Scotland has witnessed a significant increase in foreign direct investment (FDI) primarily driven by technology, skills, and the green economy, as highlighted in a recent report by EY. The analysis revealed that 142 FDI projects were secured in the previous year, representing a substantial increase of 12.7% from 2022 and doubling the growth rate of the entire UK. Furthermore, Scotland’s share of UK FDI projects has risen for the fifth consecutive year, now accounting for 14.4% of the total, according to the report.
The perception of Scotland as an appealing investment destination has also substantially improved, with 26% of potential investors expressing their intention to invest in the country, up from 19.2% in 2022. This demonstrates a growing appeal to foreign investors, bolstered by the opportunities presented by new technologies and the availability of a skilled workforce.
EY’s survey further revealed Scotland’s exceptional performance, ranking as the top area outside of London for the ninth consecutive year. Deputy First Minister and Economy Secretary Kate Forbes emphasized the critical role of inward investment in driving economic growth and advancing strategic objectives, particularly in key sectors. Forbes also underscored Scotland’s ability to outpace both the UK and Europe in FDI growth, indicating the effectiveness of the government’s policies and priorities.
One noteworthy finding of the report is the US maintaining its position as the leading contributor of Scottish inward investment projects. Germany also emerged as a major source of FDI, with the number of projects doubling to 20, the highest in a decade. Additionally, Scotland has positioned three of its cities (Edinburgh, Glasgow, and Aberdeen) among the top 10 for FDI projects outside London, further underlining its appeal on the global investment stage.
In terms of sectors, there has been a notable shift, with utility supply, including renewables, overtaking digital technology as the top sector for FDI. This trend reflects the increasing levels of low-carbon and ‘cleantech’ investment, with the sector recording an impressive decade-high rise in manufacturing projects. This signifies a crucial transition towards sustainable and environmentally friendly initiatives, aligning with Scotland’s commitment to achieving net zero emissions.
Reuben Aitken, managing director of energy transition and international operations at Scottish Enterprise, expressed enthusiasm about the boost in utility supply as the leading sector for FDI into Scotland. He cited the energy transition as a key area for transforming Scotland’s economy and accelerating its journey towards net zero. Jane Morrison-Ross, chief executive of South of Scotland Enterprise, echoed this sentiment, highlighting the region’s initiatives such as the net-zero investment guide and the newly launched Chapelcross energy transition zone.
In conclusion, Scotland’s exceptional performance in attracting foreign direct investment is a testament to its strategic focus on technology, skills, and the green economy. The record-breaking influx of FDI projects not only signifies economic growth but also paves the way for sustainable and innovative developments across the country. As Scotland continues to position itself as a prime investment destination, the collaborative efforts of its economic development agencies are poised to bring about further high-quality job opportunities and contribute to long-term prosperity.