英国外资吸引力调查

Navigating

throughturbulenceEY

UKAttractiveness

SurveyUK

including

Scotland

spotlightJune

2023/ukasForeword2Executive

summary41The

UK’s

FDI

performance

in

2022:from

volume

to

value1023Investor

perceptions

of

the

UK:mixed

mood

music6068Looking

ahead:

FDI

opportunitiesand

policy

direction

for

the

UK2EY

AttractivenessSurvey|UKandScotland|June2023EY

AttractivenessSurvey|UKandScotland|June20231/ukasForewordEY’s

2023

UKAttractivenessSurveyWe

are

delighted

to

introduce

EY’s

2023UKAttractivenessSurvey,

ourlatest

annualresearch

report

examining

theperformance

andperceptions

of

theUKas

a

destinationfor

foreign

direct

investment

(FDI).jobs

reflectinga

shiftinpolicy

focus

bytheGovernmentandother

investmentagencies

towards

attractinghigher-value

projects

rather

than

focusingonvolume.

Andinour

investor

survey,longer-term

perceptions

oftheUK’sattractiveness

haveheldfirm—

withan

unprecedented

65%

say

they’replanningonmakingan

investmentintheUKin2023—

thehighestproportiononrecord.financial

services,plushugepotentialinrenewablesdueto

its

geographicaladvantagesandstated

policy

goals.butconcerns

remain

aroundunderlyingproductivityandgrowth

rates

so

plentymore

to

do.These

attributes—

together

withtheopenness

of

its

economy,

globalhistorical

linksandthepivot

to

‘GlobalBritain’—

helpto

explain

whytheUKcontinues

to

attracta

more

globalcast

of

investors

than

most

otherFDI

destinations.Theneedfor

stabilityandcertaintyalso

extend

into

other

areas

of

publicpolicy—

for

example,theimportanceof

tackling

infrastructureandhousingpinch

points

through

easingandacceleratingplanningdecisions.Whilea

focusontheskillsandlabourchallengestheUK

faces—witha

workforce

stillsmallerthanpre-COVID-19—

shouldremainapolitical

priority.An

indispensable

reference

point

Achallenging

year

onproject

numbers

…EYhasnow

beenpublishingthisstudyfor

over

two

decades.

During

thattime,ithasbecome

an

indispensablereference

point

for

business

leaders,investors,andpolicymakers

seekingto

understandthedrivers

of

inwardinvestmentandtheUK’s

relativeperformanceinan

ever-changinglandscape.Ifanything,theimportanceofthisreporthasincreased

evenfurther

amidtheunexpectedandoftendramatic

events

of

recent

years,

fromthepandemic

to

thewarinUkraineandmore.

While

these

disruptionshave

prompted

overseas

investors

toadapttheirstrategiesandpriorities,our

research

confirms

thatthekeys

toattracting

FDI

remainthesame:

skills,infrastructure,

incentives,andsupport.First,theheadline

findings.

Total

FDIprojects

intotheUK

fell

by

6.4%in2022

to

929,

puttingitsecondbehindFrance,

whichattracted

1,259

projects.With

total

European

projects

edgingupby

1.4%,theUK’s

market

shareinEurope

also

declined.

Meanwhile,our2023

investor

survey

showstheUKslippingto

third

placeinEuropefor

perceived

attractivenessbehindGermanyandFrance.…must

be

the

goal

for

policy,by

prioritising

stability

andcertainty…and

many

areas

of

strengthshining

throughHywel

BallAdded

to

this,

many

major

points

ofstrength

fortheUKshinethroughintheproject

statisticsonsectorsandactivities,

withtheUK

retainingnumberonespot

for

digital

techandfinancial

services

investment,andalsoperforming

wellinlife

sciences.

Froma

functionalperspectivetheshifttovalueisevident—

theUK

continuingto

leadinattracting

HQs,andThrougha

sectorlens—

a

prioritymust

be

an

effective

response

to

theUSandEuropean

initiativesingreentechnology.

The

UK

mayneedtoconsidera

more

active

approach

toindustrial

policy,

through

prioritisingsupport

to

areas

wheretheUKhasunderlyinggeographicorDespite

continuing

strongEY

UKChairandUK&I

ManagingPartnerErnst

&

Young

LLPLinkedInperformance,theUK

stillhasworkto

dooninternational

perceptions,addressing

some

ofthefallout

fromrecent

politicalandeconomic

turmoil,whileBrexit

continues

to

presenthurdles

to

certain

types

of

investment,especially

those

relyingonaccessto

theEuropeanSingleMarket.

