Receive our newsletter - data, analysis and deep insights on FDI delivered to you
Western Europe / UK

Plymouth looks to ride Brexit and Covid storm

Plymouth's rich maritime history provides the city with much of its industry, as well as its tourist appeal, but with Brexit and Covid-19 to deal with, will its investment attraction remain?

plymouth-investment-maritime
Plymouth’s Mayflower 400 celebrations started in late 2019, but many events were cancelled because of the Covid-19 pandemic, robbing the city of much of its tourism income. (Photo by Finnbarr Webster/Getty Images)

While 2020 will not generally be remembered as a great year, it did mark 400 years since the Mayflower set sail from the UK’s coastal city of Plymouth to the New World. The city’s role in the global Mayflower 400 celebrations was set to highlight it as an international cultural attraction until events were somewhat overtaken by the Covid-19 pandemic.

The postponed commemorations will recommence with a series of planned events well into 2021, although amid these celebrations the waterfront city of Plymouth faces big challenges. The double impact of the Covid-19 crisis and the UK’s departure from the EU has already had far-reaching effects on the region’s economy and its citizens.

Plymouth’s regeneration and economic health

The city of Plymouth grew around its docks with the most rapid growth taking place during the industrial revolution. The city has long-standing naval ties due to its strategic position on the UK’s south coast, an association that includes HMNB Devonport, the largest naval base in western Europe. In fact, the region’s military use made it a target during the Second World War. A Plan for Plymouth in 1944 to rebuild the bombed-out city was the first of subsequent regeneration plans the city has undergone.

White papers from our partners

With the right support from government we can recover quicker than people imagine. Stuart Elford, Devon and Plymouth Chamber of Commerce

Plymouth 2020, launched in 2003, is an urban development plan led by architect David Mackie, along with Plymouth City Council, which includes the building of shopping centres and a cruise terminal, as well as goals to increase Plymouth’s population to 300,000 and build 33,000 homes. Most recently, the Plymouth Plan 2019–34, published in May 2019, outlines a new economic development strategy that includes plans to regenerate the city centre and waterfront over the next decade.

In addition to current economic constraints, Plymouth’s annual GDP growth shows an overall economic decline over the past decade, but with peaks and troughs. GDP growth peaked at more than 4% in 2012 and 2016, but otherwise remained on an overall downward trajectory until its predictable low point in 2020 of -4.7%.


Unemployment figures show a positive trajectory, however, declining since a peak of 6.68% in 2012 to 3% in 2019. Investment Monitor predicts a gradual decline to 3.4% by 2025 from 4.28% in 2020.

Plymouth’s population of 263,070 in 2019 is estimated to grow by 4% to about 274,300 by 2034, according to ONS data in the Plymouth Report 2019. The report found that although Plymouth has a higher proportion of 18–24-year-olds, at 12.2%, than the UK average of 8.7%, this is largely due to its student population. In addition, the city faces the challenge that comes with an ageing population, as its proportion of over-65s is predicted to increase from 17.9% in 2016 to 22.7% by 2034.

Plymouth’s business strengths

In an effort to help businesses suffering from the economic effects of the Covid-19 pandemic, Plymouth City Council has so far paid out more than £52m in business grants to over 7,000 businesses, according to councillor Tudor Evans. A recovery framework, the Resurgam Programme, includes projects such as a £20m regional testing lab led by Plymouth Science Park creating 400 jobs; the Skills Launchpad project to support unemployed youth; a £140m capital programme to support construction jobs; and local enterprise partnership funding for the City Business Park and Plymouth Science Park.

Stuart Elford, chief executive of the Devon and Plymouth Chamber of Commerce, is optimistic about Plymouth’s economic outlook because it has such a large manufacturing base, which has been less troubled by the pandemic than other sectors. “With the right support from government we can recover quicker than people imagine as long as government does not decide to raise taxes in the short term to pay for the effects of the pandemic, allowing businesses time to get back on their feet,” he says.

Plymouth’s maritime sector employs more than 7,100 people, according to the city’s council, and includes an industry base featuring marine operations and engineering, environmental sciences and advanced manufacturing.

Plymouth’s creative industries generate more than £250m a year, support 3,800 jobs and account for more than five million visitors to the city each year, according to the 2019 Plymouth Report. The city’s digital sector alone generated £108.8m in GVA for Plymouth in 2019. The council has obtained a £5m Creative Development Fund from Arts Council England for Plymouth’s creative businesses to help with the effects of the Covid-19 crisis.

How Covid-19 hit Plymouth’s tourism sector

Tourism is a major contributor to the city’s economy. Plymouth had 5.1 million visitors in 2019, who spent approximately £322m, according to the Plymouth Report. Being designated lead city for the Mayflower 400 celebrations, along with development of a new £38m gallery and museum, had the potential to increase these numbers until the Covid-19 crisis hit.

