EY’s Scotland Attractiveness Survey 2017

Standing strong in uncertain times

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Scotland remains resilient…

FDI remains a vital source of capability, economic activity and jobs, and Scotland’s continued ability to attract FDI will be under close scrutiny in the run-up to Brexit in 2019.

EY’s Scotland attractiveness survey 2017 paints a positive picture for Scotland’s FDI performance in 2016, but warns of potential waning investor sentiment as uncertainty takes hold.

… as it continues to attract record investment…

Demonstrating the solid foundations Scotland has laid, it has continued to attract record numbers of inward investment projects, with the total number in 2016 exceeding the previous ten-year high set in 2015 – from 119 in 2015 to 122 in 2016.

Scotland has firmly established itself over the last five years as the UK’s second most attractive destination behind London.

… and emerges as UK leader in attracting R&D projects…

Reflecting on our university strength, Scotland saw particular success in 2016, emerging as the UK leader in attracting FDI for research and development (R&D) projects. Scotland’s reputation as a global leader in the software sector is also reflected as it moves up to take second place outside of London and the South East of England.

In last year’s report we noted the need to focus on developing stronger relationships among the newer and emerging origin sources of FDI, particularly China. In 2015, China did not appear in Scotland’s top 10. However in 2016, it ranks as fifth largest originator of investments in Scotland. Looking at the primary investor into Scotland this remains the US, with 43 projects representing 35% of all projects into Scotland in 2016.

… but can’t rest on its laurels in time of uncertainty…

The investor perception section of our report shows Scotland’s attractiveness fell 1%. Although not alarming in itself, the research suggests that the EU Referendum vote and its aftermath may be having an influence on global perceptions of Scotland and the UK’s long-term attractiveness.

… with window of opportunity to respond to investors’ needs

Our perception study highlighted that global investors’ priorities are: infrastructure, cited by 31%; negotiating trade deals with new countries (32%) – with the US, China and India identified as most important; skills (28%); retaining existing EU trading arrangements (28%); the approach to migration (22%); and creating incentives for foreign investors (21%).

Against this backdrop business and government should be thinking strategically through Brexit, investing in skills, developing digital Scotland, and working together to further raise Scotland’s brand and profile.

There is a short window of time to act in response to investors’ sentiment and wish list. A strategy with trade, skills and infrastructure at its core can help Scotland protect its legacy as an attractive place to do business and capitalise on future opportunities.

Contact

EY - Mark Harvey

Mark Harvey

EY Senior Partner | Scotland