Thesubsidy-heavy

US

Inflation

ReductionAct

(IRA)andEurope’s

responsesuggests

that

competition

for

FDIwillintensifyandwiththeUK

Governmentlackingresources

to

matchtheincentivesbeingoffered

elsewhere,attracting

green

projects

may…in

avolatile

environment

…The

UK’s

performanceshouldbe

seeninthecontext

ofthedifficult

economicandpolitical

headwindsitfaced—

thewarinUkraineandits

correspondingimpactonenergy

prices

escalatedinflationary

pressuresandled

to

ageneral

economic

slowdown

acrosstheglobeandparticularlyinEurope.sectorial

advantages.Also

key

iscreating

regulation

that’sbusiness-friendly

as

well

as

effective,buildingontraditional

UK

strengths,suchas

its

market

openness.

Digitaltechnology

remains

an

area

ofopportunityinthisregard,

unlikeother

areas

regulatory

reform

can

berelatively

low

cost,andtheupsidescould

be

significant.increasingthenumber

of

R&Dandmanufacturing

investments.Peter

ArnoldEY

UKChief

EconomistErnst

&

Young

LLPLinkedInFrom

a

regional

perspective—

whilethere

wasa

declineinthenumber

ofprojects

into

London,theregionalperformance

was

better,

with

volumesholdingfirmor

increasing,

suggestingthat

levellingupinFDIisbecomingmore

ofa

reality.Inprevious

years

we

havepublishedtwo

separate

reports—

onelookingatproject

flowsandperceptions

fortheUK

overall,andonefocused

specifically

The

UK

also

faced

its

own

politicalonScotland.

For

thefirst

timethisyear,

we’ve

combinedthefindings

intoa

singlereport,enablingusto

providea

more

consistentandintegrated

viewacrosstheUK.

You’ll

find

an

overviewof

Scotland’s

FDI

performance

fromAlly

Scott,ManagingPartner

of

EYinScotland,onpage

50.

The

reportalso

contains

call-out

sectionsontheScottish

resultsandtheirimplications.challenges

during

2022,andthere’snoquestion

that

BrexithasreducedtheUK’s

relative

attractiveness

forsome

investors.become

harder.Sowhatdoesthisall

mean

for

policy?Towards

calmer

watersThereisa

clear

demand

fromthebusiness

community

for

stabilityandcertainty

bothinthemacro-Building

on

the

UK’sproven

assets

…This

report

coversa

periodwhentheUKhasbeen

navigating

throughsignificant

turbulence.Indoingso,

it’s

succeededinmaintainingasteadier

courseinterms

of

FDIandattractiveness

than

many

might

haveexpected.

Now’sthetime

to

focusontheopportunity—

andhead

forhopefully

calmer

waters

ahead.…but

grounds

for

optimismwhen

it

comes

to

valueof

investment

…environmentanda

focusoneconomicgrowth.

Economic

stabilityandgrowthdeliver

both

businessandconsumerconfidence,whichinturn

attractsinvestment.

The

UKhasmade

progressinthisregardinrecent

months—

withrecent

economic

forecasts

suggestingtheUKwillavoida

recessionin2023—Perceptions

oftheUK

remainhighonfundamentalssuchas

its

qualityof

lifeandlegal

system,

bolsteringits

attractiveness

asa

headquarterslocation.Itremainsa

largeandvibrant

consumer

market.

Andithasacknowledged

sector

strengthsinareas

like

digital,

life

sciencesandHowever,

a

closerlookrevealsa

morepositive

picture.

WhiletheUK’s

projectcount

was

downin2022,itperformedbetteronvalue

than

its

competitorscomping

firstinterms

of

announced2EY

AttractivenessSurvey|UKandScotland|June2023EY

AttractivenessSurvey|UKandScotland|June20233/ukasE

xecutivesummaryFrance

continues

to

lead

the

way

inEuropean

FDI

…But

the

UK

has

performed

well

on

projectvalue

and

jobs

……and

continues

to

perform

well

in

R&D

FDIA

further

key

area

wheretheUKputina

strong

showingin2022

wasinattracting

research&

development

(R&D)projects—

again

reflectinga

key

area

of

policy

focusfromtheUK

government.

UK

projects

relating

to

R&Drose

to

127

from

111in2021,

an

increase

of

14%.

Thisrise

narrowedthegaponfirst-placed

France,

whoseR&D

projectsin2022

wereupby

8%

at

144.

Ata

sectorlevel,theUK

attracted

28

investmentsinR&D

centreslinked

to

pharmaceuticalsandmedical

devices

projects,thehighestinEurope.

