Foreign investment into Wales reaches 'five-year high'

Money A total of 2,051 jobs were created by the investment

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Wales has attracted its highest level of foreign investment for five years, according to an annual survey.

Financial experts Ernst and Young said the number of projects involving foreign direct investment more than trebled last year from nine to 31.

A total of 2,051 jobs were also created and Wales' performance in the survey was described as "sparkling".

The annual attractiveness survey analyses inward investment and the attitudes of global investors.

Across the whole UK there was a 2.7% rise in foreign-backed UK projects while there was an overall 2.8% decline in investment across Europe.

The UK's 697 foreign-backed projects created a 1.4% rise in foreign direct investment jobs to 30,311.

Analysis

It used to be said that Wales was good at attracting inward investment because of the three L's: land, labour and lolly.

In other words, we had plenty of land, cheap wages and big cheques were being signed to tempt firms.

And Wales was good at it. A recent study found that in the 1990's Wales captured 15% of all the foreign contracts coming into the UK, that fell to 3.5%.

So what went wrong? Carwyn Jones admitted in a news conference last month that Wales reduced its international presence too much after the trade and promotion body International Business Wales was abolished in 2010.

The Welsh government is carrying out plenty of trade missions now, 44 are planned for the next year, and has a closer working relationship with UK Trade and Investment's network overseas.

But as welcome as these figures are, it's worth pointing out that the numbers are well below the years before the financial crisis.

Between 2005 and 2008, inward investment created more than 5,000 jobs a year in Wales.

The UK had the biggest foreign investment of any European country, followed by Germany and Spain.

London would come fourth in a European list by itself, attracting 45% of the UK's total projects.

Scotland recorded 76 projects, its highest total for 16 years; and Northern Ireland 29 projects.

The improved appetite was put down to changes to taxation, a more flexible financial system, trade missions and support for small and medium enterprises - each cited as enhancing the UK investment environment.

But Mark Gregory, chief economist at Ernst & Young, praised Wales for outperforming other parts of the UK.

He said: "The sparkling performance in 2012 by Wales was in stark contrast to most of the English regions, which are now represented by a series of Local Enterprise Partnerships (LEPs) in inward investment promotion, rather than the now-defunct Regional Development Agencies (RDAs).

"The success of the UK overall is a remarkable testament to the openness and international outlook of the UK economy.

"The UK's ability to win investment has been a crucial source of growth and pride over many years."

The survey of 314 global investors showed satisfaction with the UK tax regime jumping from 53% to 61% - helping the UK to secure 29 of the 168 headquarter relocations in Europe, compared to 12 in the previous year.

Labour costs were the other factor cited as having improved dramatically, with the satisfaction rating up to 63% from 48%.

Last year, a study by Cardiff Business School said Wales was lagging behind almost every other part of the UK in terms of attracting foreign companies and jobs.

In response, the Welsh government said it was working to "sell Wales to the world" in a bid to boost the economy.

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