Scotland remains top FDI location outside London – Daily Business

Scotland has marked a decade as the top UK location outside London for attracting overseas investment in a year that saw a decline in the number of projects across Europe.

Despite seven fewer projects last year (-4.9%), Scotland’s tally of 135 is still the second highest annual number recorded and the sixth best-performing region in Europe.

The EY Attractiveness Survey for 2024 showed the UK overall also recorded a fall, to 853 , down 13% on the previous year.

It retained its position as Europe’s second-best performing country for attracting inward investment. France ranked first in Europe in 2024 with 1,025 projects, a decline of 14% year-on-year.

Against a UK and Europe backdrop of a marked decline in project numbers, Scotland’s share of projects has increased year-on-year and now sits at 15.8%, up from 14.4% in 2023, and with a ten-year average of 11.5%.

Glasgow (27 projects) became Scotland’s leading city for FDI for the first time in five years – a position that Edinburgh held between 2020 and 2023 – and the second most popular UK city outside London, after Manchester (44 projects).

Scotland’s three major cities are once again in the UK top 10 cities, with Edinburgh having secured 24 projects and Aberdeen 12.

Scotland’s top three FDI sectors were machinery & equipment (19 projects), software & IT (15 projects) with agri-food and utility supply joint third (14 projects).

In fact, Scotland was the UK leader in oil and gas FDI (seven projects), as well as inward investment in the utility supply, electronics, and the machinery and equipment sectors.

It also attracted 11 financial services FDI projects in 2024, representing a decade high, and is the top location outside London with Edinburgh (six projects) joint top city outside of London alongside Manchester.

The US remained the single biggest country of origin for Scotland’s FDI projects, with US projects rising by 37% to 37 projects, accounting for 27.4% of Scotland’s total during the year — above the 23.7% of UK projects originating from the US.

Projects from Germany fell by 40% to 12 projects, maintaining its position as the second-biggest source of projects into Scotland, followed by France with eight. Over the decade, Scotland has secured 356 FDI projects from the U.S.

EY Scotland managing partner, Ally Scott, said: “Put simply, Scotland continues to punch above its weight with inward investment.

“While FDI is only one part of the Scottish economy, the challenge is ensuring the policy landscape continues to react to changing business and demographic needs.”

Peter Arnold, EY UK chief economist, said: “London remains the leading UK destination for investment while Scotland has now achieved second position for each of the last ten years.

“Tech has been the consistent lead sector for UK FDI over the last twelve years, and London has continued to hoover up the lion’s share of digital projects. But the sector and activity mix outside London remains diverse, which could be an advantage for the UK in the years ahead.

“The prominence of manufacturing in the North West, logistics in the Midlands and R&D activity in the South East, alongside renewable energy opportunities in Scotland and the North East, means the UK has various hubs that could potentially lead Europe in the years ahead.

“Policymakers will need to determine how best to support these regional strengths while also fuelling those sectors that investors see as the key driver for UK investment in future, such as professional services and technology.

“The upcoming Industrial Strategy should provide opportunities to coordinate a nationwide approach to bolster and protect high-value sectors and activity.”

Deputy First Minister Kate Forbes said: “Given the geopolitical uncertainties clearly affecting investor confidence across the world, this is an incredible endorsement of Scotland’s proposition as a destination for global investment.”

More than half (52%) of investors said they planned to invest in the UK over the next year, with 30% of those responders expecting to invest in Scotland.

When asked whether US tariffs have impacted their plans over the next year, 43% of respondents to May’s survey answered that the announcements had made them more likely to invest in the UK in the next 12 months, compared to 38% for the EU and 29% for the US.

The findings also revealed that investors do not believe that current global economic disruption will significantly affect the UK’s attractiveness as an investment location in the coming years.

More than half (54%) of respondents to May’s survey said they expect UK attractiveness to increase over the next three years, similar to the proportion (53%) that said the same in March’s survey.