Scotland leads UK in foreign direct investment

Scotland recorded a 14% increase in Foreign Direct Investment (FDI) projects in 2021, according to Ernst & Young’s (EY) latest Annual Attractiveness Survey.

This compared to an increase in FDI of 1.8% across the UK and 5.4% across Europe.

According to figures available to EY, more than 10,000 Scottish jobs were generated by FDI projects in 2021, more than double the 4,500 figure in 2020.

The latest survey results show Scotland’s perceived attractiveness to investors now sits at a record high, with 15.8% of investors rating it as the UK’s most attractive FDI location, up from 15% last year and more than doubling its rating from 7% in 2019.

Other key findings from the survey results include:

  • Edinburgh, Glasgow and Aberdeen remain in the Top 10 locations outside of London for attracting inward investment projects. Edinburgh and Manchester are ranked equal first; Dundee and Livingston also make the Top 20
  • Scotland performed strongly in high-value, high-growth industries like digital and utilities alongside a rebound in manufacturing FDI. The four leading sectors were digital technology (33 projects), utility supply (18 projects), business and professional services (14 projects), and machinery and equipment (14 projects)
  • Digital projects in Scotland rose by 73.4 %, in contrast to a 7% decline in Europe and 7% growth in the UK overall. Scotland is now firmly established as the UK’s number two location for digital projects behind London.

Trade Minister Ivan McKee said: “It is great to see these latest results, which show Scotland leading the UK when it comes to securing Foreign Direct Investment, in spite of the significant challenges posed by Brexit and the pandemic.

“That is testament to our skills base, and our highly qualified workforce.

“We have been the most successful nation or region in the UK, outside of London, for 9 of the last 11 years and for the 7th year running, in attracting FDI.

“These results indicate that our values-led approach to investment, set out in our Inward Investment Plan, is delivering and underline the important ongoing contribution of inward investment to the recently published National Strategy for Economic Transformation.

“It is critically important that we continue to work closely with inward investors by offering our unique Team Scotland approach to support an inclusive and wellbeing economy, as we strive to meet our goal of being net zero by 2045.”

Scottish Enterprise CEO Adrian Gillespie said: “Today’s EY Attractiveness Survey underlines the compelling strengths Scotland has to offer on the international stage.

“Scotland’s incredible workforce, world-renowned universities, competitive cost base, supportive business environment, magnificent natural resources and unparalleled quality of life on offer immediately put Scotland on the radar of investors.

“When combined with our ‘Team Scotland’ approach, which sees public bodies, academia and industry working together to promote the very best Scotland has to offer, this really makes us stand out from the crowd.

“Businesses have told us that this joined-up approach is a key reason why they choose Scotland – and EY’s survey is testament to this – with Scotland’s perceived attractiveness to inward investors now at record levels.

“For Scotland’s performance to grow so markedly, and to yet again be the most attractive location in the UK for FDI outside of London, is a fantastic achievement that will further enhance our global reputation.  Scottish Enterprise and our partners will continue to promote Scotland as an ideal investment location, delivering economic and partnership opportunities for our communities and businesses alike.”

Marion Beattie, Head of Skills Growth and Inward Investment at Skills Development Scotland (SDS), said: “Businesses tell us that skills are one of the key considerations when making investment decisions, and these figures show that Scotland continues to perform strongly in this respect.

“Working as part of Team Scotland, SDS is committed to developing a dynamic, resilient, inclusive and intelligence-led skills system that supports employers to invest in their current and future workforce.

“That means working with our partners to ensure the skills, training and education needs of potential and existing investors are met with a comprehensive and co-ordinated package of support.”

Scottish Financial Enterprise CEO Sandy Begbie said: “The fact that Scotland remains the UK’s premier location for inward investment outside of London is hugely welcome and a clear indication of resilience despite the many challenges businesses continue to face.

“However, Scotland still has a relatively low productivity rate compared with the rest of the UK, so it is important to have a policy environment that supports businesses to grow and create high value jobs.

“Scotland’s financial and professional services industry has a key role to play in this regard and offers the skills, innovation and growth to attract global investment and also enable other sectors to thrive.

“SFE will continue to work closely with policymakers in Edinburgh and London to ensure that our industry’s voice is heard, with the objective of further enhancing Scotland’s reputation for being a leading global financial centre.”