Andrew set out yesterday how housing could deliver a short term stimulus to the UK’s economic conundrum. Another area that the Chancellor has hoped will deliver jobs and growth is inward investment, as shown by his cutting of corporation tax and the PM’s recent trip to India.
Cities have been keen to jump on the agenda of inward investment from foreign businesses too. The suitably vague request for the signing of a 'Memorandum of Understanding’ with UKTI has been almost ubiquitous across City Deal submissions and conversations around them.
It’s no surprise that cities are eager to encourage investment from foreign shores into their cities. But if the Chancellor takes the opportunity to further incentivise international business into Blighty, where are they most likely to want to locate?
Our Open for Business report last year looked at the geography of foreign owned businesses across the UK. Cities in the Greater South East, led by London, are the most popular destinations for foreign owned businesses. Almost one in three of foreign owned firms in the UK are based in these cities, compared with one in four businesses overall (i.e. those domestically and foreign owned). Cities in the North West, on the other hand, tend to be the least popular. They are home to 7.1 per cent of all businesses but just 6.1 per cent of all foreign owned businesses.
Individually, the two most successful cities in attracting foreign owned businesses lie outside of the Greater South East. At 7.2 per cent of the total business base, Swindon has the highest proportion of foreign owned businesses. It is followed closely by Aberdeen at 7.1 per cent.
While there is large variation across cities in terms of the share of foreign owned businesses, there is much less variation in terms of the countries that these businesses represent.
Businesses from the USA dominate the total number of foreign firms in our cities. With the exception of Belfast, businesses whose ultimate parent is based in the USA account for the most foreign owned businesses in every city in the UK. Reading in particular is a hotspot for US owned firms – 2.8 percent of its total businesses had an ultimate parent from the USA in 2010. The next most frequent countries represented are near neighbours France, Germany and Holland.
The economies such as China and India are likely to become increasingly important for purchasing our goods and services. But the BRICS countries are conspicuous by their absence. Companies from these countries make up no more than 0.2 per cent of the total business base of the most popular city, Luton. The maps below show the geographies of businesses from the USA, Eurozone and BRICS across UK cities.
It is likely that any further moves by the Chancellor to attract companies to our shores in this week’s Budget will fall more loudly on the ears of business bosses in our traditional heartlands of Europe and the USA, rather than the fast growers of the developing world. And if history repeats itself, those businesses listening are most likely to choose cities in the Greater South East.
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