Blog: 23 November 2016Foreign investment can ignite economy

James Hall

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James Hall

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The North East looked on with interest as Sheffield City Council recently announced £1bn of investment from China over the next 60 years.

The deal was described by media as “ground-breaking” – and for once, it was no exaggeration. It’s a UK first: the biggest Chinese investment outside London. The question is, can the North East attract a similar deal? And does it even want one?

Investors Sichuan Guodong Construction Group – noted for making floorboards – will pump funds into Sheffield city centre regeneration projects, including hotels, commercial and residential property.

It could be a sign of things to come. Last year, a Beijing-based construction firm became main contractor on the £700m Middlewood Locks project in Manchester, and other schemes are Chinese-financed.

These successes signal the Northern Power-house brand’s potency overseas.

We have the selling points that should make it top of Chinese investors’ shopping lists. Great universities, companies and quality of life are just a few components.

The region can do it. Despite this, our economic development strategies do not include a large-scale plan to attract a deal of this size. The recent breakthroughs in Sheffield and Manchester strongly suggest they should.

 

Think-tank IPPR has highlighted the issue. IT suggested the North East could attract 12,000 jobs each year if the level of foreign direct investment returned to pre-2010 levels.

Both the North East LEP and Tees Valley foreign direct investment in their strategic economic plans. If the case of Sheffield has told us anything, it’s that we need the LEP and Combined Authority to drive big, long-term ambition on this front, not a piecemeal approach.

Property could be a big selling point for the North East. In 2014 and 2015, Newcastle attracted £842m investment into commercial property – instigated by rising prices in London and the South East. We’re also a region that needs more people, and creating housing and services for them presents a big opportunity.

Foreign investment – of the kind seen in Sheffield – could be used to ignite our regional economy.

We’re already attracting some world-beating industries in target sectors to the region, and we need to support our job creation ambitions with a mix of good quality housing.

Many of our regional leaders are turned towards overseas opportunities.  Last year, Newcastle City Council leader Nick Forbes joined then Chancellor George Osborne’s trade mission to Beijing, Shanghai and Chengdu.

Let’s put that ambition at the heart of our economic development strategies, backed up by sound spatial plans.

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