The global investment landscape is evolving at pace, prompting several nations to acknowledge the imperative of active government involvement in attracting foreign direct investment. In response to a changing world, the Harrington Review was commissioned in March 2023 and was recently unveiled at an event in London. Jennifer Hartley, Director of Invest Newcastle, was invited to attend the launch hosted at Bloomberg’s headquarters. In this article, she shares her insights and reactions to the recommendations outlined in the review.
The UK’s attractiveness as a destination for international investment has been a critical factor in driving inclusive economic growth in places like the North East, which can speak with some authority on the subject, having consistently created more jobs per capita from foreign direct investment (FDI) projects than many other parts of the country.
In Newcastle, we are fortunate to work with an ever-growing number of foreign owned companies like Siemens, Ubisoft, Accord Healthcare, TechnipFMC and Leonardo, which between them employ thousands of people across our city.
What’s important for us is that we continue to attract strategic employers to Newcastle, not just for the jobs they create but for the skills they develop and the technology they transfer to local companies who become more productive and innovative as a result.
Key to this is the broader economic and political environment across the UK, which, to put it mildly, has not been without its challenges in recent years. Between the Brexit referendum, the consolidation of government departments, multiple leadership changes at 10 Downing Street and an unprecedented period of economic turbulence and inflation, it is unsurprising that the UK has slipped down the European rankings for FDI projects.
In 2022, France claimed the top spot for the fourth consecutive year with 993 projects compared to the UK’s 929 – albeit we created more jobs per project. At the global level, countries like the US, China, Singapore, Hong Kong, Brazil and Australia are also offering increased competition for projects, with generous subsidy packages that incentivise investment into specific sectors.
In this context, the Harrington Review provides a welcome opportunity to look at why the UK has fallen behind and I was privileged to speak to Lord Harrington earlier this year about resetting our ambitions for the future.
First and foremost, the solution to the UK’s FDI performance has to be set in the context of the whole of the country and not just London. While the capital recorded its lowest number of new projects for 10 years in 2022, down 24% year-on-year, all of the Northern regions saw project numbers rise by at least 10%.
This is not to say we shouldn’t be concerned about the decline of FDI into London, but rather to recognise that Northern cities have enormous investment potential if properly leveraged. As the Harrington Review explains, it’s not about competition between areas, it’s about creating a level playing field for investment promotion and targeting support to where it’s needed most.
In Newcastle, we know that we have strong and distinctive investment propositions that appeal to international investors, and we would welcome any additional support in promoting more place-based opportunities.
The Office for Investment (OfI) has been hugely helpful since it was created in 2020, bringing together the relevant stakeholders across different government departments and getting decisions made more quickly. Increasing its scope and resources should be welcomed, especially in the context of supporting investment into devolved areas and enabling cities like Newcastle to better exploit their unique assets and capabilities.
The word unique is really important. The Harrington Review rightly calls for proposition development around specific sectors where cities and regions have genuine international strengths. Given the nature of the UK economy, we often find that we are citing the same sector strengths as other cities, and so we would welcome more support from central government in promoting our distinctiveness.
Differentiation is also about communication so it’s important that we have more opportunities to collaborate with other cities and to feed into the broader UK investment strategy.
Plans to convene a Government Investment Committee to oversee delivery of a Business Investment Strategy make complete sense but they absolutely must have regional representation.
Otherwise, how can we be serious about place-based propositions that are complementary to local industrial strategies and that target support where regions have specific competitive advantages?
The improved performance of Northern cities in terms of FDI can in some part be attributed to English devolution and the emergence of Metro Mayors that are empowered to develop distinct economic identities for their areas. The same teams credited with this success must therefore have a seat at the table when it comes to policymaking for the future.
Our message to Lord Harrington and our colleagues at Department for Business and Trade, OfI and across central government, is to make sure that regional voices are heard in the conversation about how we improve the UK’s competitiveness in the global investment market.