英国外资吸引力调查-Navigating through

Navigatingthroughturbulence

EYUKAttractivenessSurvey

UKincludingScotlandspotlight

June2023

Contents

Foreword2

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2EYAttractivenessSurvey|UKandScotland|June2023

Executivesummary

4

1

TheUK’sFDIperformancein2022:fromvolumetovalue

10

2

InvestorperceptionsoftheUK:

mixedmoodmusic

60

3

Lookingahead:FDIopportunitiesandpolicydirectionfortheUK

68

EYAttractivenessSurvey|UKandScotland|June20231

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EYAttractivenessSurvey|UKandScotland|June2023

2

3

EYAttractivenessSurvey|UKandScotland|June2023

Foreword

EY’s2023UK

Attractiveness

Survey

HywelBall

EYUKChairand

UK&IManagingPartner

Ernst&YoungLLP

L

inkedIn

PeterArnold

EYUKChiefEconomist

Ernst&YoungLLP

L

inkedIn

WearedelightedtointroduceEY’s2023UKAttractiveness

Survey,ourlatestannualresearchreportexaminingthe

performanceandperceptionsoftheUKasadestination

forforeigndirectinvestment(FDI).

Anindispensablereferencepoint

EYhasnowbeenpublishingthisstudyforovertwodecades.Duringthattime,ithasbecomeanindispensablereferencepointforbusinessleaders,investors,andpolicymakersseekingtounderstandthedriversofinwardinvestmentandtheUK’srelativeperformanceinanever-changinglandscape.Ifanything,theimportanceofthisreporthasincreasedevenfurtheramidtheunexpectedandoftendramaticeventsofrecentyears,fromthepandemictothewarinUkraineandmore.Whilethesedisruptionshavepromptedoverseasinvestorstoadapttheirstrategiesandpriorities,ourresearchconfirmsthatthekeystoattractingFDIremainthesame:skills,infrastructure,incentives,andsupport.

Inpreviousyearswehavepublishedtwoseparatereports—onelookingatprojectflowsandperceptionsfortheUKoverall,andonefocusedspecificallyonScotland.Forthefirsttimethisyear,we’vecombinedthefindingsintoasinglereport,enablingustoprovideamoreconsistentandintegratedviewacrosstheUK.You’llfindanoverviewofScotland’sFDIperformancefromAllyScott,ManagingPartnerofEYinScotland,onpage50.Thereportalsocontainscall-outsectionsontheScottishresultsandtheirimplications.

Achallengingyearon

projectnumbers…

First,theheadlinefindings.TotalFDIprojectsintotheUKfellby6.4%in2022to929,puttingitsecondbehindFrance,whichattracted1,259projects.WithtotalEuropeanprojectsedgingupby1.4%,theUK’smarketshareinEuropealsodeclined.Meanwhile,our2023investorsurveyshowstheUKslippingtothirdplaceinEuropeforperceivedattractivenessbehindGermanyandFrance.

…inavolatileenvironment…

TheUK’sperformanceshouldbeseeninthecontextofthedifficulteconomicandpoliticalheadwindsitfaced—thewarinUkraineanditscorrespondingimpactonenergypricesescalatedinflationarypressuresandledtoageneraleconomicslowdownacrosstheglobeandparticularlyinEurope.TheUKalsofaceditsownpoliticalchallengesduring2022,andthere’snoquestionthatBrexithasreducedtheUK’srelativeattractivenessforsomeinvestors.

…butgroundsforoptimismwhenitcomestovalueofinvestment…

However,acloserlookrevealsamorepositivepicture.WhiletheUK’sprojectcountwasdownin2022,itperformedbetteronvaluethanitscompetitorscompingfirstintermsofannounced

jobsreflectingashiftinpolicyfocusbytheGovernmentandotherinvestmentagenciestowardsattractinghigher-valueprojectsratherthanfocusingonvolume.Andinourinvestorsurvey,longer-termperceptionsoftheUK’sattractivenesshaveheldfirm—withanunprecedented65%saythey’replanningonmakinganinvestmentintheUKin2023—thehighestproportiononrecord.

