The UK economy has been hit hard by the Covid-19 pandemic, with gross domestic product falling by more than 20 per cent in the second quarter of 2020.
Following the lifting of nationwide lockdowns and government support schemes, regions outside of the capital London are refining their approach to FDI attraction.
Neil Rami, the CEO of the West Midlands Growth Company [WMGC], asserts that collaboration and devolution of power to regions will be crucial to the future of investment promotion.
Q: How has the crisis changed WMGC’s approach?
A: It’s probably the most dynamic and challenging professional environment that I’ve witnessed over my career. But it’s remarkable how quickly people have risen to the challenge and adapted to working remotely, agilely and much more collaboratively than we have before.
We’ve tackled the challenge in three stages: response, resilience and recovery. Our recovery phase is focused on jobs, innovation and transformation.
We’ve been able to identify a number of “oven ready” projects which with some government support have acted as a catalyst for investment moving forward.
In June, we put a £3.2bn [economic recovery plan] to the government, which sets out a whole range of areas consistent with our pre-Covid local industrial strategy.
Q: What is your local industrial strategy and has it shifted due to Covid-19 disruption?
A: The four market opportunities that we set out in our industrial strategy were smart mobility, data-driven healthcare, modern business services and creative technologies.
The pandemic has accelerated investment interest in all of those areas quite profoundly. But it has forced us to be more on the front foot in terms of describing what we can offer in those areas.
Landings are down and there’s no doubt that FDI is going to be affected here. Merely positioning our strengths has not been enough and will not be enough for any region globally.
I think we need to create “gear shift” projects in our regions across the UK.
Global corporates are thinking long and hard about their footprint, and how much of their footprints they want in the major conurbations worldwide.
As part of their risk mitigation exercises, we will probably see more of those people being based outside of those major conurbations.
The consequence for us is that we’re seeing a lot of interest from companies who are currently based in London looking at operations elsewhere.
Q: Would you do anything differently in the future?
A:One of the lessons for me is that despite the UK’s attractiveness as an investment location we still see sluggishness at times. Removing the blockages, [such as] planning or other levels of bureaucracy, is something we have learned that we need to do if we’re going to be able to move more quickly.
Many companies have been adapting and adopting agile working methodologies. I think the role of AI and a focus on workforce productivity will drive a lot of investment decisions over the medium to long term.
The value of collaboration cannot be underestimated. Some of the partners and sectors we have paid lip service to in the past in the UK, such as our higher education and university sector, have come to the fore during this period.
We are using significant market insight that these institutions are bringing to our doorstep. That level of collaboration probably won’t go away when we move back into a safer environment.
I think investment may globally be much more about place-to-place relationships, as well as nation-to-nation dialogues. We have just created a West Midlands-India partnership as we have so many strong cultural, political and business relationships with different parts of India.
We’ve been strengthening our diaspora connections over recent times.
Q: How have recent geopolitical developments affected your job?
A: It has made things a little bit more complex. From my perspective, there’s a need to not look at all of these geopolitical issues as black and white. There’s always an area of grey, whether with China, the US or the Middle East.
[However] there’s always some issues that we can’t control. The UK is a very open country, and [the West Midlands] certainly a very open region.
Most investors, and certainly the larger capital investors, we’re dealing with are taking a medium to long term view. The fundamentals are actually very strong for UK regions.
Q: What does the future hold for investment promotion?
A: We have to be in the world of transformation. Incremental growth is not a business that any Investment Promotion Agency can afford to be in over the next two or three years because of the structural impacts [of the pandemic] on our economies.
We have to think quite ambitiously. Ideally, I would like to see some fiscal devolution [to the UK regions] in the future. But these are complex things and of course difficult to take on board at a time of significant economic challenge.
We should see the opportunities that all this has created for us in terms of moving the economy forward more quickly. If we don't do it, other people will do it.
I think the FDI market will become much more competitive over the next few years.
Neil Rami is the CEO of the West Midlands Growth Company, one of the UK’s regional investment promotion agencies.
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