R&D

investments

traditionallygeneratehighlyskilledemployment,plusscope

forcommercialising

anyIPdeveloped—

hencethefocusby

policy

makers.Followinga

5.4%

increaseinthenumber

of

Foreign

DirectInvestment

(FDI)

projectsinEuropein2021,

total

EuropeanFDI

projects

edgeupin2022

by

a

further

1.4%,

from

5,877to

5,962.

Despitetheincrease,

European

projects

recordedin2022

were

still

7%

lower

thanthepre-pandemic

figurein2019,

reflecting

economicandinflationary

headwinds.France

was

Europe’s

biggest

recipient

of

projects

forthefourth

successive

year,

with

its

projectsrisingby

3%

to1,259,

ahead

oftheUKon929andGermany

with

832.However,

project

numbersonlytellpart

ofthestory—theeconomic

value

ofa

projectismore

driven

by

thescale

ofthecapital

investedandtheextentandnatureof

employment

generated.

Thishasled

to

a

policyshiftby

UKnationalandregional

government

agenciesinrecent

years,

witha

focusonsecuring

greater

value

fromFDI

rather

thanchasingthelargest

volume

of

projects.This

value

can

be

difficult

to

measure,

as

not

all

projectsannouncethescale

of

capital

invested,nor

jobcreationnumbers.

However,

the2022

statistics

provide

evidencethatthisstrategyispaying

off,

withtheUKdoingbetteronvaluewithinEurope—

securingthehighest

FDI

jobstotalinEurope,

at

46,779,

ahead

of

second-placedSpain

with

39,104andFrance

on38,102.1,259929832Sectors:

digital

tech

remains

top

in

the

UK,despite

adecline

…FranceUKGermanyInterms

of

sectors

generating

FDI

projectsintheUK,digital

tech

remainedinfirst

placein2022,

despitea32%

drop

to

234

projects

from

345in2021.Insecondplace

wasthefinance

sector,

upby

21%

to

76

projects,closely

followed

by

business

services,

down

by

26%

to70

projects.

These

sectors’

leading

positions

reflecttheUK’s

heavily

services-orientated

economyandtraditionalstrengthinfinancial

services.

Ata

European

level,thetop

three

sectorsin2022

were

software&

ITservices;business

services;andtransportation

manufacturers&

suppliers.FDI

jobs46,77939,10438,102UKSpainFrance…as

UK

project

numbers

slip

back

…FDI

jobsAgainstthebackground

ofa

riseinEuropean

FDI

projects,theUK

saw

its

project

count

declinein2022

by

6.4%

to929,thelowest

for

eight

years.

Asa

result,theUK’s

shareof

all

European

projects

fell

from

16.9%in2021

to

15.6%in2022,thelowest

levelinthepast

decade.

The

declineinUK

projects

likely

reflectedthepolitical

instabilityanduncertainty

experiencedin2022,plusa

trend

towards

netoutboundproject

flows

since

Brexit.…leads

Europe

in

securing

‘new’

projects

…As

well

as

leadingonFDI

jobsin2022,theUK

alsosecured

Europe’s

highest

number

of

‘new’

investmentsby

first-time

investors,

reflectingunderlyingdynamismintheeconomy.

The

UK

attractedatotal

of

646

newprojects—

a

fall

of

15.4%

from

2021,butstill

ahead

ofsecond-placed

Germany.

New

projects

into

Europe

overalldeclined

by

8.5%

duringtheyear,

meaningtheUK’s

shareof

new

projects

didslipfrom

20.3%in2021

to

18.7%in2022,althoughthisproportionisbroadlyinlinewith

itsdecade-long

average

share.TheUKput

ina

strongshowinginattracting…with

UK

tech

projects

down

sharplyThe

UK’s

overall

declineinprojectsin2022

was

largelydueto

a

32%

fallindigital

technology

projects,

with

thoserecorded

into

London

down

even

more

sharply.

However,

theUK

still

leads

Europeinthetech

sector

FDI

with

234

projectsanda

market

share

of

19.8%.

And,

more

positively,

UKprojectsinthefinance,

utilitiesandpharmaceuticals

sectorsall

rosein2022—

reflectingtheUK’s

sectorial

strengths.(R&D)projects.new

jobsin

theUKin

20226464EY

AttractivenessSurvey|UKandScotland|June2023EY

AttractivenessSurvey|UKandScotland|June20235/ukas…while

the

UK

remains

strong

inpharmaceuticals

and

medical

devices

FDI

…Activities:

business

services

still

leads,but

there’s

ashift

from

selling

to

creating

……indicating

apivot

towards

strategic

investment—and

opening

up

opportunities

for

the

future...

as

the

UK

looks

globally

for

FDIShiftsinFDI

origins

are

reflectingtheUK’s

drive

to

broadentrading

ties

with

major

multilateral

trading

blocs

beyondEurope.

