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Investment into Birmingham could be hit by Brexit, says FDI expert

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Birmingham’s position as one of the main beneficiaries of Foreign Direct Investment (FDI) could be threatened by a vote to leave the European Union on 23 June.

FDI expert Courtney Fingar, editor in chief of fDi magazine, told an audience at a recent breakfast seminar hosted by leading real estate company Cushman & Wakefield, that a vote to leave would be a ‘huge gamble’ for the UK.

She said that Birmingham had been a major target for foreign investors in recent years, but added: “It’s worth thinking about the impact a ‘Brexit’ could have – is it worth the gamble?

“Brexit is a big risk – from an FDI perspective, you would be gambling with the UK’s world leading FDI status. There is little to gain and potentially a lot to lose.

“There is no guarantee that the UK would be better out of EU – there is no guarantee that once freed from the shackles of the EU, that regulation would improve. There is lot of uncertainty that would be unleashed, and the transition would be long and painful.”

During the event, a snap poll of those present was taken, on the question of whether the UK would be more competitive in or out of Europe – the result was overwhelmingly in favour of Europe, with 50 per cent of those voting saying that the UK would be more competitive in the EU, and only 27 per cent disagreeing.

The event was Cushman & Wakefield’s ‘Property Outlook 2016’, a look at how the commercial sector in the city was faring and what its prospects were for the coming years.

Ms Fingar’s presentation focused entirely on FDI, and she revealed that the UK was the leading recipient of FDI projects into Europe during 2015. During the year, there were 974 UK FDI projects, compared to just 364 for Germany and 356 for France.

She added that the UK had enjoyed a strong performance in terms of FDI since the global recession of 2008. She said that the source for most FDI projects was the US and added: “The UK is the most popular destination for US projects but there is a lot of interest in engaging with the emerging markets, not least of which is India.

“Birmingham has been a decent performer for FDI but has flattened out over the past two years. The main investors in Birmingham are US and India, with the latter very bullish about the city.

“Everyone has been busy chasing China but Birmingham has done a good job of taking advantage of the growth coming out of India.

“Birmingham is strong on businesses and technology and there are many reasons to be optimistic about the city – the ‘Midlands Engine’ is ramping up, and the city is seen to be a reliable performer, in terms of FDI.

“It is a safe haven market, has good connectivity and a huge catchment area. It is also on the doorstep of London, which is one of the world’s top FDI cities.

“The only reason Birmingham might worry is that it could be squeezed out by the South East and the Northern Powerhouse.”

She added that FDI was a ‘competitive game’, with only 12,000 projects on offer globally each year. Some previously active FDI sectors had been in decline recently as well, she added, including financial services, where the number of available projects had dropped by 30 per cent in 2015 alone.

She said that a decline of about five per cent was forecast for the global FDI market in 2016, but added: “Don’t expect the bottom to fall out of the market – it will start to recover in the next three years, with growth of between 3-5 per cent expected.”

David Tonks, head of Cushman & Wakefield’s Birmingham office, said: “The variety of clients attending the Outlook event enabled the Cushman & Wakefield team to gauge current sentiment following presentations by our market leading experts and our guest speaker from the FT.

“It was especially encouraging to see the results of the audience poll, which confirmed the positive attitude toward both occupational and investment markets across the Midlands.”