Produced by law firms Wright, Johnston & Mackenzie (WJM) and Irwin Mitchell, the Investment Attractiveness Index has been compiled by a team of experts at the Centre for Economics and Business Research (Cebr), who have analysed the UK’s 50 largest cities according to eight indicators related to Growth Potential, Local Infrastructure, and Local Skills.

According to the report, Edinburgh has climbed two places to secure the sixth position. However, its overall attractiveness score is 5.7 points lower than the previous year. This decline aligns with the trend observed in most of the other 50 cities analysed. The reduction in the overall score is primarily attributed to a decrease in Growth Potential, driven by lower predicted GVA growth in 2024 compared to 2023.

Despite this, the report reveals Edinburgh performed impressively in the Local Skills pillar having the highest score out of all 50 locations for qualification levels.

Glasgow also performs well in the study. Although like Edinburgh its attractiveness score fell, it moved up the rankings into 11th place, rising by four places. Aberdeen is some distance behind in 39th place but has increased its relative position by three places boosted improvements in the Local Skills pillar, where it rose two places to now rank 12th.

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 (fintech), it’s no surprise to me that it has again become such an attractive proposition for investors.

“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.”

Bryan Bletso partner and Head of International at Irwin Mitchell, said: “The results in our report point to challenging conditions and mirror the sentiment amongst both businesses and overseas investors that we are speaking to.

“Edinburgh excels in the pillars of Local Skills and Local Infrastructure, ranking 5th in each. On an indicator level, the Scottish capital ties with Oxford for 1st place in the qualification levels indicator and boasts a large economically active population, ranking in the top 10.

“It has also seen significant improvement in online connectivity over the year, which, combined with high public transport usage, makes it an attractive investment destination based on the education levels of locals and the presence of reliable digital and physical infrastructure.”

FDI refers to investments made by foreign investors in a company located in a different country. It can take the form of greenfield investments or Mergers & Acquisitions. In 2021, the UK’s inward FDI position was £2,002 billion, slightly higher than the previous year’s £1,919 billion.

According to EY’s 2024 UK Attractiveness Survey, 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.

Three Scottish cities ranked in the UK’s top 10 urban locations for FDI outside of London, as Edinburgh is placed second with 32 projects, Glasgow fourth with 25 projects, and Aberdeen eighth with 13 projects.