Scotland has reclaimed its position as the top UK location for financial services foreign direct investment (FDI) outside of London, according to EY’s latest Attractiveness Survey for Financial Services.

London remains the main UK destination for financial services FDI (46 projects in 2022), with Scotland in joint second place with the East of England, recording eight projects (up from three in 2021).

Scotland has been the second-placed region for financial services FDI – at least jointly – for nine of the last ten years, with the exception of 2021. The third-placed region in 2022 was the North-West of England with six projects. 

Of the eight Scottish projects, five were expansions to existing projects while three were new undertakings, spread across Edinburgh (five projects total – three expansions, two new) and Glasgow (three project total – two expansions, one new).

The survey found that 14% of investors plan to establish or expand operations in Scotland over the next year, up from 12% last year and the highest percentage recorded for any location outside of London.

Edinburgh is perceived to be the most attractive city outside of London, with 17% of investors reporting financial services investment plans in Scotland’s capital over the next year.

At a UK level, 80% of investors think the country as a whole will retain or improve its level of attractiveness for financial services investment over the next three years. This is despite the impact of Brexit

The UK continues to be Europe’s most attractive location for financial services FDI projects, attracting 76 financial services projects in 2022 – an increase of 13 projects from 2021 – and has extended its lead over second-placed France, which secured 45 projects in 2022 – 15 fewer than in 2021.

Investors cite key areas for future strategic investment as being the liquidity of markets and availability of capital (38%); the level of tech adoption by citizens and administrations (35%); and the stability of political and regulatory regimes and safety of securing measures to prevent a major crisis (28%).

These findings come ahead of the full Scotland Attractiveness Survey publication on 19 June.

Sue Dawe, EY Scotland’s managing partner for financial services, said: “This is great news for Scotland’s financial services sector.

“To see a solid mix of both new and expanded financial services projects in our major cities – as well as our return to being the top location outside London – shows that Scotland is delivering for investors.

“Financial services investors remain confident in Scotland. The number of projects is only one metric in FDI attractiveness, and over the years the significance and scale of individual projects in Scotland – particularly in financial services – is both notable and impressive.

“With links between Scotland and London remaining strong, it’s clear that the two locations – which have historically held the top two spots in the UK league tables – can benefit from each other’s successes.”

Sandy Begbie, chief executive, Scottish Financial Enterprise, said: “Scotland’s financial services industry has a number of major strengths for investors, from depth, breadth, and maturity of our ecosystem to talent and innovation, to our increasingly strong reputation as a global centre for green finance and fintech.

“We also recognise that we are in an increasingly competitive domestic and international marketplace, leaving no room for complacency.

“The continued growth and development of Scotland’s financial services industry is a key priority for SFE. In the next few months we plan to deliver a new sector growth plan, while we will also be increasing the promotion of our industry internationally over the next few years.

“Collaboration with both the Scottish and UK Government, as well as with key partners like City of London Corporation, and stakeholders from across the industry, is key to achieving this aim.”