OftheUK’s

nineleading

sources

of

FDIin2022,five

were

outside

Europe,includingAustraliaandCanada

aswell

asIndia.The

UK,incontrast

to

some

of

its

Europeanneighbourshashistorically

benefited

froma

more

diversebase

of

investment—

andbasedonthecurrent

directionof

travelthistrend

looks

set

to

continue.

By

contrast,

ofEurope’snineleading

originsin2022,

seven

werewithinEurope(includingtheUK,inthird

place).A

particularly

encouraging

development

fortheUKin2022was

its

continuing

strong

showinginpharmaceuticalsandmedical

devices.

While

UK

pharmaceutical

projects

roseonlymodestlyin2022,upby

10%

to

44,andmedicaldevices

projects

actually

declined

by

27%

to

22,theUKcontinues

to

perform

wellinEuropean

health

sector

FDI,ranking

topinpharmaceutical

projects

(19%

Europeanmarket

share)andsecondinmedical

devices

(18%

marketshare).

The

UK’s

strengthinlife

sciences

came

totheforeduringtheCOVID-19

pandemic,whentheUK

ledthewayontreatments,

sequencing,andvaccine

development.Inthecontext

of

an

ageingpopulation,a

continuing

focusonattracting

FDI

into

life

scienceswillbe

important.The

most

common

activity

for

UK

FDIin2022

remainedbusiness

services,althoughprojectsinthiscategorydeclined

by

30%.

Manufacturing

projects

ranked

second,having

risen

by

17%.Interms

of

European

market

share,theUK

generally

secures

its

highest

proportion

of

projectsinheadquarters

projects—

andthat

was

againthecasein2022,

withtheUKwinning29.2%

of

Europeanheadquarters

investments.Together,

therecurring

evidence

ofhigher

jobcreationintheUK,

as

well

asthetrending

of

activity

towards

headquarterslocation,

manufacturing,

R&Dandlogisticswhilemovingaway

from

less

embedded

salesandmarketing

activity,indicatea

pivot

towards

strategic

investment:a

key

policygoalwillbe

capitalisingonstrong

R&D

investment

madenow

through

larger

industrial

projects

downstream.

Thereare

strategic

advantagesinbeingable

to

do

both

R&Dandmanufacturing,andtypically

financial

considerationsdrive

manufacturing

to

lower-cost

countriesinthelong-run.Mitigatingthisriskthrough

policywillbe

an

importantchallengeto

address.London

slips

back

but

remains

the

leadingUK

FDI

destination

…In2022,theLooking

acrosstheUK’s

devolved

administrationsandregions,

Greater

Londonhashistorically

beentheleading

destination

for

FDI

projects,

securing

40.9%

ofall

UK

projects

overthepast

decade.

Whileitremainsthenumber-one

location

for

inward

investors,

London

projectsfell

by

24.1%

to

299in2022

from

394in2021.

Asa

result,London’s

share

of

UK

projects

fell

to

a

decade-low

32.2%.The

main

driver

ofthedecline

wasa

drop

of

44.9%inLondon’s

digital

technology

projects,

from

194in2021to

107in2022.UK

won

29.2%of

EuropeanheadquartersinvestmentsOrigins

of

investment

into

the

UK:

the

US

stillleads

—but

India

is

on

the

rise

…29.2%UK

pharmaceuticalprojects

roseonlymodestlyin2022,upby

10%The

United

States

remainedtheUK’s

biggest

investorin2022,

contributing

222

projects

accounting

for

23.9%

ofall

UK

investments,including32%

of

all

projectsinScotland.It’s

worth

noting,

however,

thattheUS

market

share

ofinvestment

intotheUKhasbeendecliningsince

2019,a

year

that

witnessedthezenith

of

US

investment

intotheUK

forthepast

decade.

Overtaking

Germanyinsecond

place

for

projects

intotheUK

wasIndia,with

8.8%.The

UK

remainsa

clear

destination

of

choice

forIndianinvestors

into

Europe,

securing

58.2%

ofIndianprojectsinEuropein2022,upfrom

51.2%in2021.

