Scotland’s inward investment hits record 126 projects

Edinburgh Quay, Fountainbridge, Edinburgh

By Mark McSherry

Scotland remains the most attractive location in the UK outside of London for Foreign Direct Investment (FDI), according to EY’s latest Scotland Attractiveness Survey.

The survey shows that a record 126 inward investment projects were secured by Scotland in 2022, a 3.3% increase compared to 2021 when 122 FDI projects were attracted to the country.

This helped Scotland to increase its share of the total inward investment projects attracted by the UK, from 12.3% in 2021 to 13.6% in 2022.

The figures published by EY also show that amongst investors, Scotland polls as the most attractive location in the UK to invest after London.

A record 19.2% of investors also intend to establish or expand operations in Scotland in future, according to the report.

EY’s results, which cover the calendar year January-December 2022, align with Scottish Development International (SDI) figures announced earlier this month that showed more than 8,500 planned jobs had been generated by inward investment in FY22/23 (financial year), the highest number of planned jobs secured since FY18/19.

Scottish Enterprise said inward investors constitute just 3% of Scotland’s businesses, yet are responsible for:

  • 34% of employment (624,000 jobs)
  • 50% of turnover (£119.6 billion)
  • 63% of business R&D
  • 77% of exports (£24.2 billion)

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.

“Against an unsettled UK and Europe economic backdrop, Scotland recorded its fourth successive annual increase and has now been second only to London in nine of the past ten years.

“Our report underlines the rich dynamism, diversity and balance of the Scottish economy and FDI sector, qualities that we at EY Scotland see every day.

“For Scotland to have three cities in the UK’s top five for non-London FDI bears testament to Scotland’s enduring attractiveness, and all this adds up to an impressively resilient performance.

“While Scotland continues to build on its great reputation as a place to invest, there’s no room for complacency.

“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 existing track record in prioritising high-value, high-potential areas like digital tech, renewable energy and R&D.”

Scottish Enterprise CEO Adrian Gillespie said: “These results are a terrific signal of Scotland’s continued success at attracting FDI.

“The findings of EY’s Attractiveness Survey are testament to the dynamic business environment that Scotland offers to investors, including our enviable skills base, world-class universities, vibrant innovation districts, ambitious entrepreneurial communities, and the outstanding quality of life on offer.

“EY’s Attractiveness Survey follows hot on the heels of our own results that showed more than 8,500 planned jobs had been secured over the past financial year through inward investment projects supported by Scotland’s enterprise and skills agencies., the highest figures since 2018/19.

“For Scotland to once again be the most attractive location in the UK outside of London for FDI projects is a fantastic achievement that will further enhance our growing global reputation.

“As an internationally focused innovation and investment agency, Scottish Enterprise and our global SDI colleagues will continue to work with our Team Scotland partners to promote the very best our country has to offer to international companies and investors.”

Vicky Grant, Head of International Trade and Investment at Highland and Islands Enterprise, said: “It’s great to see the Highlands and Islands continue to make a huge contribution to Scotland’s overall success and attractiveness for foreign direct investment.

“In addition to the outstanding quality of life available here, our region offers expertise across sectors such as space, energy, food and drink and health tech, as well as excellent infrastructure and connectivity.

“As Scotland’s development agency for the region, we work closely with companies looking to invest here. We help them identify the ideal location, find premises, help with recruitment and training, and can often also help financially.

“Beyond that, we continue working with them to make sure they have access to the full range of support they need to prosper.”

South of Scotland Enterprise CEO Jane Morrison-Ross said: “These survey results are another positive indicator that Scotland is a hugely attractive country to invest in.

“Together with our Team Scotland partners, we are committed to ensuring we build on these results, for the benefit of Scotland, and the South of Scotland.

“We aim to do this by using our strengths to continue to promote our country in a way that allows us to highlight our natural economy, create more sustainable jobs, contribute to the wellbeing of our local economies, environment and communities, and, ultimately, attract even more appropriate investment.”

Marion Beattie, Head of Skills Growth and Inward Investment at Skills Development Scotland (SDS), added: “A skills and learning system that’s based on the latest intelligence, and is flexible and responsive to the needs of employers is one of the key factors for businesses making investment decisions.

“That’s why SDS is committed to working as part of Team Scotland to provide comprehensive and co-ordinated support to potential inward investors, from the earliest stages onwards, so we can continue to build on our strong track record.”

EY chief economist Peter Arnold said: “Scotland continues to consolidate its already well-established position as the most attractive UK location for FDI outside London.

“What’s more, London’s lead narrowed significantly this year, as its projects declined by almost a quarter.

“And it was telling that most other UK regions recorded an increase in projects, suggesting that levelling up may increasingly be becoming a reality in FDI.

Scotland’s trade minister Richard Lochhead said: “Attracting inward investment is critical to shaping and growing our economy and ensuring we thrive in the global marketplace.

“These findings clearly demonstrate Scotland’s attractiveness as an investment destination and highlight the phenomenal progress being made to grow our international reputation as a dynamic, open nation with an outward-facing economy.”