Once again, Scotland has shown that it’s an outstanding location for foreign direct investment (FDI). 

According to the latest EY Scotland Attractiveness survey Scotland maintained its place as the top UK location for FDI outside of London in 2023 – enjoying its largest-ever number of projects in a single year along with increasing investor confidence.

Scotland’s FDI success in numbers

There are several exciting figures in EY’s results:

• Scotland secured a record 142 inward investment projects in 2023. This marks a 12.7% increase from 2022’s figures.  
• With FDI projects into the whole UK rising by just 6%, Scotland saw its share of all UK projects rising to 14.4% (up from 13.6% in 2022). This is the fifth consecutive year that this figure has increased. It’s also Scotland’s largest share in the past decade.  
• Scotland and the UK outpaced the rest of Europe, which recorded a 4% decline in FDI projects over 2023.
• Following the trend of previous years, the USA was the number one investor in Scotland. It was responsible for 27 FDI projects, making up around a fifth of the total. Germany was second (with 20 projects) and France was third (with 10). 
• Three Scottish cities ranked in the UK’s top 10 urban locations for FDI outside of London. Edinburgh was second (with 32 projects), Glasgow fourth (with 25), and Aberdeen eighth (with 13). 

Energy transition opens new investment opportunities

EY’s results speak strongly to Scotland’s status as a leader in the global energy transition.  

For the first time in six years, utility supply overtook digital technology as the country’s top sector for FDI projects – with investment in the sector jumping by more than 80%.  EY says this is thanks to Scotland’s focus on areas like low carbon and cleantech. 

This sector shift contrasts with the UK and the rest of Europe, where digital technology is still the leading focus of FDI projects.

Reuben Aitken, Managing Director of Energy Transition and International Operations at Scottish Enterprise, says: “It’s great to see utility supply as the top sector for FDI into Scotland last year. This chimes with our focused strategy which identifies the energy transition as one of three areas central to transforming Scotland's economy, creating quality jobs and accelerating our path to net zero.”

FDI projects expand beyond city limits

As well as new sectors, investors also targeted a more diverse set of Scottish locations in 2023. 

EY points out that, since many utility supply companies are based in more rural areas, much of the last year’s investment was targeted beyond Scotland’s cities – signalling a possible shift in the spread of investment to come. 

Peter Arnold, Chief Economist at EY UK, highlights the potential of spreading investment opportunities more widely across the UK and Scotland:  

“Enhancing the attractiveness of its diverse regions will be key to elevating the UK’s national investment profile... there is a clear appetite for investing outside London. Our survey highlights that deploying a combination of incentives, grants and skills-building can be a key motivator for attracting global capital to different parts of the UK. 

“...with targeted strategic investment and support, these areas have the potential to emerge as vital hubs for the innovation and implementation of sustainable technologies, driving the nation's progress in the clean tech arena.”

Scotland's advantages drive new projects

Many existing investors chose to increase their investment in Scotland. But the country's many positive qualities – as well as the sustainability-driven shift in the investment landscape – also led to a large number of brand-new FDI projects in 2023. 

EY notes that there has been a large increase in projects from first-time investors, with 28.8% more new FDI projects than in 2022. Again, this outpaced the rest of the UK, increasing Scotland’s share of new UK projects to 11.5% – a figure which has now risen for four years in a row.  

It’s no surprise that new investors are taking an increased interest in Scotland. EY reports that international investors see the country’s ‘softer’ qualities, like talent and infrastructure, as some of its biggest advantages.  

Scotland’s skilled, well-educated and experienced workforce make a potent combination with its “strong sense of culture and belonging”, according to EY.

Investor interest in Scotland continues to grow

Scotland’s future-facing economy is also attracting the attention of potential investors. According to EY, 26% of investors surveyed are planning to invest in Scotland over the next year – once again, second only to London. 

EY says that the main reasons investors are drawn to the UK and Scotland include the highly skilled workforce, access to regional grants and services, and the ease of finding good partners and suppliers.