Investors list transport and logistics infrastructure as more important than tax rates, exchange rates and financial incentives.
Failure to build HS2 would threaten the UK’s appeal to foreign businesses, according to a detailed study of overseas investors released today.
The survey, carried out by market research agency ComRes, found that 57% of foreign investors said building HS2 makes the UK a more attractive investment destination, suggesting the uncertainty embroiling the HS2 project is harming the UK’s appeal to foreign businesses.
The findings come in a critical week for the Government’s flagship rail project. Yesterday the Hybrid Bill to pave the way for the new rail line was published, and today the transport secretary and KPMG will defend their business case for HS2 to the transport select committee. KPMG’s report suggests that HS2 would generate some 51,000 jobs in the West Midlands and boost the local economy by £4.1 billion each year.
Business leaders in Birmingham today warned that David Cameron’s ambition to compete in the global race is under real threat because of the controversy swirling around HS2 and a national aviation strategy, which could see regional airport hubs take pressure off the overheated South. The city is uniquely placed in the infrastructure debate, sitting at the heart of the HS2 network, with ambitious airport expansion plans and one of the country’s biggest rail station redevelopments already underway.
One in five investors polled by ComRes said transport and logistics infrastructure was one of their key reasons for choosing to locate in the UK, citing it as more important than tax rates, exchange rates and financial incentives.
The study sounded a strong warning about the risks of failing to invest in regional infrastructure. The majority of foreign investors (56%) feel the UK must invest more in large transport projects if it is to remain competitive in the future.
Foreign investors are vital to UK economic growth. Last year foreign investment created and safeguarded 170,096 jobs, a 51% increase on 2011/12. The Greater Birmingham area led the regional rankings with an 88% increase in foreign investment projects, securing 5,000 local jobs.
Neil Rami, chief executive of Business Birmingham, the programme responsible for attracting investors to the area, said: “Foreign businesses want HS2. That message is clear. If it is important to them, it should be a priority for us as a nation. Failure to invest in infrastructure means fewer businesses coming to the UK, which means we slip back in the global race for investment.
“The UK has grown its share of overseas investment recently but if we don’t listen to what foreign businesses are telling us they need, we risk losing that growth to our competitors. The investors we speak to on a daily basis are making long term decisions for their business, and they demand long term confidence in the critical infrastructure they rely on.”
NVC Lighting, the largest lighting manufacturer in China, located its UK base in Birmingham in 2009. It has since become the fastest growing lighting supplier to electrical wholesalers in the UK and Ireland. The company’s UK managing director, Garry Pass: “Birmingham’s strong transport links were the crucial factor behind our decision to locate in the city. Birmingham is investing heavily in its infrastructure, and is continuing to do so in the future, which is vital to the success of businesses like ours. World-class infrastructure matters a great deal to foreign businesses, who rely on quick access to local and international markets, which is why we want to see HS2 built.”
Alison Munro, chief executive of HS2 Ltd, said: “The deposit of the Hybrid Bill for Phase 1 of HS2 is a major step forward for the project. This survey clearly shows that the UK would lose out on foreign investment if HS2 was not built. HS2 is crucial to redressing the north-south divide and boosting regional economies.”