SCOTLAND continues to attract the highest number of UK financial services foreign direct investment (FDI) projects outside of London, according to the latest EY Scotland Attractiveness Survey for Financial Services.

Of the nine financial services projects recorded in Scotland, five were in Edinburgh, two were in Glasgow, and Motherwell and Dufftown each securing a project each.

Edinburgh is again the top UK city outside London for securing financial services FDI projects. Of the five UK financial services FDI projects that created more than 150 jobs in 2023, two of those were located in Glasgow. London remains the leading European city for FDI in 2023, a position retained for the last ten years, attracting 81 projects with Edinburgh also in the European top ten, at ninth place.

London remains the leading UK destination for attracting financial services FDI, securing 81 projects in 2023 (up from 46 in 2022), with Scotland in second place, securing nine projects last year (up from eight in 2022). The North-East and North-West of England, which jointly secured four projects in 2023 is in third, and the West Midlands, which secured three projects in in fourth.

Ahead of the full Scotland FDI Attractiveness report – to be published on June 19 – investor sentiment finds that 26% of financial services investors looking to establish or expand operations in the UK over the next year would look to Scotland – up from 14% in 2023, and 12% in 2022.

London remains the top destination for those looking to establish or expand operations in the UK (37% – down from 41% in 2023 and 56% in 2022). Wales is in third place at 23% – more than tripling from 7% in both 2023 and 2022. Edinburgh (25%) is the top city outside of London (37%) for investors looking to establish or expand operations in the UK, followed by Cardiff (21%).

Sue Dawe, EY Scotland Managing Partner for Financial Service, said:

“Scotland’s financial services sector is a great example of resilience and innovation. EY’s latest report shows the sector continues to attract much enthusiasm amongst investors and confirms Scotland’s position as a premier investment destination.

“These results underscore the enduring strength and confidence that investors continue to place in our financial sector: where traditional institutions and emerging FinTech disruptors contribute to a vibrant, dynamic and forward-looking financial ecosystem.

“Financial services continues to be a pillar of the Scottish and UK economy – and is only increasing its position as pivotal player on the international stage. Industry, government and education sectors need to continue collaborating to produce and retain world-class talent if we’re to harness cutting-edge technological advancements which create a competitive environment for further investment and growth.”

Scottish Financial Enterprise Chief Executive Sandy Begbie CBE FRSE, said:

“EY’s latest Attractiveness Survey demonstrates the continued strength and attractiveness of Scotland’s world class financial services industry, based on the depth, breadth and maturity of our ecosystem, the quality of our universities and skills pipeline, and the leadership we are showing in priority areas like data, AI and green finance.

“We believe there is even greater potential waiting to be unleashed. Our sector’s ambitious growth strategy aims to add an additional £4-7bn to the Scottish economy over the next five years.

“These results also show that we are operating in an increasingly competitive marketplace and there is no room for complacency. It’s vital that industry and government work closely and constructively to further build upon our long-standing reputation as a good place to do business, attract further inward investment and create new high value jobs that benefit everyone in Scotland.”

How the UK performed in Europe
The UK continues to be Europe’s most attractive location for foreign direct investment (FDI) into financial services – and has accelerated its lead over other European markets. The UK attracted 108 financial services projects in 2023 – an increase from 76 projects in 2022 – and has extended its lead over second-placed France, which secured 39 projects in 2023, down from 45 in 2022. Germany came in third place, recording 38 financial services investment projects in 2023 – seven more than in 2022.

Total financial services FDI across Europe grew to 329 projects in 2023 from 292 projects in 2022 – an increase of 13% year-on-year. This growth outpaced overall (financial and non-financial) European FDI project growth, which saw a 4% decline during the same period, and contrasts with other professional services sectors, such as tech / digital and business services, which both experienced year-on-year project number declines of 19% and 27% respectively.

UK records increase in ‘new’ financial services projects and reaches highest market share of new projects in a decade
Alongside the expansion of existing projects, the number of new financial services projects across Europe and the UK reached its highest level since 2019, rising to 233 projects in 2023 from 215 projects in 2022. The UK recorded 85 new financial services projects in 2023, representing a 25% increase from the 68 projects in 2022, and resulting in the UK market share of new financial services projects rising from 32% in 2022 to 36% in 2023 – the highest level in a decade. In comparison, Germany attracted 32 new projects, up from 12 in 2022, and France secured 22 new projects, down from 26 the previous year.

The US remains Europe’s main source of FS FDI, with the UK the leding recipient
The largest source of financial services investment into Europe in 2023 was again the US, with projects up 15%, from 79 in 2022 to 91 in 2023. This was the highest proportion of US-backed projects in the last decade and represented 28% of all financial projects into Europe. The UK was again the leading recipient of US investment, recording an 81% increase, from 21 projects in 2022 to 38 projects in 2023. Second placed France secured 15 projects from the US in 2023, an increase from 13 projects in 2022.