Inward investors flock to Scotland as it bucks UK trend

Scotland saw the number of inward investments by overseas firms increase last year despite the backdrop of the pandemic and a downward trend seen across the UK.

Latest figures also show Scotland has reached its highest-ever level of attractiveness for investment and bolstered its position as the UK’s most desirable foreign direct investment (FDI) location outside London, according to the report by EY.

The figures show Scotland secured 107 investments during the year, 6 per cent more than in 2019. At the same time, UK FDI projects fell 12 per cent to 975 and European FDI projects fell by 13 per cent to 5,578.

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The rise in projects arriving north of the Border within a shrinking UK marketplace saw Scotland’s share of all UK projects increase from 9.1 per cent in 2019 to 11 per cent in 2020. Scotland has had the second-highest number of overseas-backed projects in the UK – after London – in every year since 2014.

Edinburgh (pictured) overtook Manchester to record the highest number of FDI projects outside London during 2020. Picture: McAteer Photography.

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New projects in Scotland – as opposed to reinvestments – have rebounded to their highest level for five years (61 projects), after three consecutive years of decline and Scotland increased its market share of all new projects coming into the UK from 5.9 per cent in 2019 to 8.4 per cent in 2020.

Recent inward investments into Scotland include Singapore-based fintech firm TranSwap opening its first UK office in Edinburgh.

US-based Thermo Fisher Scientific also announced a major expansion of its facilities at its Perth plant to cope with the demand for Covid-19 sample testing.

Edinburgh, Glasgow and Aberdeen were all ranked in the UK’s top ten cities for FDI projects outside London, with the Scottish capital placed first.

Fifteen per cent of investors surveyed as part of the research said Scotland was the most attractive part of the UK in which to invest – double the proportion in 2019 and, compared to the rest of the UK, behind only London (25 per cent).

Ally Scott, EY Scotland managing partner, said: “Amid arguably the most challenging environment for FDI in living memory, it’s clear that Scotland has put in an impressive performance over the past year.

Optimism

“Beneath the headline figures, there are further reasons for optimism almost everywhere you look: the one-third rise in ‘new’ projects; the diverse spread of sectors attracting FDI, with digital tech leading the way; or, compared to last year, the fact that more than twice as many investors cited Scotland as the UK’s leading FDI destination.”

However, Mr Scott warned that Scotland couldn’t “rest on its laurels”. He added: “While our findings suggest Scotland is getting a lot right, the global market for FDI will only become more competitive, making it vital to keep listening and responding to what investors want.”

The number of Scottish jobs created by FDI in 2020 was 4,499. Although that represented a 30 per cent fall on the previous year, EY stressed that the data relied on reported figures and tended to be volatile.

A Scottish government spokesperson welcomed the figures and said they supported its approach “to further internationalise the economy by focusing efforts on our existing global strengths”.

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