Wales was the only part of the UK that saw an increase in foreign direct investment (FDI) projects during the pandemic.
In Wales, the figure increased 3%, while in London the number of FDI projects collapsed -23%. There was also a fall in Scotland (-24%) and Northern Ireland (-28%).
But despite being the only UK nation to see a rise in FDI projects Wales continued to trail most of the UK for FDI projects, with only 72 compared with London’s 492 between the 2019/20 and 2021/22 financial years.
The UK Powerhouse Report produced by the Centre for Economics and Business Research research also predicts that most of the top 10 fastest growing city economies by the end of next year will be in the South or East of England.
Cardiff was second from bottom of the UK’s 50 major cities for GVA growth in the fourth quarter of 2021, with growth of 5.1%, and predicted to be ninth from bottom by the fourth quarter of 2024, with growth of 1.5%.
Wales’ capital however performed more strongly for growth in employment levels, up 2.7% in the fourth quarter of 2021 and expected to be in 8th place in the UK with employment growth of 2.0% by the fourth quarter of 2023.
Swansea’s GVA grew 5.8% in Q4 2021 and was predicted to grow 1.4% in Q4 2023, eight from the bottom of the rankings.
Like Cardiff however Wales’ second city performed better for employment growth, growing 4.0% in Q4 2021. But Swansea was only expected to grow another 0.8% in Q4 2023.
“The dominance of London and the South East when it comes to FDI levels highlights the continued contrast in economic outcomes between the South and North of England,” the report said.
“FDI brings potential for higher productivity and improved economic output, and the regions which benefit most from investment from abroad are likely to see more growth and job creation in the coming years.”
The top 10 fastest growing economies by the end of 2023 are predicted to be Milton Keynes, Peterborough, Reading, Oxford, Brighton, Inner London, Birmingham, Edinburgh, Southampton and Swindon.
The report added that at the other end of the scale, the slower growing cities are all home to declining industries, such as Aberdeen, Wolverhampton, Belfast, Hull and Plymouth.
Bryan Bletso of Irwin Mitchell, who commissioned the report, said: “The whole of the UK has a lot to offer and the regions which benefit most from investment from abroad are likely to see more growth and job creation in the coming years.”
Josie Dent, of the Cebr and one of the report’s authors, said: “The economy is still expected to face some turbulence between now and the end of next year, notably through volatility in commodity prices, supply chain pressures, and the emerging cost-of-living crisis domestically.
“This report highlights that much of the fastest growth during next year will be concentrated in the South. Locations such as Milton Keyes, Cambridge and Oxford have economies which are dominated by fast-growth sectors and they have also been hotspots for overseas investment.
“If economic levelling up is to be tackled effectively, these two issues must be recognised and quickly addressed.”