…andmanyareasofstrengthshiningthrough

Addedtothis,manymajorpointsofstrengthfortheUKshinethroughintheprojectstatisticsonsectorsandactivities,withtheUKretainingnumberonespotfordigitaltechandfinancialservicesinvestment,andalsoperformingwellinlifesciences.Fromafunctionalperspectivetheshifttovalueisevident—theUKcontinuingtoleadinattractingHQs,andincreasingthenumberofR&Dandmanufacturinginvestments.

Fromaregionalperspective—whiletherewasadeclineinthenumberofprojectsintoLondon,theregionalperformancewasbetter,withvolumesholdingfirmorincreasing,suggestingthatlevellingupinFDIisbecomingmoreofareality.

BuildingontheUK’s

provenassets…

PerceptionsoftheUKremainhighonfundamentalssuchasitsqualityoflifeandlegalsystem,bolsteringitsattractivenessasaheadquarterslocation.Itremainsalargeandvibrantconsumermarket.Andithasacknowledgedsectorstrengthsinareaslikedigital,lifesciencesand

financialservices,plushugepotentialinrenewablesduetoitsgeographicaladvantagesandstatedpolicygoals.

Theseattributes—togetherwiththeopennessofitseconomy,globalhistoricallinksandthepivotto‘GlobalBritain’—helptoexplainwhytheUKcontinuestoattractamoreglobalcastofinvestorsthanmostotherFDIdestinations.

…mustbethegoalforpolicy,byprioritisingstabilityandcertainty

Despitecontinuingstrongperformance,theUKstillhasworktodooninternationalperceptions,addressingsomeofthefalloutfromrecentpoliticalandeconomicturmoil,whileBrexitcontinuestopresenthurdlestocertaintypesofinvestment,especiallythoserelyingonaccesstotheEuropeanSingleMarket.Thesubsidy-heavyUSInflationReductionAct(IRA)andEurope’sresponsesuggeststhatcompetitionforFDIwillintensifyandwiththeUKGovernmentlackingresourcestomatchtheincentivesbeingofferedelsewhere,attractinggreenprojectsmaybecomeharder.

Sowhatdoesthisallmeanforpolicy?

Thereisacleardemandfromthebusinesscommunityforstabilityandcertaintybothinthemacro-environmentandafocusoneconomicgrowth.Economicstabilityandgrowthdeliverbothbusinessandconsumerconfidence,whichinturnattractsinvestment.TheUKhasmadeprogressinthisregardinrecentmonths—withrecenteconomicforecastssuggestingtheUKwillavoidarecessionin2023—

butconcernsremainaroundunderlyingproductivityandgrowthratessoplentymoretodo.

Theneedforstabilityandcertaintyalsoextendintootherareasofpublicpolicy—forexample,theimportanceoftacklinginfrastructureandhousingpinchpointsthrougheasingandacceleratingplanningdecisions.WhileafocusontheskillsandlabourchallengestheUKfaces—withaworkforcestillsmallerthanpre-COVID-19—shouldremainapoliticalpriority.

Throughasectorlens—aprioritymustbeaneffectiveresponsetotheUSandEuropeaninitiativesingreentechnology.TheUKmayneedtoconsideramoreactiveapproachtoindustrialpolicy,throughprioritisingsupporttoareaswheretheUKhasunderlyinggeographicorsectorialadvantages.

Alsokeyiscreatingregulationthat’sbusiness-friendlyaswellaseffective,buildingontraditionalUKstrengths,suchasitsmarketopenness.Digitaltechnologyremainsanareaofopportunityinthisregard,unlikeotherareasregulatoryreformcanberelativelylowcost,andtheupsidescouldbesignificant.

