Brexit defied

Scotland slid as UK drew investors in 2021

Scotland drew fewer overseas financial services projects in 2021 (pic: Terry Murden)

Foreign investors poured money into Britain’s financial services sector last year, despite Brexit, according to new data that shows Scotland toppled from second place in the UK attractiveness league table.

The UK secured a greater number of higher job creating “new” projects (54) as opposed to expansion of existing ones (9) in 2021. France, which also saw an increase in foreign investment, attracted 35 new projects and 25 expansions.

But within the UK, Scotland slid from second to fourth place behind London, the West Midlands and Northern Ireland. Scotland’s three projects, down from six projects in 2020 and eight in 2019, was its lowest number since 2013.

Looking ahead, Scotland is second (12%) behind London (56%) as the target for UK investors planning to establish financial services operations, an indication of the mutual benefits of Scotland within the UK.

The data emerges in EY’s latest UK Attractiveness Survey for Financial Services showing the UK’s 63 projects in 2021 was an increase of seven on the previous year.

More than two-thirds (69%) of global investors said they plan to establish or extend operations in the UK over the next year. This is up from 50% in last year’s June survey. In addition, almost half (47%) of those surveyed said they were planning to increase their investment in the UK in the aftermath of the pandemic, up from 6% last year.

Anna Anthony, UK Financial Services Managing Partner at EY, comments: “Six years since the EU referendum, we can be confident that Brexit has not damaged the UK’s fundamental appeal, with its deep history in financial services and access to top talent. Investors clearly recognise that the UK continues to offer a unique environment for growth, innovation and progress. 

“That’s not to say the UK isn’t facing strong competition, and France in particular has narrowed the gap. But the UK secured a much higher number of ‘new’ projects, which typically create more jobs and higher levels of investment.”

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While markets such as the UK and France saw an increase in the number of financial services investment projects secured, financial services investment across Europe fell by 2.8%, representing the third annual decline in succession.

Germany, which for much of the past decade was the second largest recipient of finance projects, also reported a third consecutive annual decline, with project numbers falling from 81 in 2018 to 43 in 2019, 37 in 2020 and just 29 projects in 2021. Germany is now in fourth place behind Spain and its 39 projects in 2021.

London remains the leading UK and European city for attracting financial services FDI, securing 39 projects, one more than in 2020. However, this is the fourth lowest project count in the last 10 years (and less than half the 86 projects recorded in 2018).

Paris, in second place, is now just one project behind, securing 38 finance projects in 2021 (up from 21 the year before) – its highest number over the last 10 years. Third place was Madrid with 29 projects, up from 21 the year before when it shared second place with Paris. Dublin took fourth spot with 10 financial services projects in 2021 (up from nine in 2020), overtaking Berlin which recorded nine (down from 11 in 2020).  

The largest source of financial services investment into Europe in 2021 was again the US, which has been the case since records began. US investment accounted for more than a quarter (27%) of all projects.

But for the first time, the UK was not the leading recipient of US investment, with France securing the highest number of US projects in 2021 (19). Meanwhile, the UK secured 17 projects – its lowest US intake since 2013. 

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