Foreign investment into Scotland powers ahead at 'great strides'

More than 10,000 jobs were created in Scotland by foreign investors last year, and the nation is polling at record levels among investors who consider it the UK’s top foreign direct investment (FDI) location, a survey out today has found.

Foreign investment north of the Border outpaced the rest of the UK and Europe in 2021, according to accountancy giant EY's latest Scotland attractiveness survey, which also flagged the need for further efforts to maintain momentum amid headwinds.

Five Scottish cities have also made it into the top 20 UK locations for investment outside London. Edinburgh was joint first with Manchester, Glasgow ranked fourth, and Aberdeen, Dundee and Livingston also featured.

Scotland attracted 122 inward investment projects, up 14 per cent from 2020, while its share of projects in the UK was 12.3 per cent, its highest level in the last decade. The US remained the single biggest originator of FDI projects into Scotland, comprising 29.5 per cent.

EY highlighted Scottish strength in high-value, high-growth industries like digital and utilities/cleantech and an increase in manufacturing production FDI as cause for optimism.

The firm’s Scotland managing partner Ally Scott said: “The past year has seen Scotland continue to make great strides as a destination for FDI, meaning it can look to the future with even greater confidence. Scotland’s record levels of attractiveness underline that our second-placed UK ranking for FDI flow is matched and underpinned by investors’ rising perceptions.

“Our findings suggest the outlook for Scotland’s FDI is exceptionally bright. But having fared well through Brexit and the pandemic, keeping that momentum will require ongoing commitment and hard work in the face of historically high inflation, the rising cost of living and wider geopolitical risks.

Scotland overtook the UK and Europe last year by securing 122 inward investment projects, EY found. Picture: Matt Cardy/Getty Images.

“Other regions and countries look to Scotland’s enviable business network, supported by regional economic advisory bodies. Going forward, business and government must take action to capitalise on proven strengths, adjust to meet investors’ changing priorities and implement policy measures to provide what they’re [seeking].”

EY’s chief economist Peter Arnold said: “When we see what investors are looking for, Scotland gets many things right. The job of maintaining that, especially with economic and geopolitical headwinds, is not to be underestimated – but for now there are many encouraging trends that suggest Scotland will continue to be an attractive location for overseas investment.”