Towardscalmerwaters

ThisreportcoversaperiodwhentheUKhasbeennavigatingthroughsignificantturbulence.Indoing

so,it’ssucceededinmaintainingasteadiercourseintermsofFDIandattractivenessthanmanymighthaveexpected.Now’sthetimetofocusontheopportunity—andheadforhopefullycalmerwatersahead.

929

UK

832

Germany

39,104Spain

38,102

France

newjobsintheUKin2022

Executive

summary

4EYAttractivenessSurvey|UKandScotland|June2023

Francecontinuestoleadthewayin

EuropeanFDI…

Followinga5.4%increaseinthenumberofForeignDirect

Investment(FDI)projectsinEuropein2021,totalEuropean

FDIprojectsedgeupin2022byafurther1.4%,from5,877

to5,962.Despitetheincrease,Europeanprojectsrecorded

in2022werestill7%lowerthanthepre-pandemicfigure

in2019,reflectingeconomicandinflationaryheadwinds.

FrancewasEurope’sbiggestrecipientofprojectsforthe

fourthsuccessiveyear,withitsprojectsrisingby3%to

1,259,aheadoftheUKon929andGermanywith832.

1,259

France

FDIjobs

…asUKprojectnumbersslipback…

AgainstthebackgroundofariseinEuropeanFDIprojects,

theUKsawitsprojectcountdeclinein2022by6.4%to

929,thelowestforeightyears.Asaresult,theUK’sshare

ofallEuropeanprojectsfellfrom16.9%in2021to15.6%

in2022,thelowestlevelinthepastdecade.Thedecline

inUKprojectslikelyreflectedthepoliticalinstabilityand

uncertaintyexperiencedin2022,plusatrendtowardsnet

outboundprojectflowssinceBrexit.

…withUKtechprojectsdownsharply

TheUK’soveralldeclineinprojectsin2022waslargely

duetoa32%fallindigitaltechnologyprojects,withthose

recordedintoLondondownevenmoresharply.However,the

UKstillleadsEuropeinthetechsectorFDIwith234projects

andamarketshareof19.8%.And,morepositively,UK

projectsinthefinance,utilitiesandpharmaceuticalssectors

allrosein2022—reflectingtheUK’ssectorialstrengths.

ButtheUKhasperformedwellonproject

valueandjobs…

However,projectnumbersonlytellpartofthestory—theeconomicvalueofaprojectismoredrivenbythescaleofthecapitalinvestedandtheextentandnatureofemploymentgenerated.ThishasledtoapolicyshiftbyUKnationalandregionalgovernmentagenciesinrecentyears,withafocusonsecuringgreatervaluefromFDIratherthanchasingthelargestvolumeofprojects.Thisvaluecanbedifficulttomeasure,asnotallprojectsannouncethescaleofcapitalinvested,norjobcreationnumbers.However,the2022statisticsprovideevidencethatthisstrategyispayingoff,withtheUKdoingbetteronvaluewithinEurope—securingthehighestFDIjobstotalinEurope,at46,779,aheadofsecond-placedSpainwith39,104andFranceon38,102.

46,779

UK

FDIjobs

…leadsEuropeinsecuring‘new’projects…

AswellasleadingonFDIjobsin2022,theUKalsosecuredEurope’shighestnumberof‘new’investmentsbyfirst-timeinvestors,reflectingunderlyingdynamismintheeconomy.TheUKattractedatotalof646newprojects—afallof15.4%from2021,butstillaheadofsecond-placedGermany.NewprojectsintoEuropeoveralldeclinedby8.5%duringtheyear,meaningtheUK’sshareofnewprojectsdidslipfrom20.3%in2021to18.7%in2022,althoughthisproportionisbroadlyinlinewithitsdecade-longaverageshare.

