Scotland outstrips Europe and UK on inward investment

Scotland outpaced both Europe and the UK as a whole last year as a destination for foreign investors, according to a new report.

The latest EY Scotland Attractiveness Survey revealed 122 inward investment projects were secured in Scotland in 2021, up from 107 the previous year.

The 14% increase compared with rises of 1.8% across the UK and 5.4% in Europe.

The figures indicate that Scotland remains the top UK location outside of London.

Digital technology led the way with 33 projects, followed by utility supply (18 projects), business and professional services (14) and machinery and equipment (14).

Digital projects in Scotland rose by 73.4%, in contrast to a 7% decline in Europe and 7% growth in the UK overall.

Scotland's share of all UK foreign direct investment (FDI) projects rose to its highest level in the past decade, securing 12.3% of projects - up from 11% in 2020.

The survey also found that Edinburgh, Glasgow and Aberdeen remained in the top 10 locations outside of London for attracting projects.

Edinburgh ranked equal first with Manchester, with Dundee and Livingston also making the top 20.

Scottish jobs created by FDI projects continued an upward trend, with reported jobs rising from about 4,500 in 2020 to more than 10,000 in 2021. EY cautioned that the figures were projected and not exact numbers.

While London remained the most attractive UK location for future investors, Scotland's perceived attractiveness for FDI now sits at a record high.

Investors ranked the availability and skills of the local workforce, the strength of business networks locally and support from regional economic advisory bodies as the most important criteria.

The US remained the single biggest originator of FDI projects into Scotland, accounting for 29.5% of them. Projects from Spain rose strongly to 9.8%, followed by Germany at 6.6%.

Edinburgh secured 17 digital projects, making it the leading city for digital FDI after London, while Glasgow's six business services projects represented the largest number for this activity after the UK capital.

EY Scotland managing partner Ally Scott, said: "The past year has seen Scotland continue to make great strides as a destination for FDI, meaning it can look to the future with even greater confidence.

"Scotland's record levels of attractiveness underline that our second-placed UK ranking for FDI flow is matched and underpinned by investors' rising perceptions.

"Our findings suggest the outlook for Scotland's FDI is exceptionally bright.

"But having fared well through Brexit and the pandemic, keeping that momentum will require ongoing commitment and hard work in the face of historically high inflation, the rising cost of living and wider geopolitical risks."

Scotland's Trade Minister Ivan McKee said the latest figures were "testament to our skills base, and our highly qualified workforce".

He added: "We have been the most successful nation or region in the UK, outside of London, for nine of the last 11 years and for the seventh 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."