A NEW report has said that Edinburgh has overtaken Greater Manchester as the most attractive location in the UK for foreign direct investment (FDI) outside London and the south east.
Produced by law firms Wright, Johnston & Mackenzie (WJM) and Irwin Mitchell, the Investment Attractiveness Index was compiled by a team of experts at the Centre for Economics and Business Research (CEBR).
The team analysed the UK’s 50 largest cities according to eight indicators related to growth potential, local infrastructure and local skills.
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This meant looking at the following:
- Growth potential – the number of new enterprises per 10,000 people
- Local skills – share of the population with a qualification at NVQ4 level or above, the number of economically active people in the city and the number of universities
- Local infrastructure – Online connectivity (fixed and mobile) and major road length (relative to the population)
The study found Edinburgh climbed two places to secure sixth position although its overall attractiveness score was rated as 38.6 – 5.7 points lower than the previous year.
The highest score was Inner London which was awarded a 72.
However, this decline aligns with the trend observed in most of the other 50 cities analysed while the Scottish capital also achieved the highest score out of all 50 locations for qualification levels.
The top 10 was listed as follows:
- Inner London – 72
- London – 68.5
- Outer London – 61.3
- Brighton – 41.9
- Oxford – 39.6
- City of Edinburgh – 38.6
- Birmingham – 37.8
- Greater Manchester – 36.4
- Manchester – 34.5
- Cambridge – 33.9
Glasgow also performed well in the study as it came in 11th place, although like Edinburgh its overall attractiveness score fell as it picked up an overall score of 29.2.
Aberdeen meanwhile came in 39th place but increased its position three places by improvements in the local skills category. It had an overall score of 15.4.
FDI refers to investments made by foreign investors in a company located in a different country.
According to an attractiveness survey by EY, the US has remained the single biggest originator of FDI projects, accounting for 27 projects or 19% of Scotland’s total during the year – the lowest proportion in the past decade.
Projects from Germany doubled to 20, a decade high, making it the second-biggest source of projects into Scotland, followed by France with 10.
Commenting on the findings, Fraser Gillies, managing partner at WJM, said: “We spelled out some concerns last year about investment levels in Scotland from overseas, so it is encouraging to see Edinburgh is back on the rise.
"From my perspective, I can only hope that other city hubs such as Glasgow and Aberdeen soon follow suit.
"Often working in the city, it is clear to see Edinburgh’s strength lies in its infrastructure, skilled workforce, and competitive marketplace across the financial services industry, with over 30,000 people working in the sector.
“With a sophisticated supply chain and a growing specialism in financial technology, it’s no surprise to me that it has again become such an attractive proposition for investors.
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“Edinburgh offers interested parties a strong regional presence and allows diversification north of the border, something we have been keen to press with our new partnership with Irwin Mitchell.
"Indeed, Scotland, overall, lies second only to London for the ninth consecutive year in terms of FDI projects
“This news, which shows a record number of 142 FDI projects in 2023, only emboldens the sector, and we would expect Edinburgh to grow in confidence and stature in the coming years and continue leading the way for the nation.”
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