646

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…andcontinuestoperformwellinR&DFDI

AfurtherkeyareawheretheUKputinastrongshowingin2022wasinattractingresearch&development(R&D)projects—againreflectingakeyareaofpolicyfocusfromtheUKgovernment.UKprojectsrelatingtoR&Droseto127from111in2021,anincreaseof14%.Thisrisenarrowedthegaponfirst-placedFrance,whoseR&Dprojectsin2022wereupby8%at144.Atasectorlevel,theUKattracted28investmentsinR&Dcentreslinkedtopharmaceuticalsandmedicaldevicesprojects,thehighestinEurope.R&Dinvestmentstraditionallygeneratehighlyskilledemployment,plusscopeforcommercialisinganyIPdeveloped—hencethefocusbypolicymakers.

Sectors:digitaltechremainstopintheUK,despiteadecline…

IntermsofsectorsgeneratingFDIprojectsintheUK,digitaltechremainedinfirstplacein2022,despitea32%dropto234projectsfrom345in2021.Insecondplacewasthefinancesector,upby21%to76projects,closelyfollowedbybusinessservices,downby26%to70projects.Thesesectors’leadingpositionsreflecttheUK’sheavilyservices-orientatedeconomyandtraditionalstrengthinfinancialservices.AtaEuropeanlevel,thetopthreesectorsin2022weresoftware&ITservices;businessservices;andtransportationmanufacturers&suppliers.

TheUKputin

astrongshowing

inattracting

(R&D)projects.

EYAttractivenessSurvey|UKandScotland|June20235

In2022,theUKwon29.2%ofEuropeanheadquartersinvestments

299

2022

projects

…whiletheUKremainsstronginpharmaceuticalsandmedicaldevicesFDI…

AparticularlyencouragingdevelopmentfortheUKin2022wasitscontinuingstrongshowinginpharmaceuticalsandmedicaldevices.WhileUKpharmaceuticalprojectsroseonlymodestlyin2022,upby10%to44,andmedicaldevicesprojectsactuallydeclinedby27%to22,theUKcontinuestoperformwellinEuropeanhealthsectorFDI,rankingtopinpharmaceuticalprojects(19%Europeanmarketshare)andsecondinmedicaldevices(18%marketshare).TheUK’sstrengthinlifesciencescametotheforeduringtheCOVID-19pandemic,whentheUKledthewayontreatments,sequencing,andvaccinedevelopment.Inthecontextofanageingpopulation,acontinuingfocusonattractingFDIintolifescienceswillbeimportant.

UKpharmaceutical

projectsroseonly

modestlyin2022,

upby10%

…andrenewablesprojectsoffer

majoropportunities

Regardinginvestmentslinkedtorenewableenergy,theUK’sjointsecondrankingwithSpainon37projectsunderlinesthecountry’sexistinggreencredentialsanditsaspirationsfordeploymentofgreentechnology,particularforlow-carbonenergyandrenewables.Thatsaid,theUKsecuredonlyfourprojectsintheautomotiveandaerospacesectorslinkedtolow-carbonmobility,comparedtoGermany’seightandSpain’s12.AclearfocusonareasofUKcomparativeadvantageingreenandcleantechwillbeimportant,astheUKseekstocompetewithdevelopmentsliketheUSInflationReductionAct,andtheEU’sownresponsetothispolicy

—bothofwhichpresentriskstotheUK’sabilitytoattractgreenFDI.

6EYAttractivenessSurvey|UKandScotland|June2023

Activities:businessservicesstillleads,

butthere’sashiftfromsellingtocreating…

ThemostcommonactivityforUKFDIin2022remained

businessservices,althoughprojectsinthiscategory

declinedby30%.Manufacturingprojectsrankedsecond,

havingrisenby17%.IntermsofEuropeanmarketshare,

theUKgenerallysecuresitshighestproportionofprojects

inheadquartersprojects—andthatwasagainthecase

in2022,withtheUKwinning29.2%ofEuropean

headquartersinvestments.

