Professional services firm EY said that the country’s businesses could be well placed to take advantage of the respite offered by the stable immediate economic outlook, with as many as one in four overseas businesses intending to invest into the UK.
In an update to its UK annual Attractiveness Survey released in May this year, the EY report, which involved interviews with 259 international companies in Autumn 2016, said that 25 per cent of those surveyed said they intended to invest in the UK in the next 12 months, suggesting that the potential impact of Brexit has not yet had an impact on investor perceptions to a significant degree.
However, the responses paint a different picture when international investors were asked how they expect the UK’s attractiveness in the next three years.
The proportion of investors that expect the UK to become more attractive has slumped from 36 per cent in spring 2016 to a new low (since 2004) of 29 per cent in autumn 2016.
Meanwhile, the percentage expecting it to get worse has more than doubled, from 16 per cent to 34 per cent, in the same time period.
Stuart Watson, Yorkshire & Humber senior partner at EY, said: “There is no sign of any immediate deterioration in FDI intentions over the next 12 months, in fact there has been an improvement in short-term sentiment since May this year.
“However, the medium term outlook has worsened across a number of metrics and investors are concerned about how the UK’s attractiveness will develop over the next three years.
“The UK now has a window of opportunity to address their concerns and preserve future competitiveness. It also provides increased pressure on the Northern Powerhouse to demonstrate its worth and potential value to investors.”
The North of England attracted record levels of foreign investment in 2015, with 225 projects, representing an increase of 89 per cent on 2014 figures.
The 2015 figures also represented the highest level of inward investment in Yorkshire in two decades, with this region recording more FDI projects in 2015 – at 83 – than in any year since 1997. Yorkshire also played a major role in attracting manufacturing projects to the UK. The report found that Asian investors are the most positive about the UK’s future attractiveness, with 34 per cent expecting an improvement.
The top four countries that investors think the UK should prioritise trade deals with, to minimise the impact of the changes in its arrangement with the EU, are: the US, cited by 61 per cent of all investors, followed by Germany, China and France. Investors are particularly concerned about not having access to skilled labour which combines access to workers from outside the UK and investment in skills within the existing workforce.