Inward Investment
Forecast for 2020-2021
A combination of Brexit uncertainties and the impact of Covid-19 restrictions meant that by March 2020 WMGC inward investment pipeline had shrunk by 9% from December 2019 and by 33% from March 2019. Many of the projects still within the pipeline, meanwhile, are on pause due to the challenging economic climate. For example:
- While commercial and legal processes relating to property acquisition are taking much longer, investors are also re-setting their space requirements as they adopt more agile and home working.
- There is no incentive for investors to progress projects until office occupation levels begin to increase current projections from Birmingham’s BPFS sector practice heads, suggest that only 20% of their staff will be back in the office full time by January 2021.
In the face of these challenges WMGC have downgraded their forecast for projects landed in 2021-2022 from 36 to 12, jobs created from 1,570 to just under 530, GVA generated from £104m to £37m and business rate uplift from £8.3m to £2.9m.
2021-2022 and beyond
Under the WMGC strong bounce back scenario the region’s investment pipeline to would return to pre-Covidlevels in H2 2021-2022, underpinned by:
- The emergence from lockdown of key source markets for the region
- An orderly exit from the EU with a trade deal at the end of 2020
- A UK government budget for jobs and growth in the Autumn
- The increased near-shoring and localisation of supply chains
41 new inward investment projects would be landed in 2021-2022 and another 54 would be landed in 2022-2023. So after achieving an outcome nearly 70% below target this year they would out-perform the previous forecast next year and the year after, allowing us to meet our three year target. As a result while projects landed will create less than 530 jobs this year (more than 1,000 below target) this would rise to more than 1,000 next year (nearly 200 above target) and more than 1,500 the year after (nearly 700 above target). This would lead to GVA generation of more than 120m next year and more than 160m next year and business rates uplift of nearly £10 m next year and more than £13 m the year after. ‘Gear shift’ projects involving the attraction of substantial, high value ‘anchor’ investments would account for just 4% of the total but account for two thirds of jobs created, GVA generated and business rates uplift. Our estimates for jobs, GVA and business rate uplift per project landed are based on WMGC average actual achievement over the last 3 years
Under our sluggish recovery scenario the region’s investment pipeline would remain at below pre-Covid levels throughout the forecast period and new initiatives such as the Midlands Engine KAM Programme and the Commonwealth Games Tourism, Trade and Investment (TTI) Programme would not hit their outcome targets.
Just 25 new inward investment projects would be landed in 2021-2022 and another 32 would be landed in 2022-2023, with performance 36% below target over the forecast period. Less than 3,000 new jobs would be created over the 3 years, more than 1,700 below target. This would generate just £205m of GVA, more than £120m below target and create just £16m worth of business rate uplift, nearly £10m below target. Only 3 ‘gear shift’ projects would be attracted to the region, creating just over 2,000 jobs.
Under the WMGC ‘second wave scenario’ prolonged Covid-19 restrictions would act as a significant constraint on business attraction activity into 2021-2022. Just 4 new inward investment projects would be landed this year, another 14 would be landed in 2021-2022 and another 18 would be landed in 2022-2023, with performance 67% below target over the forecast period. Only just over 1,500 new jobs would be created over the 3 years, nearly 3,200 below target. This would generate just £105m of GVA, more than £220m below target and create just £8m worth of business rate uplift, nearly £18m below target. Only 1 ‘gear shift’ projects would be attracted to the region, creating just over 500 jobs.