By Karen Peattie
THE UK’s attractiveness as an inward investment destination remains resilient and overseas companies still plan to invest in the UK in the next 12 months although the number has fallen to 25 per cent from a 10-year high of 31% in April, a key survey from EY shows.
EY says its latest UK Attractiveness Survey provides more evidence of the economic impact of Covid-19, which has created uncertainty and prompted a rethink of investor priorities.
Tracking the UK’s appeal as a destination for foreign direct investment (FDI), the survey of 220 non-UK investment decision-makers also found 43% of respondents will continue with UK investments they planned before the pandemic, down from 72% in April.
Ally Scott, EY Scotland managing partner, said: “The UK’s attractiveness – and Scotland’s place within that – as an FDI destination remains comparatively strong despite Covid-19. Overall, the outlook appears stronger than that for Europe.
“With strengths in areas like digital technology, R&D, healthtech and manufacturing – key sectors for Scotland and identified as opportunity areas in the Scottish Government’s Inward Investment Plan published last month – there is more than a solid base for the country to build a future strategy on."
Tracking the UK’s appeal as a destination for foreign direct investment (FDI), the survey of 220 non-UK investment decision-makers also found that 43% of respondents are continuing with the UK investments they planned before the coronavirus pandemic, down from 72% in April.
According to EY’s analysis, these figures would mean 30-45% fewer FDI projects in 2020 than the 1,109 projects recorded in 2019 – equivalent to a fall of between 333 and 499 projects.
A separate EY survey of 109 investors, carried out at the same time and focused on Europe, found that the UK is seen as the second-most attractive European destination for foreign investment in 2021, with 40% of describing it as the among the “most attractive” countries – slightly behind the 43% opting for Germany and ahead of the 39% backing France.
Ally Scott, EY Scotland managing partner, said: “The UK’s attractiveness – and Scotland’s place within that – as an FDI destination remains comparatively strong despite Covid-19. Overall, the outlook appears stronger than that for Europe.
“With strengths in areas like digital technology, research and development, healthtech and manufacturing – which are key sectors for Scotland and identified as opportunity areas in the Scottish Government’s new Inward Investment Plan published last month – there is more than a solid base for the country to build a future strategy on.
“These factors, combined with a growing interest in ‘reshoring’, present post-pandemic opportunities to meet investor needs and accelerate its levelling up agenda.”
Mr Scott noted that since the start of the year, Covid had seen investors place an increasing premium on a country having measures in place to prevent a future crisis and its level of success in dealing with the pandemic.
“Our research also shows that sustainability and climate change remain a key investment trend and the UK can’t afford to lag behind – especially when the eyes of the world turn to COP26 in Glasgow next year,” he said. “The global market response to such instances is proof that whatever the issue, we need to keep pace with the changing drivers of investment.”
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