Scotland last year achieved its best inward investment performance to date but needs to redouble efforts to outpace its competition and attract developing markets, according to a new study published today.
Accountancy giant EY said its latest Scottish attractiveness survey found that the total number of foreign direct investment (FDI) projects secured north of the Border in 2015 hit 119, its highest-ever level and marking year-on-year growth of 51 per cent compared to 20 per cent for the UK. Additionally, Scotland’s share of all UK FDI projects reached a ten-year high of 11 per cent.
There’s a really positive message around inward investment coming into ScotlandEY senior partner Mark Harvey
Mark Harvey, EY senior partner for Scotland, told The Scotsman: “There’s a really positive message around inward investment coming into Scotland.”
He noted that Edinburgh landed the third spot in the UK top ten, with London holding the top position, and Glasgow came in at sixth place, while Aberdeen was joint tenth with Bristol and Cambridge.
EY found that in the UK regional league table Scotland “surged past” the south east to claim second place behind London, with Harvey noting that FDI created 5,385 Scottish jobs in 2015, a year-on-year jump of 52 per cent.
Harvey said: “Our view is that what this reflects is a rebalancing of the economy outside of London.” He added that in five out of the last six years, including 2015, Scotland has been the strongest-performing region in the UK, and said: “There’s lots of talk about there being a ‘northern powerhouse,’ but I think it’s pretty clear that we’ve got a ‘Scottish powerhouse’ in terms of projects coming to Scotland, jobs being created and global organisations wanting to invest in Scotland.
“For Scotland to be punching above its weight in the regions I think it’s a really important time for us to be strong because more projects are going to be coming outside London.”
EY said that in terms of specific sectors, software was the “stand-out performance” and contributed the most FDI projects at 19, a year-on-year jump of 170 per cent. Business services reported a six-fold increase to 12 projects, with this area providing the largest growth in employment.
In summary Harvey said: “Scotland had a truly spectacular year for FDI in 2015, making some significant strides in key areas, resulting in a major step change in performance. Importantly, the majority of FDI projects for Scotland in 2015 were new rather than expansions. This ability to attract a higher proportion of new, first-time investors signals a positive future for Scotland.”
However, he also highlighted how the US continues to be Scotland’s primary investor, but China and India are not in the top ten origins for investment despite being the third and fifth biggest sources of investment respectively for the UK. He said this is an area “where government needs to be continually focused, and I know they have been, but these things take time”.