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1、Navigating through turbulenceEY UK Attractiveness SurveyUK including Scotland spotlight June 2023ContentsForeword Executive summary24The UKs FDI performance in 2022:from volume to value110Looking ahead:FDI opportunities and policy direction for the UK368Investor perceptions of the UK:mixed mood musi
2、c26021EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June Ball EY UK Chair and UK&I Managing Partner Ernst&Young LLP LinkedIn An indispensable reference pointEY has now been publishing this study for over two decades.During that time,it has become an indis
3、pensable reference point for business leaders,investors,and policymakers seeking to understand the drivers of inward investment and the UKs relative performance in an ever-changing landscape.If anything,the importance of this report has increased even further amid the unexpected and often dramatic e
4、vents of recent years,from the pandemic to the war in Ukraine and more.While these disruptions have prompted overseas investors to adapt their strategies and priorities,our research confirms that the keys to attracting FDI remain the same:skills,infrastructure,incentives,and support.In previous year
5、s we have published two separate reports one looking at project flows and perceptions for the UK overall,and one focused specifically on Scotland.For the first time this year,weve combined the findings into a single report,enabling us to provide a more consistent and integrated view across the UK.Yo
6、ull find an overview of Scotlands FDI performance from Ally Scott,Managing Partner of EY in Scotland,on page 50.The report also contains call-out sections on the Scottish results and their implications.A challenging year on project numbers First,the headline findings.Total FDI projects into the UK f
7、ell by 6.4%in 2022 to 929,putting it second behind France,which attracted 1,259 projects.With total European projects edging up by 1.4%,the UKs market share in Europe also declined.Meanwhile,our 2023 investor survey shows the UK slipping to third place in Europe for perceived attractiveness behind G
8、ermany and France.in a volatile environment The UKs performance should be seen in the context of the difficult economic and political headwinds it faced the war in Ukraine and its corresponding impact on energy prices escalated inflationary pressures and led to a general economic slowdown across the
9、 globe and particularly in Europe.The UK also faced its own political challenges during 2022,and theres no question that Brexit has reduced the UKs relative attractiveness for some investors.but grounds for optimism when it comes to value of investment However,a closer look reveals a more positive p
10、icture.While the UKs project count was down in 2022,it performed better on value than its competitors comping first in terms of announced We are delighted to introduce EYs 2023 UK Attractiveness Survey,our latest annual research report examining the performance and perceptions of the UK as a destina
11、tion for foreign direct investment(FDI).jobs reflecting a shift in policy focus by the Government and other investment agencies towards attracting higher-value projects rather than focusing on volume.And in our investor survey,longer-term perceptions of the UKs attractiveness have held firm with an
12、unprecedented 65%say theyre planning on making an investment in the UK in 2023 the highest proportion on record.and many areas of strength shining throughAdded to this,many major points of strength for the UK shine through in the project statistics on sectors and activities,with the UK retaining num
13、ber one spot for digital tech and financial services investment,and also performing well in life sciences.From a functional perspective the shift to value is evident the UK continuing to lead in attracting HQs,and increasing the number of R&D and manufacturing investments.From a regional perspective
14、 while there was a decline in the number of projects into London,the regional performance was better,with volumes holding firm or increasing,suggesting that levelling up in FDI is becoming more of a reality.Building on the UKs proven assets Perceptions of the UK remain high on fundamentals such as i
15、ts quality of life and legal system,bolstering its attractiveness as a headquarters location.It remains a large and vibrant consumer market.And it has acknowledged sector strengths in areas like digital,life sciences and financial services,plus huge potential in renewables due to its geographical ad
16、vantages and stated policy goals.These attributes together with the openness of its economy,global historical links and the pivot to Global Britain help to explain why the UK continues to attract a more global cast of investors than most other FDI destinations.must be the goal for policy,by prioriti
17、sing stability and certainty Despite continuing strong performance,the UK still has work to do on international perceptions,addressing some of the fallout from recent political and economic turmoil,while Brexit continues to present hurdles to certain types of investment,especially those relying on a
18、ccess to the European Single Market.The subsidy-heavy US Inflation Reduction Act(IRA)and Europes response suggests that competition for FDI will intensify and with the UK Government lacking resources to match the incentives being offered elsewhere,attracting green projects may become harder.So what
19、does this all mean for policy?There is a clear demand from the business community for stability and certainty both in the macro-environment and a focus on economic growth.Economic stability and growth deliver both business and consumer confidence,which in turn attracts investment.The UK has made pro
20、gress in this regard in recent months with recent economic forecasts suggesting the UK will avoid a recession in 2023 but concerns remain around underlying productivity and growth rates so plenty more to do.The need for stability and certainty also extend into other areas of public policy for exampl
21、e,the importance of tackling infrastructure and housing pinch points through easing and accelerating planning decisions.While a focus on the skills and labour challenges the UK faces with a workforce still smaller than pre-COVID-19 should remain a political priority.Through a sector lens a priority
22、must be an effective response to the US and European initiatives in green technology.The UK may need to consider a more active approach to industrial policy,through prioritising support to areas where the UK has underlying geographic or sectorial advantages.Also key is creating regulation thats busi
23、ness-friendly as well as effective,building on traditional UK strengths,such as its market openness.Digital technology remains an area of opportunity in this regard,unlike other areas regulatory reform can be relatively low cost,and the upsides could be significant.Towards calmer watersThis report c
24、overs a period when the UK has been navigating through significant turbulence.In doing so,its succeeded in maintaining a steadier course in terms of FDI and attractiveness than many might have expected.Nows the time to focus on the opportunity and head for hopefully calmer waters ahead.Peter Arnold
25、EY UK Chief Economist Ernst&Young LLP LinkedInForewordEYs 2023 UK Attractiveness SurveyEY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June continues to lead the way in European FDI Following a 5.4%increase in the number of Foreign Direct Investment(FDI)pro
26、jects in Europe in 2021,total European FDI projects edge up in 2022 by a further 1.4%,from 5,877 to 5,962.Despite the increase,European projects recorded in 2022 were still 7%lower than the pre-pandemic figure in 2019,reflecting economic and inflationary headwinds.France was Europes biggest recipien
27、t of projects for the fourth successive year,with its projects rising by 3%to 1,259,ahead of the UK on 929 and Germany with 832.as UK project numbers slip back Against the background of a rise in European FDI projects,the UK saw its project count decline in 2022 by 6.4%to 929,the lowest for eight ye
28、ars.As a result,the UKs share of all European projects fell from 16.9%in 2021 to 15.6%in 2022,the lowest level in the past decade.The decline in UK projects likely reflected the political instability and uncertainty experienced in 2022,plus a trend towards net outbound project flows since Brexit.wit
29、h UK tech projects down sharply The UKs overall decline in projects in 2022 was largely due to a 32%fall in digital technology projects,with those recorded into London down even more sharply.However,the UK still leads Europe in the tech sector FDI with 234 projects and a market share of 19.8%.And,mo
30、re positively,UK projects in the finance,utilities and pharmaceuticals sectors all rose in 2022 reflecting the UKs sectorial strengths.Executive summaryBut the UK has performed well on project value and jobs However,project numbers only tell part of the story the economic value of a project is more
31、driven by the scale of the capital invested and the extent and nature of employment generated.This has led to a policy shift by UK national and regional government agencies in recent years,with a focus on securing greater value from FDI rather than chasing the largest volume of projects.This value c
32、an be difficult to measure,as not all projects announce the scale of capital invested,nor job creation numbers.However,the 2022 statistics provide evidence that this strategy is paying off,with the UK doing better on value within Europe securing the highest FDI jobs total in Europe,at 46,779,ahead o
33、f second-placed Spain with 39,104 and France on 38,102.The UK put in a strong showing in attracting (R&D)projects.leads Europe in securing new projects As well as leading on FDI jobs in 2022,the UK also secured Europes highest number of new investments by first-time investors,reflecting underlying d
34、ynamism in the economy.The UK attracted a total of 646 new projects a fall of 15.4%from 2021,but still ahead of second-placed Germany.New projects into Europe overall declined by 8.5%during the year,meaning the UKs share of new projects did slip from 20.3%in 2021 to 18.7%in 2022,although this propor
35、tion is broadly in line with its decade-long average share.and continues to perform well in R&D FDI A further key area where the UK put in a strong showing in 2022 was in attracting research&development(R&D)projects again reflecting a key area of policy focus from the UK government.UK projects relat
36、ing to R&D rose to 127 from 111 in 2021,an increase of 14%.This rise narrowed the gap on first-placed France,whose R&D projects in 2022 were up by 8%at 144.At a sector level,the UK attracted 28 investments in R&D centres linked to pharmaceuticals and medical devices projects,the highest in Europe.R&
37、D investments traditionally generate highly skilled employment,plus scope for commercialising any IP developed hence the focus by policy makers.Sectors:digital tech remains top in the UK,despite a decline In terms of sectors generating FDI projects in the UK,digital tech remained in first place in 2
38、022,despite a 32%drop to 234 projects from 345 in 2021.In second place was the finance sector,up by 21%to 76 projects,closely followed by business services,down by 26%to 70 projects.These sectors leading positions reflect the UKs heavily services-orientated economy and traditional strength in financ
39、ial services.At a European level,the top three sectors in 2022 were software&IT services;business services;and transportation manufacturers&suppliers.new jobs in the UK in 2022646FDI jobs46,77939,10438,102UKSpainFrance1,259929832UKGermanyFranceFDI jobsEY Attractiveness Survey|UK and Scotland|June At
40、tractiveness Survey|UK and Scotland|June 2023 while the UK remains strong in pharmaceuticals and medical devices FDI A particularly encouraging development for the UK in 2022 was its continuing strong showing in pharmaceuticals and medical devices.While UK pharmaceutical projects rose only modestly
