Research by the Big Four accountancy firm shows that the devolved administrations of Scotland and Wales are achieving big increases in foreign direct investment.
But since the scrapping of the regional development agency and the introduction of local enterprise partnerships, Yorkshire has witnessed “a stark and continuing decline” in the number of projects, said EY.
David Buckley, senior partner in Yorkshire, told the Yorkshire Post: “Regions, like companies, either grow or go backwards.
“We are all in a fight for scarce investment capital – our competitors are the rest of the world, not just adjacent cities or regions.
“Foreign direct investment brings important capital for new projects and new employment. It brings a wider dynamism to local economies.
“It brings leverage too. A new company investing in Yorkshire brings a boost to many companies around it, including everything from the steel fabricator who builds the factory to the local coffee shop.
“I’m very passionate that Yorkshire wins this fight.”
He blamed Yorkshire’s poor performance on the lack of political advocacy and the Government’s decision to switch management of foreign direct investment from regions to cities.
The North West and North East, which both attracted more foreign direct investment than Yorkshire last year, have also seen declines in project numbers since the scrapping of regional development agencies, according to EY’s research.
Mr Buckley warned that England is becoming two countries: “There’s London and there’s the rest – the regions.”
London dominated foreign direct investment last year with 45 per cent of all projects. Scotland was in second place and the South East third.
Mr Buckley said Yorkshire’s success in winning the bid to host the Grand Depart of the Tour de France against rivals Scotland, France and Italy was due to “selling the region” rather than the individual cities.
Contrasting Yorkshire’s poor showing in the foreign direct investment table last year, he said: “It is very stark that those going with a region-wide concept and a story to tell are the winners.”
Wales and Northern Ireland both reported strong increases last year.
Mr Buckley added that selling a concept is just as important as the hard science of making the numbers work for global investors.
He said: “I would argue that is part of the reason that we are weaker divided into individual cities, therefore losing the political argument, losing the hearts and mind argument and falling down the league table relative to where we should be.”
The UK also faces a challenge from its proximity to crisis-hit Europe, added Mr Buckley.
He said the UK is in danger of being tainted by the perception that the eurozone is in the middle of a 10-year slump akin to Japan’s lost decade.
US investors are questioning whether Europe is “the best route for their dollars” and are considering moving their capital to emerging markets instead, he added. The Yorkshire Post has heard a leading regional investor raise similar concerns in recent days.
The UK relies heavily on the US for investment. The States accounted for 28 per cent of all projects last year.
The US invested in more than 150 projects in Yorkshire over the last 15 years, three times as many as Germany, followed by France and Japan.
Mr Buckley said the UK and Yorkshire have the opportunity to improve perceptions and distance themselves from the worst issues that prevail in the eurozone.
He added: “Germany has started to do that. That’s the reason Germany is viewed as a strong foundation that others are going to.”
Germany succeeded in toppling the UK for winning the most new foreign direct investment projects last year, according to EY’s research.
Germany overtook the UK as the most attractive European country for global investors and maintained its market-leading share of emerging investors.
Mr Buckley said the UK is reaching a tipping point; like Germany, it can be perceived as so strong it is separate from Europe, or the UK can continue on its current path and fail to rise up the league tables.
Mr Buckley said: “Yorkshire lacks the consistent and focused voice that Wales and Scotland has.
“We are now promoting ourselves by city much more than by region and that’s much harder on the global map to get recognition.
“A lot more people have heard of Scotland and Yorkshire than Leeds, Hull, Sheffield and Rotherham.
“Are we allowing ourselves to be sucked in as just another part of the eurozone?”
He said cheap sterling and low taxes should help the UK.
Enduring a downward trend
ANNUAL investment activity in Yorkshire shows an overall downward trend over the last 15 years, according to Ernst & Young.
EY said activity declined significantly in 1999-00 and failed to recover until a slight improvement in 2009-12.
But from 2010, the number of investments started to decline in line with the abolition of regional development agencies like Yorkshire Forward.
A spokeswoman for the Department of Business Innovation and Skills said the Government is “reversing years of centralisation by giving local areas back the power and funding they need to achieve their potential”. She said all regions increased investment projects over the last year.