UK trends: a return to optimism?
This edition of the Investment Attractiveness Index reveals a notable positive shift, with 46 of the 48 cities showing improvements in their scores.
This broad-based rise is driven primarily by gains in the Growth Potential pillar, as GVA forecasts and – to a lesser extent – employment forecasts after a bleak economic outlook was given for the UK following the hikes in payroll taxes announced in last year’s Autumn Budget.
The reshuffling in this year’s ranking tells a story of regional rebalancing. Though London’s dominance remains unchallenged, the competition for positions below has intensified. Oxford and Birmingham have broken into third and fourth places, respectively, displacing Manchester, which in turn fell two places. This extends beyond the top ten and into the middle-order of the Index as well, with cities like Solihull seeing a 11-place rise.
Indeed, the Midlands has emerged as this year’s winner, with three of the five biggest risers being in the region. Solihull tops this list with a remarkable 11-place leap, followed by Nottingham in second place with an eight-place improvement. Swindon, in the South-West, came third with a seven-place improvement. Stoke-on-Trent, also in the Midlands, rounds off the top five in a tie with Milton Keynes – both improving by five places. Key contributors to these cities’ improvements included stronger upward revisions in the Growth Potential pillar, along with improvements within the Local Skills pillar.
Challenges remain in the North
Compared to Q4 2024, only Manchester and Peterborough declined in their overall score – both by a marginal 0.2 points. For the former this was due to a drop in Local Skills, whereas for the latter this was driven by underperformance in Growth Potential relative to the rest of the cities included within the Index.
Meanwhile, the greatest declines in terms of ranking were largely concentrated in the North. Though Peterborough recorded the largest fall by far, this was followed by Preston and Sheffield, both of which saw drops of six places each. They were followed by Stockport and Derby, both of whom witnessed declines of five places each. A shared feature among these cities is relatively weaker improvements in their Growth Potential scores and declines in both their Local Skills and Local Infrastructure scores.