41、in 2022,up by 10%to 44,and medical devices projects actually declined by 27%to 22,the UK continues to perform well in European health sector FDI,ranking top in pharmaceutical projects(19%European market share)and second in medical devices(18%market share).The UKs strength in life sciences came to th
42、e fore during the COVID-19 pandemic,when the UK led the way on treatments,sequencing,and vaccine development.In the context of an ageing population,a continuing focus on attracting FDI into life sciences will be important.Activities:business services still leads,but theres a shift from selling to cr
43、eating The most common activity for UK FDI in 2022 remained business services,although projects in this category declined by 30%.Manufacturing projects ranked second,having risen by 17%.In terms of European market share,the UK generally secures its highest proportion of projects in headquarters proj
44、ects and that was again the case in 2022,with the UK winning 29.2%of European headquarters investments.indicating a pivot towards strategic investment and opening up opportunities for the futureTogether,the recurring evidence of higher job creation in the UK,as well as the trending of activity towar
45、ds headquarters location,manufacturing,R&D and logistics while moving away from less embedded sales and marketing activity,indicate a pivot towards strategic investment:a key policy goal will be capitalising on strong R&D investment made now through larger industrial projects downstream.There are st
46、rategic advantages in being able to do both R&D and manufacturing,and typically financial considerations drive manufacturing to lower-cost countries in the long-run.Mitigating this risk through policy will be an important challenge to address.Origins of investment into the UK:the US still leads but
47、India is on the rise The United States remained the UKs biggest investor in 2022,contributing 222 projects accounting for 23.9%of all UK investments,including 32%of all projects in Scotland.Its worth noting,however,that the US market share of investment into the UK has been declining since 2019,a ye
48、ar that witnessed the zenith of US investment into the UK for the past decade.Overtaking Germany in second place for projects into the UK was India,with 8.8%.The UK remains a clear destination of choice for Indian investors into Europe,securing 58.2%of Indian projects in Europe in 2022,up from 51.2%
49、in 2021.Meanwhile,UK outbound projects jumped after the Brexit referendum,and have continued to increase each year apart from the pandemic-affected year of 2020.as the UK looks globally for FDI Shifts in FDI origins are reflecting the UKs drive to broaden trading ties with major multilateral trading
50、 blocs beyond Europe.Of the UKs nine leading sources of FDI in 2022,five were outside Europe,including Australia and Canada as well as India.The UK,in contrast to some of its European neighbours has historically benefited from a more diverse base of investment and based on the current direction of t
51、ravel this trend looks set to continue.By contrast,of Europes nine leading origins in 2022,seven were within Europe(including the UK,in third place).London slips back but remains the leading UK FDI destination Looking across the UKs devolved administrations and regions,Greater London has historicall
52、y been the leading destination for FDI projects,securing 40.9%of all UK projects over the past decade.While it remains the number-one location for inward investors,London projects fell by 24.1%to 299 in 2022 from 394 in 2021.As a result,Londons share of UK projects fell to a decade-low 32.2%.The mai
53、n driver of the decline was a drop of 44.9%in Londons digital technology projects,from 194 in 2021 to 107 in 2022.as most other UK regions narrow the gap With projects in London slipping back,most other parts of the UK gained ground on it by increasing their project numbers,providing evidence of lev
54、elling up in terms of FDI.Seven of the eleven regions outside London recorded increases in 2022,with only the South East of England,West Midlands,South West and Northern Ireland registering declines.Those recording increases were Wales(82%),the North East(33%),Yorkshire and the Humber(28%),the East
55、Midlands(23%),the North West(19%),the East of England(10%),and Scotland(3%).The United States remained the UKs biggest investor in 2022.and renewables projects offer major opportunities Regarding investments linked to renewable energy,the UKs joint second ranking with Spain on 37 projects underlines
56、 the countrys existing green credentials and its aspirations for deployment of green technology,particular for low-carbon energy and renewables.That said,the UK secured only four projects in the automotive and aerospace sectors linked to low-carbon mobility,compared to Germanys eight and Spains 12.A
57、 clear focus on areas of UK comparative advantage in green and clean tech will be important,as the UK seeks to compete with developments like the US Inflation Reduction Act,and the EUs own response to this policy both of which present risks to the UKs ability to attract green FDI.UK pharmaceutical p
58、rojects rose only modestly in 2022,up by10%as manufacturing and industrial activity show a welcome increase Alongside the 17%rise in manufacturing FDI in 2022,the UK also recorded a healthy increase in wider industrial projects,up 21%to 175.This rise was largely due to an increase in manufacturing a
59、ctivity within the agri-food(up 9 projects on 2021),utility supply(up 7 on 2021),and pharmaceutical sectors(up 8 on 2021).The rise in UK manufacturing projects took the UKs European market share up to 10%,close to its ten-year average of 10.3%.Other noteworthy changes included rises in R&D(+13%)and
60、logistics(+34%)projects,and a decline in sales&marketing investments(-63%).In 2022,the UK won 29.2%of European headquarters investments 29.2%Manufacturing projects in 2022+17%Industrial projects in 2022+21%Logistics projects in 2022+34%2021394London FDI projects2022299EY Attractiveness Survey|UK and
61、 Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June while Scotland retains second place Scotland was the UK location securing the second highest number of projects in 2022,a position it has also held in nine of the past ten years.Scotland recorded 126 projects in 2022 compared to 122 in
62、 2021,a rise of 3.3%the fourth successive annual increase,and Scotlands largest ever total.Major drivers of Scottish FDI projects included digital technology and utility projects,including renewables.Scotlands share of all UK projects continued to rise,reaching 13.6%in 2022 from 10%in 2019 and 12.3%
63、in 2021.and Manchester and Edinburgh retain their lead among UK cities outside London After London,the UKs most successful FDI cities in 2022 were Manchester,whose projects rose by 45.2%to 45,and Edinburgh,up by 22.6%to 38.Both totals were these cities highest since 2018.Strong growth was also recor
64、ded by third-placed Birmingham,which increased its project count by 64.7%to 28,while Glasgow remained fourth despite a small fall in projects,ahead of Belfast in fifth,also down.Manchester,Edinburgh,and Belfast are especially strong in securing digital projects,while Birmingham and Glasgow appear to
65、 attract investment interest from a broader spread of sectors.Investor perceptions:while short-term measures of the UKs attractiveness has slipped When we asked respondents to our global investor survey which three European countries they believe will be the most attractive for foreign investment in
66、 2023,the UK was cited by just 32%compared to 44%in 2022.This took it from second to third place,with the fall probably reflecting the political uncertainty the UK experienced in 2022,with three different prime ministers and four chancellors in the space of 12 months.Germany,despite facing its own e
67、conomic headwinds from higher energy prices,unexpectedly leapt by 20 percentage points to 62%,leapfrogging France on 49%to take first place.investors intention to invest in the UK has never been stronger More positively,and in contrast to the downturn in short-term sentiment,an impressive 65%of inve
68、stors surveyed were planning on making an investment in the UK in 2023 the highest level ever recorded in this research.Meanwhile,expectations of the UKs attractiveness over the next three years have remained largely unchanged,with 48.6%believing the UKs attractiveness will increase compared to 49.4
69、%in 2022.Where respondents foresee a decline in attractiveness,the main reasons are an increased regulatory burden(55.6%),higher costs(54.2%),and a reduced market size(38.9%).and levelling up and sustainability are on investors agenda Asked what policy action would most improve future attractiveness
70、,the geographic rebalancing of the UK economy ranked first,cited by 30%compared to 20%last year,correlating with the rise in projects in most areas of the UK outside London.And 81.2%believe the UK ranks highly in offering the right environment to achieve ESG goals a finding that underlines the oppor
71、tunities in renewables and cleantech,and which reflects the UKs strong showing in renewable energy projects in 2022,joint second in Europe with Spain.with investors in chemicals,pharmaceuticals and finance and R&D particularly positive Intention to invest in the UK is especially strong in the chemic
72、als and pharmaceuticals sector,where 84.6%of investors are planning to undertake a UK project in the next year,an intention also voiced by the vast majority of financial investors(82.5%).Also,most investors in UK R&D projects are looking to increase their footprint in the UK,with 53.8%saying this is
73、 their expectation,rising to 70%of R&D investors in the industrials sector.Again,this appears to reflect the effects of the policy pivot towards value over volume.and finance,services,and tech expected to drive the UKs future growthAsked which business sectors will be most important in driving the U
74、Ks growth in the coming years,35.5%of executives rank financial services either first or second as a UK growth driver,narrowly ahead of software&IT services on 34.9%.These findings are mirrored by the UKs continuing substantial share of European projects in both of these sectors running at 26%of fin
75、ance projects and 19.8%in of digital projects in 2022.Also,the proportion of UK investors planning to change their supply chain model has dropped from 39%in 2022 to just 18.8%this year,as the pressures from the pandemic ease.Among those companies looking to change their supply chains,the biggest sin
76、gle reason is to improve sustainability(42.9%),closely followed by digitalisation(41.6%)and enhancing cost effectiveness(40.3%).Regional perceptions:London still leads,followed by Scotland London remains the most attractive region of the UK in which to establish operations,cited by 41%of respondents
77、(up from 27%last year),with Scotland in second place on 11%(down from 15.8%),and the East of England third on 9%(up from 5.2%).Significant gains in perceived attractiveness have also been made by Wales(up by 1.1 percentage points to 8.3%in fourth place)and Northern Ireland(up by 2.1 percentage point
78、s to 3.9%).and the factors influencing regional FDI choices are shifting,with grants and incentives now topThe factors influencing decisions to invest in regions outside London are changing,with access to grants and incentives now leading the way,cited by 22.5%of investors a finding that sends a cle
79、ar signal to policymakers at both a national and regional level.In second place is the availability of business partners and suppliers at 18.1%,and the availability and skills of the local workforce is joint third on 17.4%(down from 27%last year),level with the strength of business networks locally.
