Mark Hallan: Financial services key to Scotland’s inward investment ambitions
Mark Hallan, director of global investment at Scottish Enterprise, discusses why the financial services are key to attracting inward investment to Scotland.
Scotland is an extraordinary proposition for global companies to invest in.
Businesses are attracted to our shores for a range of factors, including our world-class workforce, integrated ecosystem between the public and private sector and our outward facing economy.
It’s no surprise therefore that for the past seven years, Scotland has been the most attractive destination for Foreign Direct Investment (FDI) in the UK outside of London. Growth of FDI in Scotland outpaced the UK as a whole and our share of UK inward investment also grew in 2019.
This inward investment has created thousands of high-skilled jobs while our communities have enjoyed significant ‘spillover’ benefits, such as supply chain opportunities, productivity improvements and increased investment in R&D activities.
But this is a tough market. Competition for attracting inward investment is fierce and uncertainty over the UK’s trading relationship with the EU, with the end of the transition period fast approaching, remains.
And that’s not to mention COVID-19.
We know that this global pandemic has significantly impacted inward investment levels across the world. Recent research published by UNCTAD revealed that global FDI flows fell 49% in the first half of 2020 compared to 2019.
That means we need to be forensic in our approach to attracting inward investment to Scotland and focus on sectors where we are a world leader.
Undoubtedly, one of those is our internationally renowned financial services sector.
Scotland’s financial services sector is rightly regarded as one of the leading finance centres in Europe. More than 2,000 financial service businesses currently operate in Scotland, with the sector generating approximately £13bn for the Scottish economy.
Our burgeoning fintech sector, built upon a collaboration between our robust financial services industry, vibrant tech sector and world-class universities, continues to shine. Despite these challenging times, global fintech companies are still locating in Scotland and we are incredibly excited about future growth.
As financial services companies review their global footprint in light of extraordinary changes in business delivery, and as talented employees re-evaluate work and home lives, Scotland is a location that offers a healthy environment, quick and easy access to the great outdoors, as well as cosmopolitan communities and diverse cultural attractions.
Scotland’s financial services sector, including inward investors, also makes a significant contribution to other areas where our country excels, such as the transition to a low carbon economy and our commitment to delivering fair and sustainable growth.
For example, Aviva recently launched one of the UK’s largest combined solar carports and energy storage facilities at its Perth office, while Barclays announced that Kilmarnock was its latest location for its Thriving Local Economies initiative, a project that identifies opportunities to boost local economies.
And industry research recently published by EY Scotland revealed that two-thirds of financial services companies surveyed were planning either to establish new operations or expand existing operations in Scotland. Access to a skilled workforce was also identified as key factor for firms choosing to locate or invest in Scotland.
These are just some reasons why digital financial services has been identified as one of nine key opportunity areas in Shaping Scotland’s Economy: Scotland’s Inward Investment Plan, the Scottish Government’s targeted new approach to attracting inward investment.
Launched by Trade, Investment and Innovation Minister Ivan McKee in late October, the strategy focuses on areas where there’s significant opportunity for Scotland to become an inward investment destination of choice, and to maximise the wider spillover benefits to our economy.
It’s estimated this refreshed plan has the potential to increase GDP by £4.2 billion and boost exports by £2.1bn over the next two decades. This updated approach also aims to deliver up to 100,000 high-quality jobs over the next decade.
Scottish Development International (SDI), the global trade & investment agency of Scottish Enterprise, was delighted to contribute to this plan and our team of trade experts across our 30+ offices across the world will further align their activities to reflect its aims.
SDI has assigned professionals for each of the nine opportunity areas and our specialists will spend at least 80 per cent of their efforts on proactive opportunities aligned to these opportunity areas, relentlessly promoting the very best Scotland has to offer.
Alongside this international activity will be our ongoing partnership work with the private sector here in Scotland. More than ever, all of us with a stake in our country’s economy working together will help to deliver the sustainable economic growth we all want to see.
This collaborative spirit was evident in the cross-sector response to COVID-19. Throughout the pandemic, we’ve been in regular discussions with key players in the private sector, including Scottish Financial Enterprise (SFE), to ensure critical intelligence from its membership was fed into Scotland’s multi-agency action plan.
These conversations are ongoing and there are many areas of shared interest between Scottish Enterprise and SFE as we look to support Scotland’s economic recovery, including skills development, digital innovation, promoting the industry and sustainability.
We place great value on these discussions with SFE members and would welcome the opportunity to chat about any of these topics and to explore joint promotional opportunities. Please do not hesitate to get in touch with my team or me - our (virtual) door is always open.
This blog was first featured on Scottish Financial Enterprise.