FOREIGN investment in the south east has fallen by more than a fifth according to a new report.

The South East recorded 72 foreign direct investment (FDI) projects in 2015 – a decline of 21.7 per cent on 2014 when the region attracted 92 projects, according to the 2015 Attractiveness Survey by global finance firm EY.

In Southampton there were just two FDI projects but the city is doing better than its coastal neighbours in Portsmouth and Bournemouth both of which had none but lagged behind Reading which has four and Oxford, five In 2015 South East recorded a 6.8 per cent share of the FDI market, down from 10.3 per cent in 2014.

When employment secured from FDI is considered, the South East recorded 2,573 jobs in 2015 – up six per cent on 2014 employment figures when 2,423 jobs were created in the region.

Strong growth was reported in the South East for projects from the manufacturing sector, with 23 projects attracted to the region from this sector. Manufacturing investment into the region equated to nearly a third of the region’s total projects and 17 per cent of jobs created.

Geraint Davies, managing partner at EY across the South Coast: “The South East appears to be losing out in terms of attracting inward investment projects, especially when compared with other regions that continue to benefit from the rebalancing effects of the UK economy.

“Looking more generally at investment levels into the South East of England, the root causes of the region’s declining FDI performance remains unclear. It could be that the devolved regions of the Northern Powerhouse are dominating UK investment, hence why Southern regions are failing to compete. Alternatively, the South East may have under-invested in inward investment promotion, or could be suffering the effects of an ‘investment shadow’ from London.

“The South East, and in particular the South Coast, doesn’t have any dominant centre to focus inward investment, with the region’s larger cities and towns attracting relatively modest numbers of investment in 2015.

“The fragmented nature of the South East and the region’s challenges in terms of skills, infrastructure and high-priced commercial property means that the South East’s inward investment proposition is somewhat diluted. The region needs to find a way to counteract these issues if we are to compete with the rest of the UK. Business must find a way to engage with both regional and local government to find appropriate mechanisms to increase the attractiveness of the South Coast to FDI projects.”

Nationally there has been a 20 per cent growth in the number of projects, with 1,065 FDI projects attracted to the UK last year, the largest number of projects ever since the survey began in 1997.

The UK took a 20.9 per cent share of the total number of projects locating in Europe (5,083).

The North West led the way out of 12 UK regions, with an increase in projects of 118 per cent, contributing to a 127 per cent growth in FDI levels across the Northern Powerhouse, since the term was coined two years ago.

Only three regions saw a decline in projects secured during the year – The South East of England (22 per cent), Northern Ireland (62 per cent) and Wales (two per cent).

Geraint Davies continues: “The geographic mix of inward investment last year strongly suggests that the UK is using FDI very effectively to help rebalance its economy, with almost 90 per cent of the UK’s total FDI growth coming from the regions outside of London and the South East.

“Investors are voicing solid support for the UK’s agenda to devolve power to a regional level, it now seems devolution is starting to work and foreign investors are helping rebalance economic activity more evenly across the country.”

Commenting on the lack of foreign investment in the county Stewart Dunn, CEO of Hampshire Chamber of Commerce commented: “A number of our members have reported a fall in investments in the last quarter and believe that an uncertain future around the referendum is a key contributing factor.”

EY maintain a neutral stance on the EU debate but said they certainly been a marked deterioration in investor perceptions of the UK “on a scale we have not witnessed before”.

It said that that the upcoming referendum could be weighing on investors’ minds, along with concerns raised over labour costs, airport and road capacity, and cost of real estate.