80、Notably,local labour costs have receded as an issue,falling to 16.4%from 23.5%in 2022,perhaps reflecting a cooling labour market.Scotland was the UK location securing the second highest number of projects in 2022.The UK is still favoured on several key investment criteria The UK remains favoured by
81、investors on important criteria including the size of its domestic market,the quality of education,and the quality of life,diversity,culture and language.These attributes are traditional strengths of the UK relative to competing destinations and are qualities that policy will need to safeguard while
82、 seeking to attract investment.The UK is rated relatively less attractive on factors such as corporate taxation and the availability and cost of real estate,again continuing existing trends.of investors surveyed were planning on making an investment in the UK in 202365%In Manchester,projects rose by
83、 45.2%to 45 45.2%EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June UKs FDI performance in 2022:from volume to value 1The UK remains second in Europe for FDI,despite a fall in project numbers In 2022,the number of FDI projects recorded across Europe edged
84、 up by 1.4%,from 5,877 in 2021 to 5,962 in 2022.Our global survey of executives shows the modest scale of this rise largely reflected the challenging economic environment triggered by the war in Ukraine,which pushed energy prices and inflation upwards and boosted geopolitical uncertainty.As a result
85、 of these factors,the number of direct investments in Europe is still below pre-pandemic levels,down from the 6,412 projects secured in 2019.The number of direct investments in Europe is still below pre-pandemic levels.Figure 1:Total European projects,2013-2022 Source:EY European Investment Monitor(
86、EIM),20002020213,9575,9624,4485,0836,0416,6536,3566,4125,5785,877EY Attractiveness Survey|UK and Scotland|June Attractiveness Survey|UK and Scotland|June 2023 with tech projects into London driving the declineThe decline in UK projects in 2022 was largely driven
87、by a significant fall in tech projects into London,which slumped to 107 from 194 in 2021.However,to put this fall into context,projects across Europe from the tech sector were also down marginally after a strong run.In each of the past 10 years,the digital tech sector has contributed more projects a
88、cross Europe than any other industry,and its share of all European projects in 2022 was 19.8%,marginally lower that its share 20.1%in 2021.In the UK and London particularly,several drivers lay behind the sharp decline in tech projects in 2021.While volume was down value remained solid,reflecting the
89、 fact that smaller tech projects are not being prioritised by investment agencies.Also,the sector faced global headwinds,and there may be an element of catch-up in other countries,given that the UK and London received historically very high numbers of tech projects in the years 2016 to 2019.Finally,
90、while the UKs overall project figures may have dropped,the average jobs announced,focus in terms of activities,and level of capital expenditure all indicate a focus on higher-value projects into the UK.The 2022 investment figures also show that France has retained its position as Europes leading FDI
91、 destination,attracting 1,259 projects,an increase of 3%.Its widely perceived that the groundwork for Frances continued strong performance was laid by President Macrons series of business-friendly reforms.While projects into Europe rose in 2022,the number secured by the UK fell by 6.4%,to 929 from 9
92、93 in 2021.However,despite this decline,the UK retained second place among European recipients of FDI,behind France and ahead of Germany.The fall in UK projects appears to reflect the political instability seen throughout much of 2022,together with a medium-term trend since Brexit towards net outbou
93、nd project investments.Based on the forward-looking results from our perception survey in 2023,UK-specific issues look to be an ongoing concern among investors,although current global economic headwinds are also a consideration.Source:EY European Investment Monitor(EIM),2013-22 Figure 2:Total UK pro
94、jects and European market share,2013-2022 Total UK projectsMarket share ProjectsPercentage(%)1,4001,2001,0008006004002000252000021202020221,0547998871,1381,2051,91,065As well as falling in the UK,projects in Germany were also down,by 1%to 832,probably refl
95、ecting the pressure on German supply chains and the impact of higher energy costs.Together,Europes big three FDI destinations France,the UK and Germany continue to account for 50%of the total of investments across the continent.Source:EY European Investment Monitor(EIM),2013-22 Figure 3:Evolution of
96、 top three destinations for FDI into Europe,2013-2022 In the UK and London particularly,several drivers lay behind the sharp decline in tech projects in 2021.FranceUnited KingdomGermany2000,400 1,200 1,000 800 60040020002022EY Attractiveness Survey|UK and Scotland|Ju
97、ne 2023EY Attractiveness Survey|UK and Scotland|June the UK performs well on project value,delivering the highest FDI jobs total in Europe As noted above,the fall in UK project numbers in 2022 was compensated for by a stronger UK performance on the value of projects reflecting the Governments shift
98、away from volume and towards value.Most notably,in terms of FDI employment creation announcements1,the UK came top in Europe,with its projects delivering 46,779 jobs.While this represented a year-on-year fall of 33.2%,its important to note that 2021 was a record year for UK FDI jobs and a clear outl
99、ier over the past decade.There were also relative declines in FDI employment creation in most other countries.Spain came a close second for FDI jobs with 39,104,down by 1.6%on 2021,while third-placed France dropped by 14.9%to 38,102 job announcements.However,Germanys fourth-placed total of 33,548 jo
100、bs reflected a huge rise of 58.2%.This made Germany and Ireland(with a 21.4%increase)the two outliers in terms of higher jobs creation from FDI in 2022.When broken down to a per project level and compared across countries,the job announcement figures again appear to reflect the impact of value-over-
101、volume strategy being pursued by the UK and Germany.The average job per project in the UK was 59,similar to Germany(58)and much higher than France(33).The UK also led the way in terms of projects creating large numbers of jobs,with 103 UK projects recording over 100 jobs created compared with 89 in
102、France on,62 in Spain and 48 in Germany.Figure 4:Total jobs announced in five largest investment countries,2021-2022 Country20212022Change 2021-2022United Kingdom70,02246,779-33.2%Spain39,74439,104-1.6%France44,75138,102-14.9%Germany21,21133,548+58.2%Ireland19,25223,371+21.4%Source:EY European Inves
103、tment Monitor(EIM),2021-22 1 The EY EIM database focuses on job announcements.These figures are often announced at the beginning of an investment and may be subject to change over time.As such,the jobs figures should be read not as jobs already created,but as the number of jobs anticipated to arise
104、from such an investment.Source:EY European Investment Monitor(EIM),2022 United KingdomFranceGermany595833Figure 5:Average jobs announced per project in Europes three largest FDI countries,2022 That said,some of the economies further down Europes FDI ranking have outperformed the larger FDI destinati
105、ons in terms of the average number of jobs created per project.Based on employment generation,the average project created 334 jobs in Serbia,326 in Spain,253 in Hungary and 239 in Romania.These are likely to reflect the presence of larger manufacturing projects than those the UK,France and Germany t
106、end to attract.The fall in UK project numbers in 2022 was compensated for by a stronger UK performance on the value of projects.Figure 6:Total UK employment from investment projects recorded 2013-2022 Source:EY European Investment Monitor(EIM),2013-22 Sum of jobs creationMarket shareJobsPercentage(%
107、)20000,00070,00060,00050,00040,00030,00020,00010,000025207,95331,34442,33647,00650,19636,61527,92670,02246,77928,403EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June and maintains its lead in securing new proje
108、ctsAs well as leading on FDI jobs in 2022,the UK also secured Europes highest number of new investments by first-time investors,as opposed to expansions of existing operations.The UK has now led Europe on new projects for the past four years,after taking over that position from Germany.During 2022,t
109、he UK attracted a total of 646 new projects a fall of 15.4%from 2021,but still ahead of second-placed Germany with 511.New projects into Europe overall declined by 8.5%during the year,meaning the UKs share of new projects slipped from 20.3%in 2021 to 18.7%in 2022,broadly in line with its decade-long
110、 average share of 19%.The UKs continued strength in attracting new projects is a reflection of its ability to attract a dynamic and new investor base.Comparing Europes five largest recipients of new projects in 2022,we find that the UK recorded 26%more new projects than Germany.And while the UK secu
111、red its lowest number of new projects since 2014,for Germany it was the lowest number in the past decade.Only France and Portugal increased their new project count in 2022,with Frances total of 447 representing a jump of 17.3%an impressive performance against the background of new projects across Eu
112、rope falling by 8.5%.Portugal joined the big four recipients of new projects with an even bigger increase,as its new projects leapt by 77.9%to 185.Figure 7:New UK projects and market share of all new European projects 2013-2022 UKMarket shareSource:EY European Investment Monitor(EIM),2013-22 Project
113、sPercentage(%)2000008007006005004003002000502022726538602740842753782727764646Figure 8:Largest five recipients of new projects in 2022 results from 2013-2022 Source:EY European Investment Monitor(EIM),2013-22 FranceUnited KingdomGermanySpainPortugalProject
114、s1,000900800700600500400300200420046520202022The UK has now led Europe on new projects for the past four years.EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June and services lead the way across Europe At the Eu
115、ropean level,the top sectors by number of projects in 2022 were digital technology(software&IT services)with 1,182,an 8%increase on 2021;business services&professional services with 765,a 27%increase year-on-year;and transportation manufacturers&suppliers with 470 projects,a 7%decrease.Both business
116、 services,professional services and the utility supply sector which includes renewables projects,and which was also up 27%had a very strong year.1,182digital technology(software&IT services)projects.Sectors for UK FDI:industry trends continue to shiftFigure 9:Total project numbers for the three lead
117、ing sectors generating projects for Europe 2013-2022 Source:EY European Investment Monitor(EIM),2013-22 Transportation manufacturers&suppliersDigital technologyBusiness servicesMarket share20001920211,201,6001,4001,2001,00080060040020002022The project flows by sector
118、 broadly reflect the responses to our global investor survey,in which executives in pharmaceuticals(85%),business services&professional services(71%),finance(71%)and chemicals(70%)all voice a strong expectation to establish or expand operations in Europe over the coming year.As well note in greater
119、detail in our analysis of our perception survey findings in the final section of this report,the appetite for establishing and expanding in these sectors could be explained by the factors investors cite as most important in their decision-making.Tellingly,respondents in all of these sectors rank ava
120、ilability of capital,R&D,and the approach to climate change highly in their decision-making calculus indicating that Europe has a competitive advantage over other regions that should be built upon.By contrast,the high tech,industrials and consumer sectors all appear to have sector-specific needs dri
121、ving their decision-making.while in the UK,digital is way ahead with finance a distant second As in Europe,the leading sector for projects within the UK in 2022 was once again digital technology,despite it reporting a 32%drop in projects from 345 in 2021 to 234 in 2022.It was followed by the finance
122、 sector,whose projects rose by 21%from 63 in 2021 to 76 in 2022.Third place was taken by business services&professional services,which saw its projects decline by 26%from 94 in 2021 to 70 in 2022.The UKs rise in finance projects took its market share of all European finance projects up to 26%from 22
