Scotland achieves 'powerful performance' for foreign investment, overtaking UK and Europe

Scotland has outpaced both the UK and Europe on foreign investment for the second year in a row in 2022 – but should work to avoid “complacency”, according to EY’s latest Scotland Attractiveness Survey.
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The nation secured a record 126 inward investment projects last year, up 3.3 per cent on 2021, and a record 13.6 per cent share of UK foreign direct investment (FDI) projects, while it is polling at record levels of attractiveness to investors as an FDI location outside London, the report found.

Scotland’s “strong” performance comes amid a 6 per cent decline in total UK projects to 929, and growth of just 1 per cent across Europe. While London remains the UK’s most attractive location to future investors, Scotland ranks second with 11 per cent of investors rating it as the most attractive place to establish operations in the UK. EY said this is down from the record high of 15.8 per cent in 2022’s survey – but higher than 2019’s score of 7 per cent.

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Like the UK and Europe, Scotland’s largest sector in 2022 was digital tech, and the number of projects in this category recorded in Scotland in 2022 was 29, down from 33 in 2021. However Scottish manufacturing continued its “recent renaissance”, with a joint decade-high 35 projects in 2022 matching last year’s project total, while Scotland secured 27 research-and-development (R&D) projects – its highest number since 2015.

Scotland’s 'strong' performance comes amid a 6 per cent decline in total UK projects, and growth of just 1 per cent across Europe, EY has found. Picture: Jeff J Mitchell/Getty Images.Scotland’s 'strong' performance comes amid a 6 per cent decline in total UK projects, and growth of just 1 per cent across Europe, EY has found. Picture: Jeff J Mitchell/Getty Images.
Scotland’s 'strong' performance comes amid a 6 per cent decline in total UK projects, and growth of just 1 per cent across Europe, EY has found. Picture: Jeff J Mitchell/Getty Images.

Four countries accounted for more than half of Scotland’s total projects – the most prominent being the United States, followed by, in order, Germany, Ireland, and Canada, while a record high 19.2 per cent of investors overall are planning to establish or expand operations in Scotland, the highest figure for any UK location outside London.

EY Scotland managing partner Ally Scott said: “Scotland put in another powerful performance on FDI in 2022, securing record inward investment projects and UK market share… [it] recorded its fourth successive annual increase and has now been second only to London in nine of the past ten years.”

Sustain

However, he believes there is “no room for complacency”, adding: “To maintain and enhance its status, Scotland must engage, plan, and play to its strengths: engage with public and private sector bodies to create a vibrant ecosystem for growth; plan how to sustain market-leading levels of attractiveness in the medium and long term; and, build on its exiting track record in prioritising high-value, high-potential areas like digital tech, renewable energy, and R&D.”

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EY’s chief economist Peter Arnold said: “Scotland continues to consolidate its already well-established position as the most attractive UK location for FDI outside London. Expertise in manufacturing and utilities – key sectors in Scotland – will be crucial to any efforts by the UK to establish itself as a place where clean technology is not just deployed, but also developed and built too.”

Scotland’s Trade Minister Richard Lochhead said: “These findings clearly demonstrate Scotland’s attractiveness as an investment destination… From being at the forefront of the energy transition to the rapidly emerging cutting-edge technology such as in the space sector, there is a tremendous opportunity for us to capitalise even further. The results are also a strong endorsement of the ‘Team Scotland’ approach taken by government and our economic development agencies to attracting [FDI].”

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