Like the UK and Europe, Scotland’s largest sector in 2022 was the digital tech industry. Digital tech has been the leading sector for Scottish FDI in each of the past three years. The number of digital tech projects recorded in Scotland in 2022 was 29, down by 12% from 33 in 2021 – although total UK digital tech projects were down by 32%. Utility supply (22 projects, up 22% from 18 in 2021) and Business services (15, up 7% from 14) were the second and third largest sectors.
While the finance sector is not among Scotland’s five largest FDI sectors over the past five years, finance projects in Scotland more-than doubled in 2022, rising to eight projects compared to just three in 2021. This was the strongest showing by the sector in Scotland since 2016, when Scotland secured nine finance projects.
As with the rest of the UK, sales and business services were the most common FDI activity in Scotland in 2022, with 51 projects (two-fifths of all Scottish projects), down from 59 in 2021. Scottish manufacturing continued its recent renaissance, with a joint decade-high 35 projects in 2022 matching last year’s project total.
Equally encouraging is the rise in R&D project activity in 2022, with Scotland securing 27 projects – its highest number of R&D investments since 2015, when it recorded 28, and up from 20 in 2021.
EY’s Chief Economist, Peter Arnold, said: “Scotland continues to consolidate its already well-established position as the most attractive UK location for FDI outside London. What’s more, London’s lead narrowed significantly this year, as its projects declined by almost a quarter. And it was telling that most other UK regions recorded an increase in projects, suggesting that levelling up may increasingly be becoming a reality in FDI.
“Expertise in manufacturing and utilities – key sectors in Scotland – will be crucial to any efforts by the UK to establish itself as a place where clean technology is not just deployed, but also developed and built too. The UK’s green ambitions should go hand-in-hand with its levelling-up goals, and investment in clean technology means investment in the UK’s industrial heartlands.”
Four countries accounted for more than 50% of Scotland’s total projects – the most prominent being the United States, which has been the leading country of origin for Scotland, the UK and Europe throughout the past decade. Scotland secured 32% of its inbound projects from the US in 2022, while the US share of projects into the UK was lower at 24%. A breakdown of US investment shows a sectoral focus on digital & IT services (30% of projects), and activities being led by R&D (33%) as well as business services (33%).
Behind the US, second place among origins of Scottish projects in 2022 went to Germany, which was the source for 8% of Scottish projects. Third was Ireland, followed by Canada in fourth place.
In second, fourth, and joint-fifth place, Edinburgh (38 projects), Glasgow (20 projects) and Aberdeen (15 projects) featured in the UK’s top five investment locations outside London in 2022, as well as over the last five years. Meanwhile, 16% and 15% of investors said they were planning to establish or expand operations over the next year in Edinburgh and Glasgow, respectively – the highest totals for any non-London cities.
The success of most cities in the ranking seems to be driven either by an existing diverse sectoral base or a success in embracing digital investment. Manchester, Edinburgh, and Belfast are especially strong in securing digital projects, while Birmingham and Glasgow seem to attract investment interest from a broader spread of sectors.
The factors influencing decisions to invest in regions outside London are changing with access to grants and incentives now leading the way, cited by 23% of investors. In second place is the availability of business partners and suppliers at 18%, and the availability and skills of the local workforce is joint third on 17% (down from 27% last year), level with the strength of business networks locally. Notably, local labour costs have receded as an issue, falling to 16% from 24% in 2022.
Source link : https://www.ey.com/en_uk/news/2023/06/scotlands-foreign-investment-grows-with-record-results
Author :
Publish date : 2023-06-19 03:00:00
Copyright for syndicated content belongs to the linked Source.