Invest Plymouth estimates that the city will have lost almost £150m of its annual visitor spend between March and September 2020 – half of its typical annual income. Until the Covid-19 crisis hit, the city’s tourism sector had seen 25% growth in the past eight years, according to Invest Plymouth. Tourism supports nearly 8,000 jobs, which represents more than 7% of the city’s employment.

Plymouth City Council and the tourism promotion agency Destination Plymouth have called on central government to maintain a 5% VAT reduction rate and continued business rate relief to March 2022, among other support measures, to help the tourism industry recover from the pandemic.

Elford suggests that a 12-month strategic plan would make a difference for the suffering tourism industry as short-term financial aid only defers the problem for a seasonal business sector. “We need support commensurate with the business type,” he says. Specifically, he would urge the deferral of business rates and Covid-19 business loans, as many tourism businesses have endured what is termed as “three winters in a row”, meaning they have not had their high season to offset the costs of low season.

Brexit and Plymouth

According to the New Statesman’s Brexit Vulnerability Index, which examines the UK’s local authorities for how they might fare economically in the post-Brexit period, Plymouth ranks a relatively positive 295th out of 379 overall (with first position being the most vulnerable).

While the city’s employment and trade may not be at as big a risk as some areas of the UK, perhaps more troubling is its funding gap when EU subsidies end. The city ranks 105th out of 379 in the New Statesman index when it comes to funding, as it received at least £69m from 1995 to 2020 through various EU programmes. European Structural and Investment Funding programmes continued to be funded until December 2020, after which time the city’s council has indicated they are to be replaced with the UK Shared Prosperity Fund, although there is no data on any shortfall between the two funding sources.

The local authority’s Plymouth 2019 Report suggested that leaving the EU will likely reduce the level of foreign direct investment (FDI) coming to the south-west region, with Plymouth taking a significant hit. Following the 2016 Brexit referendum, the Heart of the South West investment promotion agency missed its FDI targets for the first time since 2012. The report estimates that in the south-west, European source FDI has created or safeguarded 13,396 jobs between 2012 and 2016. Brexit may put many of these jobs at risk.

Historically, many foreign-owned companies have located in Plymouth to take advantage of having access to the EU single market. A number of Plymouth companies are also dependent on larger European supply chains. Of the 20 largest employers in Plymouth, which collectively contribute nearly £1bn to Plymouth’s GVA, three-quarters have parent companies outside of the UK. In a Brexit impact update in October 2020, Plymouth City council recognised the need to retain FDI-supported businesses, given that they employ approximately 7,900 people.

EY’s 2020 UK Attractiveness survey found that the south-west lagged behind every region of the UK save Wales and Northern Ireland as an attractive investment destination. Furthermore, greenfield investment project numbers in the region were already declining, from 35 in 2018 to 30 in 2019, even before the pandemic hit.

Education offers hope for Plymouth

A potential economic bright spot for Plymouth is the wealth of marine expertise in the region. As well as the University of Plymouth and two large colleges, Plymouth is home to marine research institutions including the UK’s Marine Biological Association, the Plymouth Marine Laboratory, the National Marine Aquarium, the Sir Alister Hardy Foundation for Ocean Sciences, Plymouth University’s Marine Institute and the Diving Diseases Research Centre. These marine-related organisations form the Plymouth Marine Sciences Partnership. Plymouth is also developing the UK’s first national marine park in association with the University of Plymouth, the National Marine Aquarium and the Blue Marine Foundation.

A strong education and research environment is vital for the establishment of a successful start-up ecosystem, and Plymouth ranked ninth out of the best 40 UK towns and cities in which to start a business, according to a study in October 2020 by Start-up Geeks. However, while the study found many factors such as start-up costs and graduate retention to be positive, the city’s start-up survival rate after five years was the lowest of all 40 cities and towns monitored at 31%, even though nearby Exeter ranked second with 45.5%.

However, Plymouth has the lifestyle factor that Elford believes is a major benefit for the city’s economic recovery. He believes that the pandemic has shown people that a better work-life balance is possible, which places Plymouth in the category of desirable places to relocate. In the past few months, he has fielded a higher than usual number of enquiries from businesses looking to relocate from the expensive south-east, where people battle crowded commuter trains to get to work.

“I can be kayaking 15 minutes after I leave the office,” says Elford. Added to which, with strong research and educational institutions, established expertise across the marine sector, and a tourism sector set to pick up its Mayflower 400 celebrations when restrictions allow, Plymouth seems well placed for economic recovery with the right help from government.

For more of Investment Monitor’s coverage of the UK’s cities, read through our Future of British Cities series:

Lara Williams

Lara Williams

Senior reporter

Lara Williams is a senior reporter at Investment Monitor specialising in FDI in the tech and bio-pharma sectors.