Foreign investment in Scottish economy 'falls'

Foreign investment in the Scottish economy dropped by nearly a fifth in 2018, according to research by business consultancy EY.

The number of research and development projects saw the biggest decline, while manufacturing was also down.

The fall in investment follows three particularly strong years and Scotland remains attractive to investors.

Of the foreign firms surveyed, 15 % said they had put their UK investment plans on hold because of Brexit.

The annual survey found London was far out in front in the UK as a magnet for foreign investment. It attracted 458 inward investment projects during 2018, barely down on the previous year.

Scotland remained the second most attractive part of the UK, although the Midlands in England attracted the biggest projects.

With 94 projects coming into Scotland - down from 116 in 2017 - the average number of employees being recruited was 60. Only nine projects were aimed at more than 100 new recruits, with the total coming to 2,191 out of 28,394 across the UK.

The decline in research and development projects saw 13 fewer projects come to Scotland. Manufacturing was also down, while the digital and business service sectors were up.

EY researchers highlighted the strength of Scotland's perception among investors, including those not already committed to the country. The share of those who would think of Scotland for investment doubled in a year, but to only 7%.

The leading source of investment funds was the USA, with six of the biggest nine projects. The largest single project was from Japan. Germany and Switzerland both accounted for 8% of the total, and Norway for 7%.

'Brand Scotland'

Scottish Development International managing director Paul Lewis said the findings showed "the strength of 'brand Scotland'" and the way the country was marketed on the international stage.

He said: "The survey also shows that we can't take hard-fought successes for granted.

"Scotland's public, private and academic institutions must continue to collaborate and build on the country's reputation and international connections.

"This will help attract even more inward investment and consolidate Scotland's position as a location of choice for global investors."

'Hugely encouraging'

Scottish trade minister Ivan McKee said the latest EY Attractiveness Survey had shown in six of the past seven years that Scotland was second only to London for inward investment:

He added: "It is hugely encouraging that the perception of Scotland being an attractive investment destination is growing among investors - this is a significant achievement given the intense competition for inward investment and an indication our efforts to increase our international presence are paying off.

"However, the significant uncertainty created by Brexit has played a part, with the UK looking increasingly less attractive to investors.

"That is why retaining Scotland's position is such an accomplishment."