Scotland retains top spot for financial services investment outside London

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.

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 services, said: “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 added: “We believe there is even greater potential waiting to be unleashed. Our sector’s ambitious growth strategy aims to add an additional £4bn to £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.”

The UK continues to be Europe’s most attractive location for FDI into financial services – and has accelerated its lead over other European markets.

The UK attracted 108 financial services projects in 2023 – up 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.

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.

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.