29.2%

…asmanufacturingandindustrialactivity

showawelcomeincrease…

Alongsidethe17%riseinmanufacturingFDIin2022,theUK

alsorecordedahealthyincreaseinwiderindustrialprojects,

up21%to175.Thisrisewaslargelyduetoanincreasein

manufacturingactivitywithintheagri-food(up9projects

on2021),utilitysupply(up7on2021),andpharmaceutical

sectors(up8on2021).TheriseinUKmanufacturingprojects

tooktheUK’sEuropeanmarketshareupto10%,closeto

itsten-yearaverageof10.3%.Othernoteworthychanges

includedrisesinR&D(+13%)andlogistics(+34%)projects,

andadeclineinsales&marketinginvestments(-63%).

+17%

Manufacturing

projectsin2022

+21%

Industrial

projectsin2022

+34%

Logistics

projectsin2022

…indicatingapivottowardsstrategicinvestment—andopeningupopportunitiesforthefuture

Together,therecurringevidenceofhigherjobcreationintheUK,aswellasthetrendingofactivitytowardsheadquarterslocation,manufacturing,R&Dandlogisticswhilemovingawayfromlessembeddedsalesandmarketingactivity,indicateapivottowardsstrategicinvestment:akeypolicygoalwillbecapitalisingonstrongR&Dinvestmentmadenowthroughlargerindustrialprojectsdownstream.TherearestrategicadvantagesinbeingabletodobothR&Dandmanufacturing,andtypicallyfinancialconsiderationsdrivemanufacturingtolower-costcountriesinthelong-run.Mitigatingthisriskthroughpolicywillbeanimportantchallengetoaddress.

OriginsofinvestmentintotheUK:theUSstillleads—butIndiaisontherise…

TheUnitedStatesremainedtheUK’sbiggestinvestorin2022,contributing222projectsaccountingfor23.9%ofallUKinvestments,including32%ofallprojectsinScotland.It’sworthnoting,however,thattheUSmarketshareofinvestmentintotheUKhasbeendecliningsince2019,ayearthatwitnessedthezenithofUSinvestmentintotheUKforthepastdecade.OvertakingGermanyinsecondplaceforprojectsintotheUKwasIndia,with8.8%.TheUKremainsacleardestinationofchoiceforIndianinvestorsintoEurope,securing58.2%ofIndianprojectsinEuropein2022,upfrom51.2%in2021.Meanwhile,UKoutboundprojectsjumpedaftertheBrexitreferendum,andhavecontinuedtoincreaseeachyearapartfromthepandemic-affectedyearof2020.

TheUnited

Statesremained

theUK’sbiggest

investorin2022.

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...astheUKlooksgloballyforFDI

ShiftsinFDIoriginsarereflectingtheUK’sdrivetobroadentradingtieswithmajormultilateraltradingblocsbeyondEurope.OftheUK’snineleadingsourcesofFDIin2022,fivewereoutsideEurope,includingAustraliaandCanadaaswellasIndia.TheUK,incontrasttosomeofitsEuropeanneighbourshashistoricallybenefitedfromamorediversebaseofinvestment—andbasedonthecurrentdirectionoftravelthistrendlookssettocontinue.Bycontrast,ofEurope’snineleadingoriginsin2022,sevenwerewithinEurope(includingtheUK,inthirdplace).

LondonslipsbackbutremainstheleadingUKFDIdestination…

LookingacrosstheUK’sdevolvedadministrationsandregions,GreaterLondonhashistoricallybeentheleadingdestinationforFDIprojects,securing40.9%ofallUKprojectsoverthepastdecade.Whileitremainsthenumber-onelocationforinwardinvestors,Londonprojectsfellby24.1%to299in2022from394in2021.Asaresult,London’sshareofUKprojectsfelltoadecade-low32.2%.Themaindriverofthedeclinewasadropof44.9%inLondon’sdigitaltechnologyprojects,from194in2021to107in2022.

