FDI increase under threat
While Northern Ireland appears to be performing well in relation to foreign direct investment attraction and associated jobs, over 40 per cent of new FDI projects into Northern Ireland came from the European Union in the past five years, including over 3,500 new jobs from EU projects.
Recent statistics released by the UK Government’s Department for International Trade (DIT) in July show that Northern Ireland’s attraction of FDI projects for 2019–20 was proportionally greater than the UK average over the year, as was its increase in FDI jobs.
Increasing the attraction of FDI into Northern Ireland has been identified as a key driver of economic growth, however, the detrimental potential of Brexit uncertainty and potential trade barriers have been frequently cited as threats to current FDI levels and future attractiveness.
The Department for the Economy (DfE) published Northern Ireland specific data from the DIT’s figures which outline a 14 per cent increase in FDI projects (40) between 2018–19 and 2019–20, larger than the 4 per cent increase recorded for the UK as a whole.
The increase of FDI projects was matched with a 59 per cent increase in new FDI jobs (2,351) from 2018–19 to 2019–20, which was in contrast to the 3 per cent decrease in new FDI jobs into the UK as a whole.
However, it’s worth noting that Northern Ireland accounts for just 2 per cent of UK FDI projects and 4 per cent of UK FDI jobs. For comparison, in the same timeframe Scotland had 121 FDI projects and created 2,946 new FDI jobs compared to Northern Ireland’s 40 FDI projects and 2,351 new FDI jobs. Wales had 62 projects and 2,736 new jobs. Outside of London, England had 933 projects and 26,179 new jobs. Individually, London attracted 638 projects and 12,989 new jobs.
Looking longer-term, the figures also show that over the five-year period between 2015–16 and 2019–20 there were 170 new FDI projects into Northern Ireland, 70 of which came from the EU (41 per cent). These projects created some 8,767 new jobs, 3,532 of which were from EU projects (40 per cent).
Future barriers to this level of investment would be damaging to economic growth ambitions. Additionally, the figures, by their nature, do not fully reflect the impact of Brexit uncertainty as it is impossible to measure decisions not taken or delayed by foreign investors for Northern Ireland as a result.
Tied to this is the fact that Northern Ireland is likely to see a reduction in FDI levels as a result of the economic impact of the pandemic. The figures, which cover up to April, are not reflective of the changing economic landscapes for business both in Northern Ireland and more globally.
