6 minute read 22 Jun 2020
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Why UK financial services is expected to remain resilient post COVID-19

By Omar Ali

EY EMEIA Financial Services Regional Managing Partner

Passionate about building a better financial services industry with our people and our clients. Champion for DE&I and helping our people to reach their potential. Football enthusiast. Bad at skiing.

6 minute read 22 Jun 2020

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EY’s 2020 UK Attractiveness Survey shows that the UK continued to be Europe’s most attractive location for financial services (FS) investment in 2019 and should remain in a good position to continue attracting investment this year.

It was with some trepidation that I looked at the data from the latest EY UK Attractiveness Survey for financial services. The survey combines analysis of foreign direct investment (FDI) into the UK in 2019 and an investor sentiment survey, which we carried out in April this year in the heart of the COVID-19 pandemic.

For the last 20 years, the UK has consistently been the top European location for financial services FDI – maintaining its dominance even through the recent uncertain Brexit years. But investor sentiment about the attractiveness of the UK FS market dropped significantly over the past two years, so there were no guarantees that the UK would continue to attract FDI at the same rate as it had before. In addition, in 2018 we saw big rises in the number of FDI projects going to Europe’s major continental cities for the first time, in particular Frankfurt, Paris and Madrid, as UK firms looked to establish EU hubs for their operating models in a post-Brexit world.

The good news is, despite all of this, the UK held its own in 2019. This year’s survey shows that the UK continues to lead Europe in attracting FS FDI projects. With 99 FDI projects, the UK took more than a quarter of European FS FDI projects in 2019, and London attracted more than double the number of any other European city – all reassuring news considering the ongoing uncertainty surrounding the Brexit negotiations.  

UK FS FDI projects in 2019


The UK continues to be Europe’s most attractive location for international investment into financial services

Investors say they pick the UK for a number of reasons. Some are familiar, including the breadth and depth of our capital markets, and the strength of the political and regulatory regime. But some are new and give us a good sense of how the COVID-19 pandemic is affecting investor priorities. Around a third of investors we spoke to told us that the measures put in place to prevent a future crisis are important factors influencing their future investment decisions, as is access to government support.

The last few months have borne witness to growing economic uncertainty across the world as a result of the pandemic. Although no industry or country has been immune to the consequences, UK financial services firms are weathering the downturn relatively well, having entered the crisis well-capitalised post-2008. This relative strength has aided financial stability in recent months and, looking at the results from our latest survey, it is clearly standing the sector in good stead to continue as a major global destination for inward FS investment.

When asked about their short-term views on investment post COVID-19, 40% of FS investors felt that the UK's attractiveness will increase, compared to just 8% who believe that Europe as a whole will be more attractive in a post COVID-19 world.

For some years now, we have been looking closely at the spread of FDI projects across the UK, and in 2019, whilst London still attracted two-thirds of all incoming FS investment, we are starting to see more of a shift to other regions. Glasgow, Manchester, Leeds and Birmingham all saw growth this year, and Scotland attracted the most jobs, with FDI creating an estimated 2,911 new roles compared with 806 in London. Whilst there is clear cause to celebrate London’s success, we must continue to challenge ourselves so that more of our towns and cities across the UK also capture the benefits of incoming FS investment.

So, despite mixed sentiment from investors going into the year, 2019 represented the third strongest year in the decade for FS FDI in the UK. And, whilst questions around London’s status as one of the world’s leading financial hubs have been raised since the Referendum, for the time being, the UK capital has maintained its position, with no one European city emerging as a challenger. 

This is good news for financial services, but also good news for the broader economy. The sector has played a critical role supporting businesses and individuals through the pandemic to date, and will be a key component of the UK’s economic recovery and future growth prospects. Maintaining our status as a global hub will help us to continue the breadth and depth of capital markets that investors look to us for, but we should not be complacent. As the clock runs down and we approach the final months of negotiations, we must aim for a deal that enables economic recovery and growth across the EU and the UK, which will deliver mutual benefits and ensure that Europe and the UK remain competitive alternatives to non-European financial centres.

Key findings

  • Financial services FDI across Europe as a whole was down by almost 13% year on year in 2019 
  • The UK attracted 99 financial services investment projects in 2019; more than double Germany, which came in second with 43
  • London was the top European city for Financial Services FDI, recording 67 projects in 2019; more than double Paris (29), which secured second place 
  • The US is the leading origin of Financial Services investment in the UK, accounting for almost a third (32%) of all projects

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Although the impact of COVID-19 on future investment and the nature of projects remains to be seen, our 2020 UK Attractiveness Survey gives reason to be optimistic that the UK’s financial services sector is well placed to adapt to the changes and continue to be a leading destination for overseas investment.

About this article

By Omar Ali

EY EMEIA Financial Services Regional Managing Partner

Passionate about building a better financial services industry with our people and our clients. Champion for DE&I and helping our people to reach their potential. Football enthusiast. Bad at skiing.