Scotland has attracted an ‘unprecedented’ level of foreign direct investment (FDI) according to a survey, surpassing the previous year and marking three consecutive years of record investment.
The Attractiveness Survey, conducted by Ernst & Young, highlights continued foreign investment in a number of sectors nationwide, with Scotland taking the mantle as the top location for research and development projects in the UK.
An Unprecedented Record
Scotland witnessed a 7% rise in the number of foreign investment projects in 2017 compared to the year previous. These figures are particularly impressive when considering the UK as a whole witnessed a 6% increase.
A number of sectors fared strongly through the previous year, with the digital sector seeing a 56% increase in FDI projects, making it the second largest sector to attract investment into Scotland behind Business Services. Manufacturing also experienced a 25% increase of FDI in 2017, with 30 projects secured in this sector.
Investment in R&D rose for a second consecutive year with a staggering increase of 70% compared to 2016, making Scotland the most attractive location in the UK for R&D projects. Scotland won 22 R&D projects in 2017, accounting for nearly 25% of investment in the UK.
Economy Secretary Keith Brown welcomed the report findings, highlighting Scotland pivotal role in the UK economy and underlining the nations continued ability to attract investment and innovation.
He said: “The EY results confirm Scotland’s position as the top UK destination after London for inward investment, with the increase in projects coming to Scotland greater than that across the UK.
“It also reflects the underlying attractiveness of Scotland for R&D and digital investment, where we are outperforming the UK, both in terms of the number of projects and in the growth in projects.”
The Economy Secretary also noted that there is “a significant increase in the number of jobs being created as a result of this investment, with over 6,000 jobs in 2017,” making it “a record year for Scotland.”
The total number of jobs secured as a result of foreign investment rose by an impressive 104%, with 6,374 jobs created compared to the 3,131 created in 2016. According to EY, this growth has been driven by a shift toward “more large-scale projects”.
Scotland’s continues to maintain its position as a prime investment location for global business. The United States ranks first place as Scotland’s greatest source of FDI projects, winning 30 US-backed projects last year; up by 16% on 2016.
Other major sources of investment include Norway, France, Ireland and China, all of which generated an increased number of projects for Scotland.
The Scottish Government has been further developing its economic relationship with China – the worlds second largest economy. First Minister Nicola Sturgeon travelled to China in April and met with Vice Premier Hu Chunhua, where they discussed the “long-standing friendship between Scotland and China, and how we can continue to develop this”.
According to the EY report, Brexit continues to weigh heavily on the shoulders of British industry and manufacturing. The effects of the 2016 vote – and the uncertainty that surrounds the ongoing negotiations – is undoubtedly affecting both Scotland and the UK as a whole.
Last year the UK’s share of the European market for FDI fell slightly from 18% from the previous years level of 19% – glancing back to 2015 however these figures rested at 21%. London is naturally regarded as a global economic powerhouse, attracting investment from around the world, however the city has been overtaken by Paris as the most attractive city to invest in. This marks the first time London has been overtaken since the survey began in 2004.
Nonetheless, the UK still retains its number one position in Europe in regards to FDI.
Keith Brown says that although strong figures point toward Scotland’s attractiveness as a business destination, Brexit continues to hamper confidence and damages the UK’s reputation as an investment location.
He said: “While these strong investment and employment figures reflect the continuing attractiveness of Scotland, the full report shows the damage Brexit is already doing to the UK’s reputation as a location for investment, with Paris replacing London as the top city location.
“Our continuation in the single market and customs union post-Brexit is crucial for business and investment. We are doing all we can to mitigate the impact of Brexit on our business community – it means the ability to trade in a market which is around eight times bigger than the UK market alone.”