THE North could miss out on 120,000 jobs over the next 10 years if more isn’t done to attract foreign money to the region.
Think tank IPPR North has warned shrinking overseas investment has left the North of England lagging behind with the number of new foreign business projects slashed by a quarter in the last three years.
Ed Cox, director of the group, believes more than 12,000 posts a year could be introduced across the North East, North West and Yorkshire if pre-2010 levels of investment return.
However, with the abolition of the Regional Development Agency structure, he said it will be increasingly difficult for money to successfully trickle back into the region.
“It is very worrying to see that a key element of the North’s economic success in recent decades has been declining in the past three years,” he said.
“If it continues, this can only make the imbalance in the UK economy even worse than it is already. It is clear that the Coalition’s current approach to attracting inward investment in the North is not working,” added Mr Cox, who has previously warned that business leaders are ‘over-reliant’ on the Nissan car plant in Washington for the region’s buoyant export market.
IPPR’s report, UK First? Improving Northern Access to Foreign Direct Investment, shows that between 2010 and 2011 the number of projects funded by foreign investment in the region dropped from 68 to 54 with the loss of more than 2,000 jobs.
While figures show this grew to 66 projects last year, Mr Cox believes only a return to pre-2010 rates of investment will rescue the economy.
The report also shows that in 2011 only 12% of the UK’s entire foreign direct investment went to the North compared to 18% in 2010. That figure combined with LEP success in 2011 could equate to 12,261 jobs a year, Mr Cox argues.
He added: “Our report shows there are steps that can be taken to improve [investment]. It is vital that action is taken to allow the UK to maintain its place as the leading place to invest in Europe, and for the whole of the UK to contribute to that ambition.”
The report also calls for central Government to improve capacity to existing projects in the North East rather than creating new ones and for a Northern Investment and Trade Board. It also found that the eradication of One North East Regional Development Agency has been a severe blow.
However, a spokeswoman for region’s Local Enterprise Partnership, set up in place of the RDA by the Government in 2010, refutes claims that the region has lost out during this ‘transitional’ phase.
She said: “In a period of financial collapse, entrenchment of investment and low levels of confidence, the North East LEP is beating every other in terms of job creation from international and UK investment projects in 2011 and 2012 with 4165 jobs. There is an impressive list of blue chip companies already here and considering further investment.” MP Chi Onwurah, MP for Newcastle Central, said she welcomed the report.
“It makes it clear that abolishing the RDAs, then leaving North East inward investment at the mercy of Southern consultancies, was a disaster for the North East,” she said.
She added foreign investment could be boosted in the North East if overseas markets were more aware of the region’s expertise in green energy, chemicals and manufacturing.
Catherine McKinnell, MP for Newcastle North, said she had concerns that the Local Enterprise Partnerships are being driven forward by local authorities at a time when they are seeing their resources being ‘cut down to the bone’.
“All of this is ever more pressing when, just over the border, Scotland has tools to attract inward investment that we no longer have,” she said.
She believes that Nissan and the renewable energy sector should be the region’s focus in terms of attracting foreign investment in the future.