Scotland is the most attractive region for financial services foreign direct investment (FDI) outside of London, according to EY’s latest UK Attractiveness Survey for Financial Services.
The UK and Europe recorded fewer projects in 2020 than the year before, with Scotland continuing to be the most attractive European market for global FDI.
The UK attracted 56 financial services projects in 2020, representing a 43%year on year fall, resulting in the gap with the second largest recipient of investment – now France – narrowing. Of the 56 projects, six were located in Scotland (two fewer than in 2019).
The Scottish financial services market recorded a decline in financial services projects in 2020, it was a smaller fall than that of the UK.
Edinburgh, is seen as the UK’s top city for total FDI outside London, recorded three financial services projects in 2020 and Glasgow, now in the top 10 most attractive cities in Europe, also recorded three financial services projects.
The UK retained its leading position for international investment, securing 19.6% of all financial services FDI into Europe, although this was down from 26.7% in 2019.
Out of the 56 UK projects recorded in 2020, 49 were new projects and seven were expansions.
Scotland also recorded a decline in 2020 – a fall of 25% – from eight projects in 2019.
As for which regions investors think will be the most attractive for future financial services investment into the UK, London came top backed by 31% of respondents with Scotland second with 15%.
The largest source of financial services investment into Europe in 2020 is the US, with 23% of financial services projects being undertaken by US businesses.
The second largest source was the UK – contributing 14% of total projects – although this represents a decline of 40% on 2019 levels.
In terms of investment into the UK, the US again was the principal source, accounting for over a third (37%) of all UK financial services FDI – up from 32% in 2019.
According to the global investors surveyed, the top three drivers of UK growth in the coming years are the digital economy, real estate and financial services.
EY Scotland’s managing partner for financial services Sue Dawe commented: “Scottish financial services firms entered the pandemic in a position of strength, and while a number of challenges still lie ahead, investor sentiment indicates strong cause for optimism.
“A decline in projects would usually be concerning, but considering the wider UK and European picture, Scotland’s relatively small market has actually outperformed many other countries, and the news that its attractiveness as an investment location has tripled over two years is hugely encouraging.
“Scotland has a successful and deeply-established financial services ecosystem, with strong links between industry, government and our education institutions – this is particularly important to highlight to potential investors looking to establish and grow their financial services products and offerings.”
Sandy Begbie, chief executive at Scottish Financial Enterprise, added: “Scotland’s established strengths across financial and professional services are well known, from long standing household names in banking, life and pensions and asset management, to some of the biggest names in global finance who choose to base their operations here.”
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