123、.7%in 2021.However,in digital projects,the UKs 19.8%market share in 2022 was well below its decade long average of 28.3%,while in business services the UKs share of 9.2%was less than half its ten-year average of 19.9%.The situation in these sectors seems to be that UK has had its share of investment
124、,and now other countries are catching up.Source:EY European Investment Monitor(EIM),2018-22 Figure 10:Performance of the leading sectors generating investment projects in the UK 2018-2022Digital technologyFinanceBusiness servicesElectronics&ITUtility supplyProjects200205004504003503002502
125、002223469687076EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June first at digital technology,this sector has announced more projects across Europe than any other sector in each of the past 10 years.The digital tech sectors share of all Europea
126、n projects in 2022 was 19.8%,marginally lower than the 20.1%share of projects it contributed in 2021.In the UK the digital technology sector accounts for an even larger proportion of total projects,with more than a quarter 25.2%of all UK investment project announcements in 2022 coming from the secto
127、r,despite the decline in digital project numbers.In 2021,the UK secured 29.2%of all digital technology projects announced across Europe,but this fell to 19.8%in 2022.To an extent,the UKs declining market share in 2022 appears to be a further reflection of its focus on attracting higher-quality proje
128、cts offering greater job creation and capital investment.The UK is highly attractive for digital investment for a variety of reasons.But in terms of the competitive advantage it has within Europe,our survey shows that investors think the UK not only has a bigger workforce and pool of in-demand skill
129、s in the digital sector,but also ranks comparatively well on data regulation and a range of factors related to access to capital.Figure 11:UK market share of the three leading sectors generating projects for Europe 2013-2022 Transportation equipmentDigitalBusiness servicesMarket share2001
130、62002119.812.59.25201510502022Source:EY European Investment Monitor(EIM),2013-22 A comparison between the European countries that rank highest for digital investments shows that the UK,Spain,and France have seen a decline in project numbers in 2022.However,powered by strong per
131、formances from their respective capital cities,Germany and Portugal have been able to attract more digital investment projects despite the challenges facing the sector globally in 2022.Understanding the success of the Berlin and Lisbon tech investment scenes should be a priority for policymakers in
132、this area.Source:EY European Investment Monitor(EIM),2021-22 Figure 12:Number of digital technology projects in the top five investment locations for the digital sector,2021-2022 20212022The UK secured 29.2%of all digital technology projects announced across Europe.PortugalUnited KingdomGermanySpain
133、France1502500350Projects234451721516881EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June European Investment Monitor(EIM),2013-22 Figure 13:Financial Services projects and UK market share 2013-2022 All EuropeUKUK shareProjects201320
134、00235030025020022Percentage(%)4035302520151050UK financial services FDI maintained its historically strong showing in 2022,with the UK securing 26%of all finance project announcements made across Europe compared to 22.7%in 2021.Looking back,the UK saw a re
135、latively sharp dip in finance sector investments in 2017,but even then it retained the top spot in Europe.The UKs 2022 share of finance projects was its highest since 2019(26.6%),but well below the high-point of the past decade,the 35.1%recorded in 2016.Its notable,however,that the finance sector ha
136、s not resumed the same level of project investments that it was making before the pandemic a shift that appears to be a Europe-wide phenomenon as opposed to UK-specific.The UKs resurgent market share since 2020 seems to underline the stability of the banking sector in the UK.Given that the latest EI
137、M has tracked projects until the end of 2022,it seems likely that the positive trend in UK financial services FDI will continue,as the Edinburgh Reforms announced at the end of 2022 signal positive mood music to investors in contrast to the otherwise largely negative press comment on the financial m
138、arkets in recent months.and the UKs strength in health-related and renewables FDI continues While the UK saw its pharmaceutical projects rise by only a modest 10%in 2022 to 44,and its medical devices projects declined by 27%to 22,the UK remains a leading force in European health sector FDI ranking t
139、op in pharmaceuticals projects with a European market share of 19%,and second for medical devices projects with an 18%share.Despite the overall decline in health sector projects in 2022,these are continuing to run above pre-pandemic levels.The UKs strengths in life sciences came to the fore during t
140、he COVID-19 pandemic,when the UK led the way on treatments,sequencing,and vaccine development.In the context of an ageing population,a continuing focus on attracting FDI into life sciences will remain important for UK policymakers.The UK also performs well on investments linked to renewable energy,w
141、here it ranked joint second with Spain in 2022 on 37 projects.An analysis of project flows also points to the beginnings of a move to repatriate production capacity in Europe,a shift that mainly benefits the UK,France,Germany and Ireland.Figure 14:Number of foreign investment projects in the pharmac
142、eutical and medical devices sectors across Europe,2018-2022 Source:EY European Investment Monitor(EIM),2018-22 PharmaceuticalsMedical devices20202025234137153Figure 15:Top five countries with the most projects in the pharmaceuticals sector 2021/2022 Source:EY Europea
143、n Investment Monitor(EIM),2021-22 20212022Figure 16:Top five countries with the most projects in the medical devices sector 2021/2022 Source:EY European Investment Monitor(EIM),2021-22 20212022The UKs strengths in life sciences came to the fore during the COVID-19 pandemic.GermanyUnited KingdomFranc
144、eIrelandBelgium60Projects443823519IrelandUnited KingdomGermanyTurkeyFrance103515040Projects25302053922204EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June electronics sector in the UK,despite being some way down the list
145、in terms of project numbers in recent years,has seen a sharp rebound from 10 projects in 2021 to 69 in 2022.This appears to be partly a correction to the norm for the UK,as the 2021 figure was unusually low compared to the rest of the decade.Figure 17:Number of foreign investment projects in the ele
146、ctronics sector in the UK,2013-2022 Source:EY European Investment Monitor(EIM),2013-22 Services activity still leads in the UK,but R&D,manufacturing,and logistics are all increasing In addition to logging projects by sector,we also categorise them by activity undertaken:for example,a food business m
147、ay establish a HQ or a new manufacturing plant.Like the changes observed at the sectoral level,there have been clear shifts over recent years in the mix of activities to which investors commit their resources.The underlying trend in UK projects has been towards higher-value activities such as manufa
148、cturing plants,research&development(R&D)facilities,and logistics installations,with a corresponding fall in the number of business services and sales functions although these activities are still prominent in the UK.Positively,the UK has seen a sustained improvement in projects relating to R&D,inclu
149、ding a rise from 111 in 2021 to 127 in 2022,an increase of 14%.In line with its overall dominance in healthcare-related projects,it may be unsurprising that the UK is also the leading European country by number of investments in R&D centres linked to pharmaceuticals and medical devices,with 28 proje
150、cts in this category,well ahead of second-placed France with 15.The overall strength of R&D investment in the UK and across Europe again broadly aligns with responses to our 2023 investor survey,which indicates that 64%of executives expect to increase their European footprint in R&D over the next th
151、ree years.R&D activity represents a stream of investment thats important to both the host country and the investor for two main reasons.First,R&D-focused FDI plays a crucial role in driving innovation and technological advancement:companies investing in R&D bring new knowledge,expertise,and technolo
152、gies to the host country,contributing to the development of new products,processes,and services.This can lead to productivity gains,increased competitiveness,and economic growth.R&D investments also often result in the creation of intellectual property,including patents,which can provide long-term b
153、enefits and help the host country move up the value chain.Activities behind UK FDI:from selling to creating Source:EY European Investment Monitor(EIM),2021-22 Figure 18:Performance of leading activities for UK FDI projects,2022 vs 2021 20212022Business servicesTesting&servicingHeadquartersSales&mark
154、etingContact centreEducation&trainingLogisticsResearch&developmentShared services centreManufacturingData centre1000350Projects30020050545555900202023020424131301069EY Attractiveness Survey|UK and Scot
155、land|June 2023EY Attractiveness Survey|UK and Scotland|June their nature,R&D activities generally require a highly-skilled workforce and create demand for specialised services and support industries.This,in turn,stimulates the growth of knowledge-intensive sectors,enhances economic resilience,and pr
156、omotes a more balanced and sustainable economy.Capturing the value of these positive effects is the emerging challenging for policymakers:skills development will have to be carefully nurtured;knowledge exchange will have to be strengthened;and these R&D investments will need to help local companies
157、integrate into global value chains and tap into international markets where they will have to be supported in competitive fields.Figure 19:UKs share of European FDI projects by activity,2012-21 Source:EY European Investment Monitor(EIM),2013-22 Sales&business servicesLogisticsResearch&developmentHea
158、dquartersManufacturing2000022UK percentage share29.215.614.422.310.06050403020100 which has resulted in the UK capturing a larger market share of these activities across Europe.Historically,the UK has secured its highest market share of European project activities in
159、 headquarters investments.The UKs share of headquarters projects peaked at over 50%in 2015,but this was an outlier.The share of headquarters projects recorded by the UK in 2022 was 29.2%,slightly down from 2021 and close to the 10-year average of 31.2%.In the remaining project activities,the UK has
160、recorded variable shares of investment over the past 10 years.It recorded 22.3%of research projects in 2022 which was above the ten-year average of 19.2%and conversely 14.4%of logistics projects,below the 10-year average of 15.2%.Despite the UKs total number of projects decreasing in 2022,activity i
161、ncreased in manufacturing(up 17%),R&D(up 13%)and logistics(up 34%),while sales(down 63%)and business services(down 30%)declined.These shifts align positively with the kinds of activity the UK is seeking to seed highly throughout its supply chains.However,policymakers will need to ensure that opportu
162、nities to capture high value-add investments further downstream are capitalised on.The steady increase in R&D activity is positive for seeding investment The early stages of developing technology and clustering R&D centres tend to create relatively small numbers of high-value jobs;but to deliver job
163、s at scale,the UK(and Europe more widely)also need to build those technologies further down the supply chain.There are strategic advantages in being able to do both,although financial considerations have typically propelled manufacturing projects to lower-cost countries.The UK performed strongly in
164、R&D projects in 2022,narrowing the gap on first-placed France and attracting 22.3%of European R&D projects,above its ten-year average of 19.2%.As weve highlighted,the challenge now is to capitalise on this R&D investment by securing more future projects in activities like manufacturing.Figure 20:Top
