Inward investment: is it time to prioritise effective action or suspend?
Brexit was clearly a hugely important issue for many organisations, taking up a great deal of resource, before Covid-19 roared in as the new dominant and tragic feature of pre-Brexit landscapes.
With such monumental impact to the economy, government, Local Enterprise Partnerships (LEPs) and local authorities urgently need to review Local Industrial Strategy, Growth Hub and other economic development strategies to address these two far-reaching economic challenges, to rebuild economic momentum, to address the needs of people/businesses requiring support, and to shape service delivery.
UK economic development professionals have their hands full at present, but on top of other issues being addressed, post Covid-19 economic recovery focus must consider the combined impact of Brexit on inward investment plans, and of Covid-19 on operating models.
International investors who may normally view the UK as an attractive location due to the stable economic environment may be concerned that the UK political, economic and social profile is now less certain. They may be less inclined to make a move to the UK and may be more actively considering other locations as a result. Post Covid-19 UKPLC may still attract some investors even with Brexit looming, but action is required now to protect the longer term position as investors will not stay loyal forever.
One thing is for certain, just pinning our hopes on any perceived legacy benefits of the UK’s membership of the EU, or the loyalty normally associated to UKPLC as a trusted stepping stone to Europe will not be enough. International investors and indeed UK business will be attractive prospects to European competitors in the new environment. Other EU economies offer stable legal, financial, political and social environments in an adequate English language environment. The UK must expect intense competition from the EU for new inward investment and must be ready to fight to retain UK-based businesses possibly considering an EU location for expansion.
Investor behaviour may change due to Covid-19, so delivery models will need to be flexible. Site visits may need to be interchangeable with slick online engagement for prospects and existing investors alike. Prospect engagement/investor development techniques must adapt. UK inward investment growth will almost certainly slow as a result of all this, and even when the situation is clearer, it will take some time to rebuild investor confidence and momentum.
Although we know the Brexit date looms, many related commercial questions still need to be answered, yet waiting for perfection is not an option. However, the time is right to plan for the future. Rather than being caught in the headlights, stalling, pausing or getting distracted, UK economic development professionals should act now. Focus is required on new foreign direct investment, overseas funded expansions, domestic relocations, domestic expansions and, of course, investor development.
It is critical that every UK location seeking to attract or retain investors makes sure that:
• Assets are reviewed and thought is given to how they are attractive
• Marketing messaging is reviewed and collateral amended
• Lead generation and other sales plans are reconsidered
• Prospect triage and engagement protocols are updated
• Investor development resources and processes are reinforced
• Operating models and plans address the realities of the impact of Covid-19
It is easy to avoid taking action on these issues, or to claim that while questions remain unanswered the status quo can continue, or to assert that other issues demand more attention. Short term re-prioritisation of effort or resource in favour of other apparently more pressing issues at the expense of inward investment may damage long-term results, as investors will quickly shift focus unless compelling propositions and a warm welcome are offered to them.
There are many issues involved, and careful thought needs to be given to relative priorities and resource. Given the unprecedented situation we face all options should be considered. It is important to take action now – much can and must be done now to prepare for the post-Brexit world and despite any uncertainty now is the time to take action and plan for the future if inward investment momentum is to be increased. But Covid-19 issues must be considered.
However, there may generally be a lack of capacity to do this, so outside expert resource may be helpful/required to add capacity, knowledge, skill experience and expertise. This shares the workload and brings in fresh thinking…both of which may possibly be helpful.
Chris Parkhouse is Managing Director of Deyton Bell, a member of the Institute of Economic Development