of jobs created did not exceed 1,073 (the number of jobs recorded in 2013). 

The largest investments in the East of England in terms of jobs creation were generated by a wholesale, retail and distribution company from Germany based in Luton, which created 1,000 jobs; an electronics and IT company from Japan based in Cambridge, which created over 350 jobs; and a wholesale, retail and distribution company from the US also based in Cambridge, which created nearly 200 jobs.

Investment in the East of England led by agri-food, machinery & equipment, and digital sectors

The East of England recorded the highest number of agri-food projects and machinery & equipment projects in a decade, with the agri-food sector responsible for six projects in 2018 (matching 2017) and the machinery & equipment sector responsible for five projects in 2018 (up from four in 2017).

Whilst the UK’s leading sector in terms of FDI projects was digital for the sixth year running, the East of England had only four digital projects – a significant drop from 16 digital projects secured in 2017. This meant that digital was the third most popular sector for generating FDI projects in the region in 2018.

Nick Gomer, Managing Partner at EY in the East of England (pictured), said: “Our latest report demonstrates a mixed picture for the East of England in terms of foreign direct investment. It’s fantastic to see Cambridge as a top 10 UK location for attracting inward investment, with many other key locations in the East attracting a large number of FDI projects. However, whilst inward investment in the region remains high when comparing 2018 to years prior to 2016, a 40% year-on-year drop in the number of projects cannot be ignored. This acts as a warning sign that our region must fight harder to ensure that it’s not losing out to other UK regions such as Greater London or the South East.

“At a time when concerns over Brexit appear to be reducing the UK’s appeal currently and are hampering its ability to attract capital, it becomes increasingly important for the East of England to play to its strengths. The region must continue to invest in its own future – such as working hard to attract and retain high-skilled talent and continuing to build its existing strengths in areas such as life sciences.”

Perceptions of the UK as an FDI location have weakened

The UK attracted its third-highest number of FDI projects in 20 years (1,054 projects) according to EY’s 2019 UK Attractiveness Report. However, this was a 13% drop in FDI projects compared to 2017 (1,205 projects).

The UK’s share of FDI projects secured in Europe fell very slightly from 18% in 2017 to 17% in 2018. While overall FDI into Europe fell by 4% year-on-year, ending a five-year period during which Europe’s annual project numbers increased continuously.

Brexit appears to be a significant factor behind the decline of UK FDI projects in 2018. According to the report, 15% of global investors say they have paused one or more UK projects due to Brexit (up from 8% last year), however, only 6% plan to move assets out of the UK in the future. Five per cent of investors say they have increased investment in the UK due to Brexit, down from 7% last year, and 5% have reduced investment due to Brexit compared to 6% a year ago.

Nick Gomer concludes: “If the trends evident in our report continue then the UK risks becoming “Branch office Britain”, an attractive market to sell to, but not one that companies will commit to manufacture or research and develop in. However, with the right policies in place, the UK could strive to become “Interconnected Britain”.

“For this to happen, the digital opportunity must be seized to modernise manufacturing and services, pioneer digital health and lead in innovative cleantech technology and applications. High speed fibre must be used to connect disconnected towns, enabling more remote working, less commuting, less pollution and more local engagement. This investment in technology, infrastructure and skills would not only increase productivity but create better paid, more rewarding jobs.”



EY is a global leader in assurance, tax, transaction and advisory services. With over 400 employees in our Cambridge and Luton offices, our teams provide a range of services to a variety of sectors, including manufacturing, life sciences, consumer products and retail, technology, real estate and construction, health, and the public sector. The broad array of companies across the East allows us to bring real, relevant and key insights to our clients.