165、 five European countries with the most R&D projects in 2022 Source:EY European Investment Monitor(EIM),2021-22#CountryNumber of projects in 2022Number of projects in 2021Change 2021/22 1France1441338%2UK12711114%3Germany5275-31%4Portugal3942-7%5Belgium2333-30%5Ireland231553%Total6466135%EY Attractiv
166、eness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June manufacturers&suppliersMachinery&equipment while the UK needs to continue capturing manufacturing investment The modest rise in all projects across Europe in 2022 was not reflected in manufacturing investments.Instea
167、d,there was a small decline in manufacturing projects from 1,769 projects in 2021 to 1,756 projects in 2022(down by 0.7%).Despite this slight fall,the number of manufacturing projects recorded was ahead of the annual average for the decade,at 1,565.Against the background of this marginally declining
168、 European position,the UK recorded an impressive increase in manufacturing projects from 145 in 2021 to 175 in 2022,a rise of 20.7%.This UK project count of manufacturing investments was the highest since 2017,when the UK recorded 216 manufacturing projects,and its fourth highest total in the past d
169、ecade.However,while the UK performed better in securing manufacturing projects in 2022 than in the previous year,its long-term share of manufacturing FDI across Europe remains its lowest of the main project activities.Over the past 10 years the UK has recorded an average of 10.3%of manufacturing pro
170、jects and in 2022 its share was similar,at 10%.So its important that the UK sustains the momentum from the increase in projects achieved in 2022.and manufacturing activity in the UK is geographically more balanced than other sectors,with recurring pockets of success Within the UK,the largest regiona
171、l recipient of manufacturing projects in 2022 was Scotland,and the number of projects was static at 35,remaining at the decade-high recorded in 2021.Scotland was also the leading UK recipient of manufacturing projects from a decade-long perspective a position it held in five of the past 10 years.The
172、 second largest regional recipient of UK manufacturing projects over the decade was the West Midlands with 214 projects recorded.In 2022,however,the region was ranked joint third despite increasing its project count by 26.7%.The second-placed region for manufacturing projects in 2022 was North East
173、England,as it was in 2021.The North East recorded 20 projects in 2022,an increase of 17.6%on the previous year.The modest rise in all projects across Europe in 2022 was not reflected in manufacturing investments.Figure 21:Manufacturing projects into UK regions and devolved administrations 2013-2022S
174、ource:EY European Investment Monitor(EIM),2013-22 Within the UK market,manufacturing has undoubtedly faced a challenging regulatory and political landscape in recent years with a high degree of uncertainty.Against this background,its interesting to observe which sectors have seen a decline or increa
175、se in manufacturing activity.Among the top sectors,a clear shift in manufacturing activity can be seen:previously dominant manufacturing activity in transportation(at 44 manufacturing projects in 2017)initially saw a decline followed by a steady recovery in the past three years.Meanwhile,manufacturi
176、ng projects in sectors such as pharmaceuticals,agri-food,and utility supply(including renewables)have seen large gains in the past three years.This evolution of manufacturing activity over time may be less of a two-dimensional impact of Brexit,and more of a reflection on sectors where especially hig
177、h levels of uncertainty have dissuaded companies from investing.Figure 22:Number of manufacturing activity projects by sector,2016-2022Source:EY European Investment Monitor(EIM),2016-22 2000022Scotland532173535North East England1991720North West
178、 England314181219Wales4510919West Midlands712111519South East England77516East Midlands8688Yorkshire and the Humber94111112Northern Ireland07South West England579921137696East of England4457977684Greater London45471213523Gr
179、and total42145175Utility supplyPharmaceuticalsChemicals&plastic2000 45 40 35 30 25 20 15 10 5 02022MetalsElectronics&ITOil&GasMedical devicesEY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June European Investment
180、 Monitor(EIM),2013-22 Figure 23:Manufacturing projects and UK market share 2013-2022 All EuropeUKUK shareProjects2000,5002,0001,5001,00050002022Percentage(%)20The UK also saw a jump in manufacturing activity this year The 20.7%.rise in UK manufacturing pro
181、jects in 2022 is clearly a positive development.And while the UKs 10%share of manufacturing projects in Europe may appear low,this is largely because manufacturing activity is highly diffused across European countries.In fact,only France and Turkey reporting higher shares of manufacturing activity t
182、han the UK,at 13%and 12%respectively.However,if the UK is to fully realise the opportunities that manufacturing creates and is to build the industrial capacity it needs to reach net zero its proportion of projects needs to be higher.Figure 24:Top five European countries with the most manufacturing p
183、rojects in 2022 Source:EY European Investment Monitor(EIM),2021-22#CountryNumber of projects in 2022Number of projects in 2021Change 2021/20221France54748213%2Turkey25723012%3UK17514521%4Germany1061060%5Poland81104-22%European total1,7561,769-1%Figure 25:Leading country destinations of manufacturing
184、 projects 2013-2022 Source:EY European Investment Monitor(EIM),2013-22 FranceUnited KingdomTurkeyGermanyProjects20000050040030020010002022EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June but the UK is performing well in
185、advanced manufacturing and mobility R&D Attracting investments in R&D activity is equally key.In this context,the UK,France and Germany together accounted for more than half(56%)of foreign investment in R&D centres in Europe in 2022.When this share is broken down further,we find it is significantly
186、higher for projects carried out by the industrial sector for example,70%for the advanced manufacturing and mobility(AMM)industrys R&D centres which tend to be more technology-intensive.The UK and France both performed well in 2022,with France leading AMM R&D activity with 37 projects and the UK seco
187、nd with 21.Meanwhile,Germany retained a similar level of projects to the previous year.Figure 26:Number of foreign investment projects in R&D centres within advanced manufacturing and mobility,2021-2022 Source:EY European Investment Monitor(EIM),2021-22 20212022The UK ranks highly for renewables and
188、 sustainability and is perceived as a leader in this area As we noted earlier,the UK secured 37 investment projects in the renewable energy sector in 2022,putting it joint second in Europe alongside Spain.While this is a real boost to the UKs green credentials,there are some more detailed figures fo
189、r policymakers to pick over.For instance,in 2022 the UK secured only four industrial projects in the automotive and aerospace sectors that were linked to low-carbon mobility(19%of the UKs total industrial projects).By comparison,Germany secured eight such projects(67%of its total industrial projects
190、)and Spain 12(also 67%of its total industrial projects).Figure 27:Number of foreign investment projects in the renewable energy sector in the top 10 FDI destinations in Europe in 2022 Source:EY European Investment Monitor(EIM),2022 and there are some notable competitive factors for UK policymakers t
191、o note,driven by external forces such as the US Inflation Reduction Act While the UK ranks relatively highly in fourth place in the race for semiconductor capability,the UKs share of European projects in this space is quite small,with its three projects recorded in 2022 accounting for just 10%of the
192、 European total of 29.By contrast,both Germany and France led the pack in 2022 with seven projects each.At the same time,theres a clear risk that foreign multinationals will not significantly increase their manufacturing footprint in Europe,with the appetite to establish production facilities in Eur
193、ope being limited by high costs,challenges with the energy mix,and the lure of the USs Inflation Reduction Act.Overall,Europes energy crisis triggered by the conflict in Ukraine has added to the financial pressures on investors.As a result,they may seek greater certainty from financial strength and
194、larger,more stable markets.The UK secured 37 investment projects in the renewable energy sector in 2022.FranceGermanyUnited Kingdom 1035Projects3020521271514FranceSpainGermanyPortugalTurkeyIrelandPolandUnited KingdomItalyBelgium1035Projects302057372797333EY Attractiveness Surve
195、y|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June US remains the UKs biggest investor,with India moving up to second place and strong project flows from other Commonwealth countries The top five countries investing in the UK in 2022 were the United States(with 222 projects),In
196、dia(82),Germany(58),France(43),and the Netherlands(39).This ranking continued the previous years trend of India unseating Germany as the UKs second biggest investor.Origins of investment into the UK:the US still leads,but India is rising Figure 28:UK project count over the past decade of the top fiv
197、e countries of origin into the UK in 2022 Source:EY European Investment Monitor(EIM),2013-22United StatesFranceGermanyIndiaChinaProjects20000035030025020022At a European level,60%of FDI projects in Europe originate from European-based companies,followed by
198、 investors from the US at 21%.The US remains the leading origin of projects both into the UK and into Europe as a whole a position it has held in in every year since the EIM data was first recorded.Figure 29:Top five leading countries of origin into Europe over the past decade time series analysis 2
199、013-2022 Source:EY European Investment Monitor(EIM),2013-22 United StatesGermanyUnited KingdomFranceChinaProjects1,6001,4001,2001,0008006004002000200002260%of FDI projects in Europe originate from European-based companies.EY Attractiveness Survey|UK and Scotland|June
200、 2023EY Attractiveness Survey|UK and Scotland|June keeping with previous years,the US is a larger proportionate investor into the UK than into Europe as a whole.The UK secured 23.9%of its investment projects from the US in 2022 the same proportion as in 2021.Across Europe,US projects accounted for 2
201、0.8%of investments,a slight increase from 19.9%in 2021.However,US investment into the UK(and by extension Europe)has been impacted in recent years by several geopolitical and geo-economic shifts in policy much of which we are seeing filter through in FDI activity and our investor survey.While there
202、is no doubt that the war in Ukraine is having a significant impact on US perceptions of investing in Europe,political uncertainty in the form of protests and strikes across European numerous countries could also be a factor.More broadly,US economic and trade policy may be seeing the impact of a push
203、 for more domestically fuelled industries and the high level of subsidies and incentives being put forward by the Inflation Reduction Act(IRA).Figure 30:Top five destinations for Indian investment by market share into Europe,2013-2022 BelgiumFranceGermanyNetherlandsUnited KingdomSource:EY European I
204、nvestment Monitor(EIM),2013-22 200000%90%80%70%60%50%40%30%20%10%0%2022Grand totalMeanwhile,the rise of Indian investment in the UK is a real success story,even relative to other European countries.In 2022,Indian-originated projects accounted for 8.8%of UK inbound pr
205、ojects,and the UK secured 58.2%of all Indian investment projects into Europe,up from 51.2%in 2021.This project contribution made India the UKs second biggest origin of projects after the US.By contrast,the second biggest origin of FDI projects across Europe was Germany,with 11.5%of the European tota
206、l.However,there are some lessons to be gleaned from the patterns of Indian investment into the UK,providing valuable insights into how it might be amplified further.For example,its clear that Indian investors strongly favour London as a location to invest,with 42 of their 82 projects in 2022 landing
207、 in the capital.Yet the same year saw significant gains in regions such as the West Midlands,where Indian projects jumped from four in 2021 to 10 in 2022.Figuring out what drives an increase of this scale will be of interest to many local authorities.An analysis of Indian FDI through a sectoral lens
