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Post-Covid optimism

Scotland will remain target for foreign investors

Glasgow was the second most attractive UK city for financial services FDI (pic: Terry Murden)

Scotland’s financial services sector is expected to remain a prime location for overseas investors in the post-pandemic economy.

Investor sentiment suggests that the UK will continue outperforming the rest of Europe as it did last year and that Scotland will be particularly attractive.

Forty per cent of investors believe the UK will be more attractive for financial services investment from overseas post COVID-19, compared to just 8% who believe Europe as a whole will be more attractive after the crisis.

The findings appear in the latest EY UK Attractiveness Report for Financial Services 2020, published today.

Scotland increased its share of financial services foreign direct investment (FDI) in 2019 and secured Europe’s largest international investment project in terms of job creation, while project numbers across Europe fell.

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There were eight financial services FDI projects secured in Scotland last year, creating an estimated total of 2,911 jobs – more than three times the employment number for London (estimated to be 806) and more than half the UK total (estimated to be 4,443).

At a city level, Glasgow was the second most attractive city in the UK for financial services FDI in 2019, having secured more than three times the number of projects than Edinburgh.

At the UK level, Scotland was the second most attractive location for financial services FDI in 2019 for the seventh consecutive year, with its share of all financial services FDI into the UK increasing from 6.3% in 2018 to 8.1% in 2019. The sector’s contribution to Scotland’s overall FDI figures also increased from 7.4% in 2018 to 7.9% last year.

Sue Dawe, EY’s Head of Financial Services in Scotland, said: “In a year where both Europe and the UK experienced a fall in their numbers of financial services foreign investment projects, it is positive to see Scotland demonstrating relative resilience and bucking the trend with an increase in project numbers.”

The 2019 figures were above the annual average for the last decade (2010 – 2020), with Scotland’s share of UK financial services FDI averaging 7.5% while the sector’s share of all FDI into Scotland averaged 6.4%.

Scotland was the second most attractive destination in the UK for financial services FDI while London topped the list with 67 projects (68% of the UK total). Yorkshire & Humber moved up into third place with six recorded projects (double its 2018 total), while the North West recorded a decline in projects for the second year running and was ranked fourth.

Ms Dawe added: “Across all sectors, Scotland is an attractive proposition for foreign investors, as demonstrated by the increase in the total number of FDI projects in 2019. This legacy of appeal and strong performance offers confidence in Scotland’s ability to continue to secure healthy numbers of FDI as we emerge from COVID-19.

“As the economy shifts to become increasingly digital, sustainable and inclusive, the financial services sector must continue to innovate and evolve in order to remain at the forefront of change and hold its position as an international leader.”

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Overall, the UK continues to be Europe’s most attractive location for international investment into financial services, with 99 projects recorded in 2019.

While UK project numbers were down 11.6% from the year before (a drop of 13 projects), financial services FDI across the whole of Europe fell by 12.6% from 2018, when Europe saw a record number of financial services FDI projects driven by firms opening new offices or restructuring in preparation for Brexit.

The UK has consistently been the number one location for financial services FDI for the last twenty years, and 2019 was the third strongest year in the past decade for the sector. The UK registered more than double the projects of Germany, which came in second place with 43.



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