North East region 7th best in UK for attracting foreign investment thanks to skilled workforce

The North East was the UK’s seventh best-performing region in the UK for attracting FDI projects in 2024, up from eighth in 2023 and the region’s highest ranking since 2016. Overall, the North East’s increase in project numbers also saw its share of UK FDI projects increase from 3.9% in 2023 to 4.9% in 2024.

Despite the increase in overall North East projects however, employment created by FDI projects in the region stood at 1,864 jobs in 2024, down 35% from the 2023 total (2,887).

The UK recorded 853 FDI projects in 2024, a 13% decline from 2023, making it Europe’s second-best-performing country for attracting inward investment. France ranked first in Europe in 2024 with 1,025 projects, a decline of 14% year-on-year. Europe as a whole recorded a 5% year-on-year decrease in FDI projects.

This continent-wide decline is believed to have been driven in part by relatively modest levels of economic growth in recent years, prompting investors to look towards more competitive global destinations such as Asia and the US.

Despite the broader national UK decline, the North of England as a whole recorded a 29% increase in FDI projects in 2024.

Manufacturing and Utilities once again play key role in North East FDI

Assessing FDI projects by sector reveals that the North East welcomed a diverse range of inward investment projects last year. Transportation Manufacturing and Supply, which includes automotive and aerospace companies; Utility Supply, which includes renewable energy companies; and Professional Services and Financial Services were all prevalent.

Over the last 10 years, Transportation Manufacturers and Suppliers has been the second-most prevalent sector in the North East’s FDI mix, contributing 12% of investment projects.

Examining FDI by activity reveals that the North East’s year-on-year rise in inward investment was driven in part by an increase in projects involving manufacturing. The region attracted 12 manufacturing projects in 2024, a 20% rise on the year before. The most prevalent type of FDI activity was business services, accounting for 13 of the region’s projects in 2024.

US remains the leading origin of FDI in the North East

The US has comfortably been the largest origin of investment projects into the North East over the last ten years, which was once again the case in 2024. This was also the case for Europe and the UK.

Over the last ten years, the US has contributed more than a quarter (29%) of FDI projects into the North East. In 2024, the US's importance was even more pronounced, contributing 31% of the investment projects into the region compared to a national figure of 21.4%.

In 2024, the other countries that made up the five largest origins for investment were France, Ireland, Belgium, and Germany. In the case of France and Ireland, no projects were secured from these countries in 2023.

Skilled workforce

“The North East’s performance in attracting FDI was encouraging in 2024, with the region displaying its ability to secure projects in strategically important areas such as manufacturing and business services,” said Michael Scoular, EY’s Newcastle Office Managing Partner. “With the UK’s overall project numbers down, the fact that the North East total saw year-on-year growth is testament to the region’s resilience and versatility.

“Looking beyond this year, our latest investor sentiment survey results also bode well for future prospects, with 11% of those looking to invest in the UK over the next 12 months planning to establish or expand operations in the North East.

“However, FDI-related employment figures, which can be volatile from year to year, were down quite significantly in 2024 – an area to build and improve on going forward to support prosperity and opportunities across the region

“ UK FDI projects, including in the North East, could be impacted by the current complex global trade landscape, so continuing to promote our great region and our distinct strengths – particularly in manufacturing - to global investors will be a top priority amid a volatile business landscape.

“Our survey highlights that access to a skilled workforce, the availability of partners and suppliers and the strength of local transport infrastructure are key criteria for global investors when considering locations outside London, so collaboration between local and national policymakers to support these priority areas in the North East will be pivotal going forward.”

Investors motivated by grants and skills when considering locations outside London

Alongside an analysis of investment numbers, EY also conducted a survey comprising of interviews with a panel of 400 international investment decision-makers between January and March 2025.

When asked for the investment criteria they assess when considering whether to invest in a region outside of London, more than a third (37%) of respondents said that the availability of regional grants and incentives for investment was a key consideration. This was followed by the availability and skills of the local workforce (30%) and the availability of business partners and suppliers (28%).

Other important investment criteria included the strength of local business networks (24%) and the strength of transport infrastructure (21%).