208、 is equally informative.Digital investments in the UK by Indian companies have been on a linear upward trend for the past decade,accounting for 38 of the 82 Indian projects secured in 2022.If the pandemic years are excluded,sectors such as business services look to be positively trending in the righ
209、t direction.But understanding how traditional sectoral strengths for the UK such as finance can better attract Indian investment should also be a focus for policymakers.Source:EY European Investment Monitor(EIM),2021-22 Figure 31:Indian investment by UK region,22Greater LondonYorkshir
210、e and the HumberWest MidlandsEast of EnglandSouth West EnglandScotlandWalesSouth East EnglandEast MidlandsNorth West EnglandNorthern IrelandNorth East England10Projects3020405003474452231321EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June 32:
211、Indian investment in the UK by sector,2013-2022Source:EY European Investment Monitor(EIM),2013-22 As the UK seeks to broaden its trading ties with other major multilateral trading blocs post-Brexit witness the recent enactment of new trade deals with Australia and New Zealand,and the Comprehensive E
212、conomic Partnership Agreement signed with Japan in 2020 its noteworthy that the UKs leading ten sources of FDI projects in 2022 included five countries from outside Europe.This leading grouping includes Australia and Canada as well as India,and the Commonwealth continues to be an important source of
213、 UK projects.In 2022 the UK secured 50%of all Australian investment projects into Europe and 24.7%of all Canadian projects into Europe.An analysis of investment projects into the UK over the past 10 years shows that China is still ranked as a top five origin of over the whole period,despite not havi
214、ng been ranked in the top five origins for the last five years.This may be partially due to the pandemic and acute supply chain crisis.But the trend may be further complicated by geopolitical risks of decoupling,reshoring,and major market interventions such as the US Inflation Reduction Act.With the
215、 new trade agreements mentioned above already in place,a key question for the UK going forward is where else it can go for trade deals.Obvious candidates include regions such as the Middle East.As US and EU investment declines,its important for the UK to give more countries around the world a reason
216、 to choose the UK as an investment location.while rising UK outbound investment signals UK businesses investing significantly in Europe.The UK was the third largest source of investment projects into Europe in 2022,as the number of outbound projects from the UK rose to an all-time high.Outbound proj
217、ects from the UK jumped initially after the Brexit referendum,and have increased in each year since apart from the pandemic-affected year of 2020.In 2022,outbound projects from the UK increased by 15.4%from 447 projects recorded in 2021 to 516 in 2022.The number of outbound project investments from
218、the UK in 2022 was more than double that recorded 10 years ago(124.3%higher),when only 230 outbound projects were recorded.The rise in 2022 means UK-originated projects represented 8.7%of European projects during the year,up from 7.6%in 2021.Germany and France have been the leading destinations for
219、UK outbound investment in every year since 2017 with France recording more UK-originated projects than Germany in each of the past three years.Both France and Germany recorded more than twice as many projects from the UK as any other European country in 2022,and together they attracted 38.6%of all U
220、K outbound investment projects.Figure 33:Number of UK outbound projects 2013-2022 Source:EY European Investment Monitor(EIM),2013-22 2062000202026447949337544740353025200002120202022Digital technologyBusiness servicesTransp
221、ortation manufacturers&suppliersFinanceLeisures,culture&tourismAgri-foodPharmaceuticalsHealth&social workMachinery&equipmentConstructionProjectsEY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June 34:Destination of UK outbound investment 2017-2022 GermanyIt
222、alyNetherlandsSpainIrelandFranceSource:EY European Investment Monitor(EIM),2017-22 The figures for 2022 show that UK businesses undertook more investment projects in Germany(95 projects)than German companies undertook in the UK(61 projects).The imbalance was even more pronounced in France,where UK b
223、usinesses undertook 104 projects while French businesses invested in just 43 projects in the UK.This position represents a significant shift,as the graph below shows.From 2017 onwards,UK businesses have made more project investments in France and Germany than vice versa.Prior to 2017 this was not th
224、e case.While this shift is probably a consequence of the UK withdrawal from the European Union and an adjustment to new trading rules and regulations,there may be some upside for the balance of payments,which sees an increase in capital flows back to the UK where the UK has traditionally been a net
225、investor overseas.Figure 35:Net direction of German and French project investments into UK compared to the reverse direction 2013-2022(negative is net outbound)Source:EY European Investment Monitor(EIM),2013-22 6040200-20-40-60-80-200020265847-28-52-832-95-672022Summ
226、ary:the UK marketplace is pivoting towards strategic investment Our analysis indicates that the UK FDI market is undergoing several shifts in strategic investment.Although the UK has performed largely in line with expectations in its traditionally strong sectors such as digital,finance,and business
227、services,the data on the activities driving investment tells a different story.There is a move away from activity being dominated by sales&marketing and towards R&D,manufacturing,and logistics.The UKs strong R&D performance,alongside the rise in manufacturing projects,represents a trend that policym
228、akers will want to continue in tandem as capturing both will be at the heart of high-value project flows in a market experiencing significant disruption from major government subsidy policies in various parts of the world.While we need to be careful about drawing firm long-term conclusions as major
229、policy decisions continue to evolve both in Europe and UK,it does appear the market is changing.We will explore the direction of travel in more detail later in this report,drawing on our global survey of executives.2002020212022100Projects3002004000EY Attractiveness Survey|UK a
230、nd Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June records a drop in projects but it still leads the UK,with non-digital investments similar to the previous year In 2022 there were 299 projects recorded in Greater London,a decrease of 24.1%from 2021 when the UK capital secured 394 pr
231、ojects.An analysis of the destination of all UK projects confirms that London remains the pre-eminent location,a position it has held for the past decade and more.To put this in context,in 2022 Greater London secured more projects on its own than all but four European countries France,Germany,Spain,
232、and Turkey.However,the share of UK projects locating in London has been on a generally downward trend since 2019.The 32.2%share of UK projects that London UK regional performance:levelling-up in FDI gains momentumFigure 36:London projects and market share of all UK projects 2013-2022 Gtr LondonMarke
233、t shareSource:EY European Investment Monitor(EIM),2013-22 With projects in London slipping back,most other parts of the UK gained ground on it by increasing their project numbers.Seven of the eleven UK regions or countries outside London recorded increases in 2022.We take a closer look at the region
234、al findings later in this section.secured in 2022 was its lowest in the past decade and well below its average share of 40.9%during that period.The surprise drop in investment projects into London may have been a result of London being disproportionally hit by travel bans and a lingering COVID-19 ov
235、erhang particularly as many larger projects see a lag from initial investment to operational delivery.Its very plausible that we will see a recovery in investments into London in the coming years,particularly taking into account the sectoral concentration in tech projects in 2022.As noted elsewhere
236、in this report,London has maintained the same levels of job creation and capital expenditure,so a decline in volume may not necessarily mean a decline in investment value.Figure 37:Projects across all UK regions,22Source:EY European Investment Monitor(EIM),2021-22 Greater LondonEast o
237、f EnglandNorth West EnglandSouth East of EnglandSouth West of EnglandEast MidlandsYorkshire and the HumberWest MidlandsNorth East of EnglandScotlandNorthern IrelandWales100Projects3002004000299484440353788240394030421735Projects20000050040030020
238、00403020100Market share(%)3803858538383394299EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June terms of Londons sector performance,the number of digital technology projects secured in the capital plunged from 194 in 2021 to 107 in 2
239、022 a drop of 44.9%.However,despite the decline,total tech sector spend on investments in London was up by over 300m.2 While technology companies are facing many sector-specific issues globally,London remains dominant by market share both within the UK and as the leading European city for projects i
240、n this sector.Turning to FDI employment,projects locating in London in 2022 announced 9,489 jobs,a figure that was down by 40%on the previous year,but 52.7%higher than the second-placed region of the West Midlands.Its worth noting that London had a single large project in 2021 that created 4,000 job
241、s,skewing the comparison with 2022.Stripping out the effect of this project,the London digital Figure 38:Projects into London recorded by digital technology,business services and finance 2013-2022 Source:EY European Investment Monitor(EIM),2013-22 Business servicesDigital technologyFinanceShare of L
242、ondon projectsProjects20005030025020022Percentage share(%)9080706050403020100In the years ahead,it seems unlikely that there will be an immediate rebound in tech investment across Europe and in the UK to the levels observed in 2018 and 2019.As it stands,th
243、ose years represented the high point of tech investment in the past decade.Its possible that the rising mobility of workers could result in a one-off decline in the skilled labour force,and companies may be cautious about reinvesting quickly until economic risks dissipate.Additionally,it does not ap
244、pear that Greater London is losing digital technology projects to any competing destination in particular.Rather,it seems that 2022 was a year in which the sector decided that the larger and more dominant digital locations with the exception of Berlin were not necessarily the best choice of investme
245、nt destination.Portugal was a beneficiary of this trend,with Lisbon and Porto both increasing their digital project numbers.As a result,both cities were ranked in the top five in Europe for digital technology investment in 2022.As these shifts indicate,London remains the pre-eminent location of choi
246、ce for digital investment and others may more accurately be described as catching up.The question for policymakers with a focus on the capital now turns to how this digital crown can be retained and what policy levers can be pulled to maintain Londons competitive edge.Given the current economic clim
247、ate,the search for solutions may focus on policy areas that do not cost large amounts of money:namely,improving the competitiveness of the regulatory environment in a sector that consistently places a high importance on this issue in our investor survey.A regulatory environment that is assertively o
248、pen to innovation and allows technological innovation to flourish while providing the necessary capital and funding will be crucial to maintaining the capitals top spot in digital FDI.Source:EY European Investment Monitor(EIM),2021-22 20222021Figure 39:Average jobs announced per project in London di
249、gital sector(excl.major outliers)2 The associated capital investment is not always identifiable,so this report does not emphasise capital expenditure as one of the key metrics,but where a year-on-year decline is observed in projects or job announcements it is worth noting that capex is significantly
250、 higher,therefore a more complex investment picture may sit behind the projects.Figure 40:The 10 leading cities for digitaltechnology investment in 2022 and theiryear-on-year performance Source:EY European Investment Monitor(EIM),2021-22 Rank 2022City20212022%Change 1London195108-44.62Berlin3175141.
