Inward investment in Scotland surges 51 per cent but spectre of ‘Brexit’ looms - EY

The global accountancy firm found a total of 119 FDI projects were secured in Scotland last year.

The tally represents an increase of 51 per cent from the previous year, and more than double the UK increase of 20 per cent, as Scotland surged past the South East to claim second place behind London in the UK regional league table for inward investment.

However, with 79 per cent of investors citing access to the European Single Market (ESM) as a key feature of the UK’s attractiveness, Ernst & Young indicated that recent high performance may be threatened by next month’s EU referendum.

When EY asked about how either a significant or substantial decline in the terms of access to the ESM would impact the UK’s attractiveness more than 50 per cent of investors in both cases said it would have a negative effect whereas only seven per cent viewed it positively.

Mark Harvey, EY senior partner, Scotland, said: “Unquestionably it’s possible the EU referendum is weighing on investors’ minds in terms of future projects.

“Our research has demonstrated that any deterioration in the terms in which UK businesses can access the European single market could be a concern for investors.”

Scotland’s impressive 2015 record of attracting inward investment was mirrored in terms of job creation with a 52 per cent rise in the number of jobs created by FDI.

A total of 5,385 jobs were secured in 2015, the second highest figure for the decade behind 2011 when 5,926 were recorded.

Mr Harvey said: “Scotland had a truly spectacular year for FDI in 2015, making some significant strides in key areas, resulting in a major step change in performance.

“Importantly, the majority of FDI projects for Scotland in 2015 were new rather than expansions.

“This ability to attract a higher proportion of new, first-time investors signals a positive future for Scotland.

“The challenge now is to not only maintain performance, but also take it to the next level and excel against the competition.

“Scotland must look to build on its success and deliver the improvements in skills and infrastructure investors require.”

The stand-out performance by sector came from software, which was responsible for the greatest number of FDI projects, representing a 170 per cent increase from the previous year.

This growth rate was only bettered by two sectors; business services had a six-fold increase to 12 while utility supply achieved 10 projects, which was five-fold increase.

In 2015, Edinburgh experienced almost a three-fold increase in the number of FDI projects (41) while Glasgow’s figure (22) more than doubled in comparison to 2014 and Aberdeen had nine, down from 12 the previous year.

Mr Harvey added: “Edinburgh and Glasgow have consistently been at the forefront of attracting inward investment to Scotland and have outdone themselves this time with a combined increase in projects of 40 in one year.

“Despite the volatile oil price, Aberdeen has weathered the storm in 2015, securing only three fewer FDI projects in 2015 than in 2014.

“While Scotland’s central belt has the greatest concentration of FDI projects, the steady and continual growth of the economy in the Highlands and Islands appears to be attracting more interest from overseas, with Caithness, Inverness and Dunoon all securing two projects each in 2015.”