394

2021

LondonFDI

…asmostotherUKregionsnarrowthegap…

WithprojectsinLondonslippingback,mostotherpartsoftheUKgainedgroundonitbyincreasingtheirprojectnumbers,providingevidenceof‘levellingup’intermsofFDI.SevenoftheelevenregionsoutsideLondonrecordedincreasesin2022,withonlytheSouthEastofEngland,WestMidlands,SouthWestandNorthernIrelandregisteringdeclines.ThoserecordingincreaseswereWales(82%),theNorthEast(33%),YorkshireandtheHumber(28%),theEastMidlands(23%),theNorthWest(19%),theEastofEngland(10%),andScotland(3%).

EYAttractivenessSurvey|UKandScotland|June20237

InManchester,projectsroseby45.2%to45

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ScotlandwastheUKlocationsecuringthesecondhighestnumberofprojectsin2022.

…whileScotlandretainssecondplace…

ScotlandwastheUKlocationsecuringthesecondhighestnumberofprojectsin2022,apositionithasalsoheldinnineofthepasttenyears.Scotlandrecorded126projectsin2022comparedto122in2021,ariseof3.3%—thefourthsuccessiveannualincrease,andScotland’slargestevertotal.MajordriversofScottishFDIprojectsincludeddigitaltechnologyandutilityprojects,includingrenewables.Scotland’sshareofallUKprojectscontinuedtorise,reaching13.6%in2022from10%in2019and12.3%in2021.

…andManchesterandEdinburghretaintheirleadamongUKcitiesoutsideLondon

AfterLondon,theUK’smostsuccessfulFDIcitiesin2022wereManchester,whoseprojectsroseby45.2%to45,andEdinburgh,upby22.6%to38.Bothtotalswerethesecities’highestsince2018.Stronggrowthwasalsorecordedbythird-placedBirmingham,whichincreaseditsprojectcountby64.7%to28,whileGlasgowremainedfourthdespiteasmallfallinprojects,aheadofBelfastinfifth,alsodown.Manchester,Edinburgh,andBelfastareespeciallystronginsecuringdigitalprojects,whileBirminghamandGlasgowappeartoattractinvestmentinterestfromabroaderspreadofsectors.

45.2%

Investorperceptions:whileshort-termmeasures

oftheUK’sattractivenesshasslipped…

Whenweaskedrespondentstoourglobalinvestorsurvey

whichthreeEuropeancountriestheybelievewillbethemost

attractiveforforeigninvestmentin2023,theUKwascited

byjust32%comparedto44%in2022.Thistookitfrom

secondtothirdplace,withthefallprobablyreflectingthe

politicaluncertaintytheUKexperiencedin2022,withthree

differentprimeministersandfourchancellorsinthespace

of12months.Germany,despitefacingitsowneconomic

headwindsfromhigherenergyprices,unexpectedlyleaptby

20percentagepointsto62%,leapfroggingFranceon49%to

takefirstplace.

…investors’intentiontoinvestintheUK

hasneverbeenstronger

Morepositively,andincontrasttothedownturninshort-

termsentiment,animpressive65%ofinvestorssurveyed

wereplanningonmakinganinvestmentintheUKin2023—

thehighestleveleverrecordedinthisresearch.Meanwhile,

expectationsoftheUK’sattractivenessoverthenext

threeyearshaveremainedlargelyunchanged,with48.6%

believingtheUK’sattractivenesswillincreasecompared

to49.4%in2022.Whererespondentsforeseeadeclinein

attractiveness,themainreasonsareanincreasedregulatory

burden(55.6%),highercosts(54.2%),andareducedmarket

size(38.9%).

