Scotland received more Foreign Direct Investment (FDI) in 2020 than it did in 2019, beating declines seen in the UK and Europe.
According to the EY 2021 Scotland Attractiveness Survey, Scotland attracted more FDI despite challenges caused by the coronavirus pandemic. According to the report, Scotland saw 107 FDI projects in 2020, a 6% rise compared to 2019’s 101 projects.
For the UK, the number of FDI projects in 2020, 975, dipped 12% compared to 2019, which saw 1109. In Europe, 2020 saw 5578 FDI projects, a 13% decline from 2019, which saw 6412.
As such, Scotland’s FDI share in the UK grew from 9.1% in 2019 to 11% in 2020. The last time Scotland exceeded this was in 2015.
In addition, Scotland saw its attractiveness level for FDI reach its highest-ever position, cementing the country as the UK’s second-most attractive investment location after London. Scotland has held this position every year since 2014.
Edinburgh was ranked first in the top ten cities outside of London for FDI, with Glasgow and Aberdeen both ranking as well, fifth and seventh respectively. The three cities combined account for 70 of Scotland’s 107 FDI projects.
EY Scotland managing partner Ally Scott said: “Amid arguably the most challenging environment for FDI in living memory, it’s clear that Scotland has put in an impressive performance over the past year.
“Beneath the headline figures, there are further reasons for optimism almost everywhere you look: the one-third rise in ‘new’ projects; the diverse spread of sectors attracting FDI – with digital tech leading the way; or, compared to last year, the fact that more than twice as many investors cited Scotland as the UK’s leading FDI destination.”
Scotland was also able to reverse a three-year decline in new investments, as opposed to reinvestments. With 61 projects, new investments reached their highest level in five years. The country’s share of the UK’s new projects rose from 5.9% in 2019 to 8.4% in 2020.
Scott added: “With investment intentions into the UK overall also at a record high, there’s every prospect of Scotland winning a healthy proportion of a resilient pipeline of investments in the coming months and years.
“But this is no time for Scotland to rest on its laurels. As we look to the economic recovery from Covid-19, constructive, practical engagement between business and both the UK and Scottish governments remains key to shaping the right policies, business environment and incentives to give investors continued confidence to invest.”
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Driving investment in Scotland in 2020 were the digital tech and agri-food sector. These both overtook 2019’s top sector, machinery and equipment, which fell out of the top five.
2020’s biggest investor in Scotland was the US, which funded 38 projects, 35.5% of the country’s total. This was slightly above the proportion for the UK as a whole. The second biggest investor was Ireland with 10 projects, and the Netherlands with eight.
Commenting on the Survey, a Scottish Government spokesperson said: “These findings continue Scotland’s inward investment success story.
“Despite the challenges presented by the pandemic, foreign direct investment into Scotland increased by 6% in 2020, compared to a 12% fall across the UK as a whole, making Scotland the top UK inward investment location outside London for the sixth year running.
“Scotland’s leading position was underpinned by strong investment in renewables, clean technology, life sciences, fintech and agri-food. This supports the approach of the Scottish Government’s Inward Investment Plan to further internationalise the economy by focusing efforts on our existing global strengths.”