Independence opponents’ attempts to portray Scotland as too poor to stand on its own feet have been demolished by a new report showing the country bucked the UK downward trend and attracted more foreign direct investment last year.
The 2020 investments were made while renewed arguments in favour of independence were gaining increasing support.
An annual survey by professional services company EY reported 107 foreign direct investment (FDI) projects in Scotland in 2020, an increase of 6 per cent compared with the previous year. That success contrasts with declines in investment of 12 per cent for the UK as a whole and 13 per cent across Europe.
The countries that were the source of most investment into Scotland were the USA (39 projects), Ireland (10) and the Netherlands (8).
The survey ranked Edinburgh as the UK’s top city outside London for foreign direct investment
According to EY, Scotland last year “bolstered its position as the UK’s most attractive FDI location outside London” .It accounted for 11 per cent of investment projects, up from 9 per cent in 2019
The survey ranked Edinburgh (pictured above) as the UK’s top city outside London for FDI, with 36 projects. Glasgow was fifth with 23 projects and Aberdeen seventh with 13.
The leading sectors for FDI in Scotland were digital technology with 19 projects, agri-food with 14 and business services with 11.
Scotland’s impressive performance came in the face of the global Covid 19 pandemic. It was recorded as opinion poll after opinion poll showed a majority of Scots supported a Yes vote in a second referendum, smashing the myth that independence would ‘frighten off’ investors.
Ally Scott, EY Scotland managing partner, said: “Amid arguably the most challenging environment for FDI in living memory, it’s clear that Scotland has put in an impressive performance.'
Of course, Scotland’s economic performance is always used by opponents of independence as a reason why Scotland should remain within the UK. Economic success is used as an argument that remaining within the Union is essential to that success and economic problems are used as a reason why we can’t make it alone.
This survey, however, shows that there are specific reasons why Scotland is bucking the investment trends, none of them a result of remaining in the UK.
Scottish Enterprise has put the country’s appeal to global companies down to the quality of our workforce as well as a “competitive cost base, world-class universities and supportive business environment”. Linda Hanna, Scottish Executive interim chief executive, has praised the benefit of a 'team Scotland' approach across the public sector, business and universities.
London’s vote as most attractive region has almost halved since 2019, while Scotland’s has more than doubled
According to EY, a survey of 570 international business “decision makers” found 15 per cent ranked Scotland as the most attractive part of the UK in which to establish operations — behind only London at 25 per cent, and up from the 7 per cent reported in 2019.
Ally Scott said: “Scotland has now narrowed the gap significantly with London. The scale of this two-year shift is illustrated by London’s vote as most attractive region almost halving since 2019, while Scotland’s has more than doubled.”
The Scottish government last winter unveiled an inward investment strategy that aims to attract 50 leading global companies to Scotland. The strategy prioritises nine “areas of opportunity” ranging from digital services to the exploitation of space. The plan as been described as a fundamental shift in approach to attracting investment from overseas and other parts of the UK.
It has a number of core Scottish government values at its heart which businesses will be expected to share. These include the fair treatment of employees and reduction of carbon emissions.
The Scottish government said the EY survey showed it had a “strong base from which to build” on FDI. “This supports the approach of the Scottish government’s inward investment plan to further internationalise the economy by focusing efforts on our existing global strengths,” it said.
The survey also showed that UK inward investment in manufacturing continued to decline compared with levels in EU member countries. The manufacturing drop has been attributed to Brexit, as Britain no longer has easy access to European markets.
Foreign direct investment is defined as an investor establishing a substantial and lasting interest in an enterprise based in another country.