Scotland still attractive to investors

The European Attractiveness Survey, out today from Ernst & Young, found that, despite the recession, the number of overseas investment projects in Scotland fell by just two to 51.

These included 28 manufacturing projects and investments by 18 firms operating in finance and business services.

Among the largest was last year's decision by Danish-owned Welcon Towers to take over and expand the wind turbine plant formerly owned by Vestas at Machrihanish in Argyll. That deal included private capital investment of some 35 million to nearly treble the size of the plant and increase its workforce from 92 to roughly 300.

In the financial and business services sector, French bank BNP Paribas added 80 new jobs to its securities broking office in Glasgow. This was the second tranche in a five-year plan to boost staffing by 370 across Scotland, a deal first secured in 2007 with the award of 3.7m in regional selective assistance funding to the banking group.

But London and south-east England continued to lead the UK league table.

Hywel Ball, managing partner at Ernst & Young in Scotland, said the results were encouraging given the overall economic climate. But he added there was no room for complacency.

He said: "With economic growth still fragile, and deep public-sector cuts expected next year, the outlook remains challenging. Ensuring that Scotland remains competitive will depend on encouraging entrepreneurship and delivering a regulatory framework that encourages international investment in our country."

Foreign direct investment across the whole of the UK fell by just 1 per cent last year to 678 projects, with more than one third going to London. The capital was followed by the south-east of England and then Scotland as the most popular regional destinations for inward investment in the UK.

Total job creation across the UK fell to 20,017, down from the 20,210 new posts created in 2008. Job figures for Scotland were not available.

Looking ahead, the survey asked more than 800 executives about their intentions for overseas investment. More than half said they will pause a while longer before committing to further investment in Europe.

Nearly two-thirds of small and medium-sized enterprises in Scotland do not export, according to a new study from the Bank of Scotland, with many concerned there would be no demand for their products or services overseas.

Among those that do export, 36 per cent said there had been growth in demand during the past 12 months.