Foreign investment flooding back into the West Midlands
Investors from abroad are beginning to move back into the West Midlands and are creating new jobs despite the dire economic climate, Government figures show.
Direct foreign investment increased by 206 per cent last year, which was easily the best performance by any UK region.
More than 14,000 new jobs were created by investors from abroad, the highest figure since 2007-08 when foreign companies were responsible for creating 30,000 jobs in the West Midlands.
But the increase, as welcome as it is, represents a tiny fraction of the manufacturing jobs lost in the region since the late 1980s.
The were released by Business Secretary Vince Cable.
They give an early indication of the performance of Local Enterprise Partnerships, the private sector-led organisations that replaced regional development agencies, in the vital role of ‘selling’ their area to investors from overseas.
The Greater Birmingham and Solihull LEP (GBSLEP) is in sixth place out of 39 LEPs with 2,039 jobs created from 24 projects involving direct foreign investment during 2011-12.
London heads the table with 12,655 jobs from 512 projects.
Greater Manchester is in second place with 9,291 jobs, the North Eastern LEP created 7,354 jobs and there was a strong performance in the East Midlands with the Derby, Derbyshire, Nottingham and Notts LEP managing to attract 2,299 new jobs from foreign investment.
The Black Country LEP managed 1,214 jobs, Stoke on Trent and Staffordshire 778 jobs.
Foreign investors largely shied away from Coventry and Warwickshire, where only 79 jobs were created from direct foreign investment out of 14 separate projects.
The poorest performer of all was Cumbria, where overseas investment created just 35 jobs in a single project.
Taken across the country as a whole, LEPs managed to attract 52,741 jobs from inward investment during 2011-12, a 26 per cent increase on the previous year.
GBSLEP, covering Birmingham, Solihull, Tamworth, Lichfield, East Staffordshire, Redditch, Bromsgrove and Wyre Forest, aims to deliver a net increase of 100,000 private sector jobs by 2020 and to boost economic output by £8.25 billion, or 30 per cent.
The 206 per cent increase in job creation from foreign investment in the West Midlands last year will be welcomed by politicians and business representatives, but the figure represents only a slight inroad into the recovery required to see off the economic downturn.
Research by the West Midlands Observatory two years ago predicted that 400,000 jobs would disappear across the region as a result of the Government’s emergency spending freeze and that the local economy would not recover to pre-recession levels until 2030.
According to , 80,000 public sector jobs across the West Midlands are likely to be lost and 310,000 jobs in the private sector are under threat.
A recent study by the GMB union found that 25,000 local government jobs have disappeared in the West Midlands as a result of the Government public sector squeeze.
Manufacturing jobs disappeared in the West Midlands at a faster rate than anywhere else in the country between 1997 and 2009, according to the Office for National Statistics. Gross Value added from manufacturing (a measure of economic output) slumped by 23 per cent against a 12 per cent fall in the North-east, a 10 per cent fall in the North-west and just a 1.7 per cent fall in the South-east.
However, the 23 per cent fall in manufacturing in the West Midlands is almost certainly understated. As Professor of Coventry University Business School points out, when inflation is taken into account between 1997 and 2009 the true collapse of the sector is probably closer to 40 per cent.