65%

ofinvestorssurveyedwere

planningonmakingan

investmentintheUKin2023

TheUKisstillfavouredonseveralkey

investmentcriteria…

TheUKremainsfavouredbyinvestorsonimportantcriteria

includingthesizeofitsdomesticmarket,thequalityof

education,andthequalityoflife,diversity,cultureand

language.Theseattributesaretraditionalstrengthsofthe

UKrelativetocompetingdestinationsandarequalities

thatpolicywillneedtosafeguardwhileseekingtoattract

investment.TheUKisratedrelativelylessattractiveon

factorssuchascorporatetaxationandtheavailabilityand

costofrealestate,againcontinuingexistingtrends.

…andlevellingupandsustainabilityare

oninvestors’agenda…

Askedwhatpolicyactionwouldmostimprovefutureattractiveness,thegeographicrebalancingoftheUKeconomyrankedfirst,citedby30%comparedto20%lastyear,correlatingwiththeriseinprojectsinmostareasoftheUKoutsideLondon.And81.2%believetheUKrankshighlyinofferingtherightenvironmenttoachieveESGgoals—afindingthatunderlinestheopportunitiesinrenewablesandcleantech,andwhichreflectstheUK’sstrongshowinginrenewableenergyprojectsin2022,jointsecondinEuropewithSpain.

…withinvestorsinchemicals,pharmaceuticalsandfinance—andR&D—particularlypositive…

IntentiontoinvestintheUKisespeciallystronginthechemicalsandpharmaceuticalssector,where84.6%ofinvestorsareplanningtoundertakeaUKprojectinthenextyear,anintentionalsovoicedbythevastmajorityoffinancialinvestors(82.5%).Also,mostinvestorsinUKR&DprojectsarelookingtoincreasetheirfootprintintheUK,with53.8%sayingthisistheirexpectation,risingto70%ofR&Dinvestorsintheindustrialssector.Again,thisappearstoreflecttheeffectsofthepolicypivottowardsvalueovervolume.

…andfinance,services,andtechexpectedtodrivetheUK’sfuturegrowth

AskedwhichbusinesssectorswillbemostimportantindrivingtheUK’sgrowthinthecomingyears,35.5%ofexecutivesrankfinancialserviceseitherfirstorsecondasaUKgrowthdriver,narrowlyaheadofsoftware&ITserviceson34.9%.ThesefindingsaremirroredbytheUK’scontinuingsubstantialshareofEuropeanprojectsinbothofthesesectors—runningat26%offinanceprojectsand19.8%inofdigitalprojectsin2022.Also,theproportionofUKinvestorsplanningtochangetheirsupplychainmodelhasdroppedfrom39%in2022tojust18.8%thisyear,asthepressuresfromthepandemicease.Amongthosecompanieslookingtochangetheirsupplychains,thebiggestsinglereasonistoimprovesustainability(42.9%),closelyfollowedbydigitalisation(41.6%)andenhancingcosteffectiveness(40.3%).

Regionalperceptions:Londonstillleads,

followedbyScotland…

LondonremainsthemostattractiveregionoftheUKinwhichtoestablishoperations,citedby41%ofrespondents(upfrom27%lastyear),withScotlandinsecondplaceon11%(downfrom15.8%),andtheEastofEnglandthirdon9%(upfrom5.2%).Significantgainsinperceived

attractivenesshavealsobeenmadebyWales(upby1.1percentagepointsto8.3%infourthplace)andNorthernIreland(upby2.1percentagepointsto3.9%).

…andthefactorsinfluencingregional

FDIchoicesareshifting,withgrantsand

incentivesnowtop

ThefactorsinfluencingdecisionstoinvestinregionsoutsideLondonarechanging,withaccesstograntsandincentivesnowleadingtheway,citedby22.5%ofinvestors—afindingthatsendsaclearsignaltopolicymakersat

bothanationalandregionallevel.Insecondplaceistheavailabilityofbusinesspartnersandsuppliersat18.1%,andtheavailabilityandskillsofthelocalworkforceisjointthirdon17.4%(downfrom27%lastyear),levelwiththestrengthofbusinessnetworkslocally.Notab