251、93Lisbon475619.14Paris4846-4.25Porto1029190.06Mnchen4228-33.37Dublin2826-7.1=8Madrid3620-44.4=8Milan2120-4.8=10Barcelona2118-14.3=10Edinburgh17185.9Digital technology projects secured in the capital plunged from 194 in 2021 to 107 in 2022.technology sector recorded 37 jobs per project in 2021 versus
252、 36 jobs per project in 2022,suggesting that the value gained from job creation by the sectors FDI is still sitting at about the same level.3637EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June but most UK regions have narrowed the gap on London,by achie
253、ving year-on-year increases in projects A common question is whether there is evidence of levelling up in terms of inward investment.To judge from the 2022 FDI figures for UKs regions and devolved administrations outside of London,the answer is that this is arguably the case.Seven of the 11 UK regio
254、ns outside of London saw their total FDI projects rise in 2022,with Wales(82%),North East England(33%),Yorkshire and the Humber(28%)East Midlands(23%),North West England(19%),East of England(10%),and Scotland(3%)all recording increases.This seems to indicate that despite a fall in projects for the U
255、K overall,the regions outside the capital have fared comparatively well.In common with recent years,Scotland has retained second place after London,and the third-placed destination after Scotland has changed.In 2022,North West England was placed third,a position that has previously been claimed by S
256、outh East England and the West Midlands in the past decade.Meanwhile,the 26 projects secured by Northern Ireland in 2022 was the lowest by any area of the UK and Northern Irelands lowest project total in the decade.In terms of the changes recorded in 2022 compared to 2021,the most rapid decline was
257、also recorded by Northern Ireland(a 25.7%reduction in projects),while the fastest increase was recorded by Wales.We delve into what is driving investment decision-making in the next section,where the survey results show that geographical imbalance is one of the biggest factors considered by executiv
258、es when it comes to investing in the UK.Figure 41:FDI projects into the UK outside London,22Source:EY European Investment Monitor(EIM),2021-22 Cities outside London:Manchester and Edinburgh continue to lead the way,recording their highest levels of investment since 2018 despite the UK
259、s overall decline After London,the most successful UK cities in securing FDI projects tend to change from year to year.Looking at total projects over the past five years,Manchester has been the leading city(outside London),and it was the outright leading city in 2022 for the first time since 2019.A
260、very successful year for Manchesters saw its projects rise from 31 in 2021 to 45 in 2022,an impressive rise of 45.2%.Edinburgh,which increased its project count by seven projects(or 22.6%)to 38,is the only other UK city to Source:EY European Investment Monitor(EIM),2021-22 Figure 42:20 largest UK ci
261、ty recipients of investment(excluding London)2018-2022 Rank200212022Grand total1Manchester37343431451812Edinburgh283Birmingham22302617281234Glasgow085Belfast20222524151066Leeds27Bristol98Aberdeen8Cambridge10Reading121468545
262、11Cardiff8105894012Newcastle63116113713Coventry8810643614Liverpool888373415Sheffield679473316Derby883473017Milton Keynes664953018Nottingham4610352819Warwick31212102820Oxford23412627have recorded more than 30 projects in each of the past three years.Strong growth was also recorded by Birmingham,which
263、 ranks third both for 2022 and for the past five years in total.The city increased its project count by 11(or 64.7%)in 2022,the year in which it hosted the Commonwealth Games.The success of most cities in the ranking seems to be driven either by an existing diverse sectoral base or a success in embr
264、acing digital investment.Manchester,Edinburgh,and Belfast are especially strong in securing digital projects,while Birmingham and Glasgow seem to attract investment interest from a broader spread of sectors.ScotlandSouth West of EnglandWest MidlandsYorkshire and the HumberNorthern IrelandEast of Eng
265、landEast MidlandsSouth East of EnglandNorth East of EnglandNorth West EnglandWales40Projects607530394042303517EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June Attractiveness Survey|UK and Scotland|June 2023EY
266、Attractiveness Survey|UK and Scotland|June the background of a 1.4%rise in projects across Europe and a 6.4%fall in projects into the UK as whole,Scotland recorded its fourth successive annual increase,with project numbers up by 3.3%.The 126 projects secured represented a record both in terms of the
267、 absolute total and Scotlands UK market share,which reached 13.6%.And while new projects into Scotland from first-time investors declined,even here Scotland managed to increase its UK market share of these projects,which tend to be higher-value and involve higher skills.A resilient performance in ch
268、allenging times All of this adds up to an impressively resilient FDI performance in times that are challenging both economically and geopolitically.One effect has been to further consolidate Scotlands already well-established position as the most attractive UK location for FDI outside London.Indeed,
269、Scotlands project count has now been second to London in nine of the past ten years.Viewpoint from EY ScotlandAlly Scott Managing Partner EY Scotland Ernst&Young LLP LinkedInWhats more,Londons lead narrowed significantly this year,as its projects declined by almost a quarter.And it was telling that
270、most other UK regions record an increase,suggesting that levelling up may increasingly be becoming a reality in FDI.with positive trends in terms of sectors,activities and cities A closer look at projects into Scotland provides further grounds for optimism.Digital tech and utilities(including renewa
271、bles)remain the biggest sectors driving Scottish FDI,and finance projects more than doubled in 2022.Manufacturing FDI is at its highest in a decade,and R&D projects at their second highest.And in terms of FDI cities in 2022,Edinburgh and Glasgow remain solidly in the UKs top four,with Aberdeen being
272、 in joint fifth,alongside Leeds and Belfast.On the origins of FDI into Scotland,2022 has reaffirmed once again the strength and importance of Scotlands mutually-beneficial FDI relationship with the United States,the source of almost a third of projects secured during the year.That said,the US was ju
273、st one of 29 different countries investing in Scotland in 2022.As this years UK Attractiveness Survey confirms,2022 saw Scotland put in another powerful performance in securing inward investment projects.but mixed news on jobsSuch figures underline the rich dynamism,diversity and balance of the Scot
274、tish economy and FDI sector,qualities that we at EY Scotland see every day.The only fly in the ointment for the 2022 FDI figures was the employment created by Scottish projects,which fell by 48.6%year-on-year from 2021.However,there are three points to make here.First,FDI employment numbers are noto
275、riously variable,and not all projects provide them.Second,2021 was an outlier year when FDI jobs in Scotland more than doubled and despite the subsequent correction,the 2022 jobs figure was still above 2020s.Third,lower job numbers often equate to higher-value projects,such as R&D,requiring smaller
276、numbers of higher-skilled people with the higher volumes of jobs coming later,as projects expand into activities like production.Investor perceptions remain very positive Reinforcing the positive signs in the 2022 FDI numbers,our 2023 investor perception survey suggests Scotlands offer to investors
277、is continuing to win hearts and minds worldwide with 11%rating it as the UKs most attractive FDI location,second only to London and ahead of all other regions.Other encouraging findings include the fact that 19.2%of the overseas companies planning to invest in the UK this year specify Scotland as th
278、e target destination;and that both Edinburgh and Glasgow are cited as the target location for 15%of planned investments in UK cities.Thats well ahead of all other UK cities,with third-placed Cardiff back on 8.5%.but competition is tightening However,the perception findings also indicate that competi
279、tion for FDI across the UK is tightening.While Scotlands 11%rating puts it solidly second behind London,that score is down from 15.8%in 2022,which was 6.5 percentage points ahead of the South of England in third place.This year the gap to the third-placed East of England is just two percentage point
280、s.Going forward:engage,plan,and play to our strengths The clear message is that while Scotland is making great strides in winning FDI and a building a great reputation as a place to invest,theres no room for complacency.To keep extending its status as the preferred region to invest outside London,Sc
281、otland must engage,plan,and play to its strengths.Engage with public and private sector bodies,skills agencies and more to create a vibrant ecosystem for growth.Plan how to sustain continued market-leading levels of attractiveness in the medium and long term.And play to its strengths by prioritising
282、 high-value,high-potential areas like digital tech,renewable energy and R&D.Scotlands strong FDI performance in 2022 has laid down an even stronger basis for future growth in project inflows.But resting on our laurels wont bring that about.In an increasingly competitive market for FDI,both globally
283、and within the UK,its time for all of us in Scotland to work even harder to get our message across.EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June forges ahead increasing its project numbers and UK market share In 2022,Scotland secured 126 projects com
284、pared to 122 the previous year a rise of 3.3%,in a year when total projects into the UK as a whole fell by 6.4%to their lowest level in eight years.This was the fourth consecutive annual increase in projects recorded by Scotland,and its 2022 total of 126 projects represented the largest number ever
285、recorded by the country.The combination of a fall in UK projects and an increase in Scottish projects not only meant that Scotland increased its market share of UK projects but also pushed its UK market share in 2022 to the highest level ever recorded,at 13.6%of UK projects(up from 12.3%in 2021).As
286、recently as 2018,Scotland secured just 8.9%of UK projects,and its share has been increasing ever since that point.In 2022,Scotland secured 126 projects compared to 122 the previous year.Figure 43:Scottish projects and market share of all UK projects 2013-2022 Source:EY European Investment Monitor(EI
287、M),2013-22 ScotlandPercent while further cementing its position as the UK FDI location of choice outside London With projects in London declining from 394 in 2021 to 299 in 2022,the rise in investments into Scotland during the year narrowed Londons lead in UK projects,and further cemented Scotlands
288、position as the most attractive location for FDI outside the UK capital.Whats more,Scotlands position as the UK region securing the second largest number of projects after London is a status it has held for every year of the past decade apart from 2014,when it ranked second.(See chart“Figure 37:Proj
289、ects across all UK regions,2021-2022”on page 43).Figure 44:Projects into UK regions,2013-2022Source:EY European Investment Monitor(EIM),2013-22 2000022Greater London3803858538383394299Scotland82796North West England54459890
290、88West Midlands47639293978364617874South East England579272729Yorks&Humber20508380824959554051East Midlands27293737434039383948East of England200544044North East England25244452483630323040South West England27283738533530324235Wales244241731Northern Ireland3639154219
291、3328333526Grand total7998871,0651,1381,2051,0541,9Also in common with previous years,after Scotland the third-placed region changed in 2022,with North West England taking that position.A further significant point is that while Scotland has exceeded 100 projects in seven of the past ten ye
292、ars,only one English region outside London has ever achieve the same the North West in 2017.ProjectsMarket share(%)200040020020202282796EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotl
