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Business & Economy

North East to benefit from reshoring trend amid shift in foreign investor priorities

Foreign direct investment (FDI) has fallen sharply across the UK this year, but the North East could benefit from an increase in reshoring activity from British manufacturers.

A shift in foreign investor priorities has seen the attractiveness of the UK as a location for investment into manufacturing, healthcare and digital – three growth sectors for the North East – rise against a backdrop of COVID-19 uncertainty.

That’s according to the latest UK Attractiveness Survey from EY, which found that 32 per cent of manufacturers were looking to reshore activity in the UK – a figure higher than historical trends.

Another 32 per cent of respondents said they intended to invest in the UK over the next 12 months.

The figures are the latest evidence of how the coronavirus pandemic has prompted a re-think of investor priorities.

The EY survey of 220 non-UK investment decision makers also found that only 43 per cent of respondents are continuing with their UK investments, down from 72 per cent in April.

These figures equate to a 30-45 per cent reduction in FDI projects in the UK in 2020, when compared to 2019.

Mike Scoular, EY’s managing partner for Newcastle, said: “This is a real opportunity for our region, which sees a significant proportion of its employment and GVA come from manufacturing, and an updated industrial strategy should identify the UK’s support for manufacturing and supply chain onshoring.

“COVID-19 may actually have stimulated investment activity in the manufacturing sector by accelerating technology adoption and supply chain redesign.

“Pre-pandemic, many businesses were already reviewing supply chains given trade and geo-political tensions.

“The challenges the pandemic has posed to extended global supply chains have made a rethink all the more important and reducing dependence on one source of supply and reshoring are all driving this shift.”