293、and|June and reaffirming the attractiveness of Scotlands major cities Scotlands success in maintaining its long-standing position as the second-ranked region of the UK for FDI is largely built on the success achieved by its cities.Over the past five years the total number of projects recorded by Edi
294、nburgh and Glasgow has placed them among the UKs top five cities outside London,and Aberdeen is also placed within the top 10.Edinburgh ranked equal first with Manchester in 2021 and second in 2022,and ranks second in the UK over the past five years overall.In 2022 Edinburgh increased its project co
295、unt by seven projects(or 22.6%)to 38 and it sits with Manchester as the only two UK cities to attract more than 30 projects in each of the past three years.For Scotland to have three cities in the UKs top five for FDI in 2022 despite a small fall in projects in Glasgow and Aberdeen also in the top f
296、ive bears testament to Scotlands enduring attractiveness to inward investors.(See chart,“Figure 42:20 largest UK city recipients of investment(excluding London)2018-2022”on page 47.)A more nuanced picture on new projects and FDI jobs While Scotland clearly had another strong year in attracting FDI p
297、rojects in 2022,some of the data is more mixed.For example,while projects into Scotland rose overall,new projects from first-time investors(as opposed to expansions of existing investments)remained unchanged at 66,and below the decade high of 68 in 2016.However,the fact that new projects into the UK
298、 as a whole fell by 15.4%in 2022 means Scotlands share of new UK projects rose from to 10.2%from 8.6%in 2021.This is the highest level recorded to date,and compares with a share of just 5.9%of new UK projects as recently as 2019.The data on FDI jobs for 2022 also provides food for thought.These numb
299、ers need to be treated with caution,as not all projects disclose employment figures.But the fact remains that despite a rise in projects,the number of jobs created by FDI in Scotland in 2022 fell by 48.6%to 5,205.Last year we did see a few very large projects in respect of employment,which did impac
300、t the results.However,there may be a silver lining,in that while projects in sectors like digital tech or activities like R&D often create relatively fewer jobs,those jobs are frequently higher-value and more skilled.Often the higher-volume Figure 45:Leading five sectors for investment in Scotland 2
301、018-2022 by year Digital technologyUtility supplyBusiness servicesAgri-foodMachinery&equipmentSource:EY European Investment Monitor(EIM),2018-22 20920288Figure 46:A breakdown of Scottish FDI in 2022 by sector Source:EY European Investment Monito
302、r(EIM),2013-22 RankSectorNo.Projects1Digital technology292Utility supply223Business services154Agri-food115Finance86Pharmaceuticals67Machinery&equipment58Electronics&IT59Transportation manufacturers&suppliers510Electronics511Oil&Gas412Transportation&logistics413Construction314Medical Devices215Texti
303、le,clothing&leather116Chemicals,plastic&rubber1Grand total126employment impact will come later,with follow-on investments in subsequent years.Sectors for projects in Scotland:digital and utility supply take the lead In common with the UK Europe and as a whole,the largest single sector for projects r
304、ecorded in Scotland in 2022 was the digital tech industry.While this has been the case for the UK overall throughout the past ten years,for Scotland the position has been more fluid.Digital tech has been the leading sector for Scottish FDI in each of the past three years but in 2019 the sector contr
305、ibuting the largest number of projects in Scotland was machinery&equipment,and in 2018 it was business services.The number of digital tech projects recorded in Scotland in 2022 was 29,down by 12.1%from 33 in 2021.This meant digital tech accounted for 23%of Scotlands total projects for the year.The s
306、hare of digital tech projects at a UK level in 2022 was slightly higher,at 25.2%.Three of the five leading sectors for Scottish projects over the period 2018 to 2022 increased their project count in 2022.Business services increased from 14 projects in 2021 to 15 in 2022,up by 7.1%;utility supply pro
307、jects increased from 18 to 22,up by 22.2%;and agri-food projects increased from 8 projects to 11,up by 37.5%.While the finance sector is not among Scotlands five largest FDI sectors over the past five years,finance projects in Scotland leapt by 166.6%in 2022,rising to eight projects compared to just
308、 three in 2021.This was the strongest showing by the sector in Scotland since 2016,when Scotland secured nine finance projects.EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June generating investment in Scotland:sales and business services still tops the
309、ranking but a manufacturing renaissance is underway,along with a rise in R&D projects In terms of the activities that projects are undertaking,sales and the provision of business services were the most common activities for projects secured by Scotland in 2022.This was similar to the UK overall:for
310、the UK,sales and business service operations represented 42.9%of all projects,while their share in Scotland was 40.5%.However,with sales and business services activity declining slightly,a potentially more interesting development is the continuing strength of manufacturing projects.While manufacturi
311、ng was the second largest project activity in both Scotland and the UK as a whole,manufacturings share across the UK was 18.8%of all projects while in Scotland manufacturing accounted for 27.8%of projects.This continues the recent renaissance of manufacturing project investments in Scotland,with a d
312、ecade-high 35 projects in both 2021 and 2022.Equally encouraging is the rise in R&D project activity in 2022,with Scotland securing 27 projects its highest number of R&D investments since 2015,when it recorded 28.Origins of FDI into Scotland:the US remains the biggest investor followed by Germany an
313、d France In terms of origins,four countries account for more than 50%of Scotlands total investment projects the most prominent of which is the United States,which has been the leading origin of projects into Europe as whole,the UK and Scotland throughout the past decade.Scotland Figure 47:Activity o
314、f investment projects into Scotland 2013-2022Source:EY European Investment Monitor(EIM),2013-22 Figure 48:Time series data for largest origins of investment into Scotland,2013-2022 Source:EY European Investment Monitor(EIM),2013-22 United StatesFranceGermanyNorwayIrelandProjects100%90%80%70%60%50%40
315、%30%20%10%0%2000022secured 32%of its inbound projects from the US in 2022,while the US share of projects into the UK as a whole was significantly lower,at 23.9%.A breakdown of US investment shows a sectoral focus on digital&IT services(30%of projects),and activities
316、being led by R&D(33%)as well as business services(33%).Behind the US,second place among origins of Scottish projects in 2022 went to Germany,which was the source for 8%of Scottish projects.Third was Ireland,followed by Canada in fourth place.Historically,France has been the second-biggest origin of
317、Scottish projects over the past decade after the US.But in 2022 France contributed its smallest complement of projects in five years,and slipped to fifth.Interestingly,while India ranked second among the origins of projects in 2022 for the UK as a whole,Scotland received only two projects of Indian
318、origin during the year,putting India joint 13th.Sales&business servicesLogisticsResearch&developmentHeadquartersManufacturingProjects7060504030202002022EY Attractiveness Survey|UK and Scotland|June 2023EY Attractiveness Survey|UK and Scotland|June the lead
319、ing position of the US as the main source of Scottish investments,the origins of projects in Scotland remain widely distributed,which bodes well for the future.The 126 Scottish projects recorded in 2022 came from a total of 29 different countries of origin.The top five origins of investment in Scotl
320、and have varied substantially in the past five years,with the US consistently ranked first but no other country always placed in the top five.While Germany and France have each been in the top five in four of the past five years,other top-five origins have included Switzerland,Norway,Ireland,Japan,N
321、etherlands,Canada,Australia and Spain.Table 49:The top five origins of investment into Scotland,2018-2022 200212022#1United StatesUnited StatesUnited StatesUnited StatesUnited States#2GermanyFranceIrelandSpainGermany#3SwitzerlandGermanyNetherlandsGermanyIreland#4NorwayNorwayFranceCanadaCa
322、nada#5IrelandJapanAustraliaFranceFranceSource:EY European Investment Monitor(EIM),2018-22 In summary,Scotland has had another very good year from an investment perspective.Not only are Scottish projects up in terms of overall numbers and UK market share,but a closer look beneath the headline figures
323、 also reveals further positive trends worth calling out.For example,Scotlands UK share of new projects has risen to an all-time high;Scotland remains the destination of choice for investors outside of London;and Scottish cities consistently punch above their weight in the top bracket of UK cities fo
324、r attracting FDI.Whats more,Scotland has some distinctive strengths at the more granular level.It maintains a much higher share of investment manufacturing activity than the UK as a whole a competitive strength it should work to maintain and build upon.And digital and renewables investments are perf
325、orming strongly in Scotland with both likely to remain key focus sectors into the future.However,there are some risks to be aware of not least that the Scottish investor base is relatively highly concentrated around US and intra-European investment,while the wider UK has a more diverse base of inves
326、tors.Diversifying this investor base will be a key policy challenge for Scotland in the years ahead.The origins of projects in Scotland remain widely distributed,which bodes well for the future.Scotlands UK share of new projects has risen to an all-time high.EY Attractiveness Survey|UK and Scotland|
327、June 2023EY Attractiveness Survey|UK and Scotland|June perceptions of the UK:mixed mood music 2Executive perception of the UK is down on last year putting it in third place behind Germany and France As in previous years,our 2022 perception study of the UKs attractiveness to overseas investors enable
328、s us to develop a detailed view of the UKs future appeal as a destination for FDI.This year,the research has revealed differing fortunes across the three largest European economies.When we asked executives which was the most attractive location in Europe,our findings showed that the UK has fallen to
329、 third place,with just 32%putting it in their top three compared to 44%in 2022.While this decline probably reflects to an extent some of the political and economic headwinds the UK has faced in the past year,the survey also points to a number of areas that UK policymakers may wish to prioritise on t
330、he road ahead.Germany has a clear lead in terms of attractiveness,rising by 20 percentage points to 62%,while France is second on 49%,up by 2 percentage points from 2022.Even in a recession,Germany Europes largest economy appeals strongly to investors.Its high attractiveness is stressed especially s
331、trongly by industries such as pharmaceuticals(90%).France is also holding up well,registering a modest increase in its vote even at a time when overseas investors are questioning the governments ability to push through the reforms needed to boost its competitiveness.Meanwhile,the UK is being impacte
332、d by concerns about trade restrictions and labour shortages,which are(in part)caused by Brexit.However,the UK is successfully maintaining its attractiveness in key sectors like financial services(57%).It is worth noting here the extent to which the survey is informed by an immediate snapshot of sent
333、iment in this regard,meaning it can be sensitive to temporary social,economic and geopolitical events.Therefore,perceptions do not always translate directly to reality.It is likely that some of the impact of these temporary events and uncertainties can be mitigated in time with,for example,further regulatory stability and a resumption of political calm.That said,its still interesting to note that