Meanwhile,UKoutboundprojects

jumped

aftertheBrexit

referendum,andhave

continued

to

increase

each

yearapart

fromthepandemic-affected

year

of

2020.…and

renewables

projects

offermajor

opportunities…as

manufacturing

and

industrial

activityshow

awelcome

increase

…394299Regarding

investments

linked

to

renewable

energy,theUK’sjoint

second

ranking

with

Spainon37

projects

underlinesthecountry’s

existing

green

credentialsandits

aspirationsfor

deployment

of

green

technology,

particular

for

low-carbon

energyandrenewables.

That

said,theUK

securedonlyfour

projectsintheautomotiveandaerospace

sectorslinked

to

low-carbon

mobility,

compared

to

Germany’s

eightandSpain’s

12.A

clear

focusonareas

of

UK

comparativeadvantageingreenandclean

techwillbe

important,

astheUK

seeks

to

compete

with

developments

liketheUS

InflationReduction

Act,andtheEU’s

own

response

tothispolicy—

both

ofwhichpresent

risks

totheUK’s

ability

to

attractgreen

FDI.Alongsidethe17%

riseinmanufacturing

FDIin2022,theUKalso

recordeda

healthy

increaseinwider

industrial

projects,up21%

to

175.

This

rise

was

largelydueto

an

increaseinmanufacturing

activitywithintheagri-food

(up9

projectson2021),

utilitysupply(up7

on2021),andpharmaceuticalsectors

(up8

on2021).

The

riseinUK

manufacturing

projectstooktheUK’s

European

market

shareupto

10%,

close

toits

ten-year

average

of

10.3%.

Other

noteworthy

changesincludedrisesinR&D

(+13%)andlogistics

(+34%)

projects,anda

declineinsales&

marketing

investments

(-63%).20212022London

FDI

projectsTheUnited…as

most

other

UK

regions

narrow

the

gap

…States

remainedtheUK’s

biggestinvestor

in2022.With

projectsinLondonslippingback,

most

other

partsoftheUK

gained

groundonitby

increasingtheir

projectnumbers,

providing

evidence

of

‘levelling

up’interms

ofFDI.

Seven

oftheeleven

regions

outside

London

recordedincreasesin2022,

withonlytheSouth

East

ofEngland,West

Midlands,

South

WestandNorthern

Ireland

registeringdeclines.

Those

recording

increases

were

Wales

(82%),theNorth

East

(33%),

YorkshireandtheHumber

(28%),theEastMidlands

(23%),theNorth

West

(19%),theEast

ofEngland(10%),andScotland

(3%).+17%+21%+34%Manufacturingprojectsin2022IndustrialLogisticsprojectsin2022projectsin20226EY

AttractivenessSurvey|UKandScotland|June2023EY

AttractivenessSurvey|UKandScotland|June20237/ukasScotland

was

theUK

locationsecuringthesecond

highestnumber

of

projectsin2022.Investor

perceptions:

while

short-term

measuresof

the

UK’s

attractiveness

has

slipped

……and

levelling

up

and

sustainability

areon

investors’

agenda

…When

we

asked

respondents

toour

global

investor

surveywhichthree

European

countries

they

believewillbethemostattractive

for

foreign

investmentin2023,theUK

was

citedby

just

32%

compared

to

44%in2022.

This

tookitfromsecond

to

third

place,

withthefall

probably

reflectingthepolitical

uncertaintytheUK

experiencedin2022,

with

threedifferent

prime

ministersandfour

chancellorsinthespaceof

12

months.

Germany,

despite

facing

its

own

economicheadwinds

fromhigher

energy

prices,

unexpectedly

leapt

by20

percentage

points

to

62%,

leapfrogging

France

on49%

totake

first

place.Askedwhatpolicy

action

would

most

improve

futureattractiveness,thegeographic

rebalancing

oftheUKeconomy

ranked

first,

cited

by

30%

compared

to

20%

lastyear,

correlating

withtheriseinprojectsinmost

areasoftheUK

outside

London.

And

81.2%

believetheUKrankshighlyinofferingtheright

environment

to

achieveESG

goals—

a

findingthat

underlinestheopportunitiesinrenewablesandcleantech,andwhichreflectstheUK’sstrong

showinginrenewable

energy

projectsin2022,joint

secondinEurope

with

Spain.…while

Scotland

retains

second

place

……with

investors

in

chemicals,

pharmaceuticalsScotland

wastheUK

location

securingthesecond

highestnumber

of

projectsin2022,a

positionithasalsoheldinnineofthepast

ten

years.

Scotland

recorded

126

projectsin2022

compared

to

122in2021,a

rise

of

3.3%—

thefourth

successiveannualincrease,andScotland’s

largestever

total.

Major

drivers

of

Scottish

FDI

projectsincludeddigital

technologyandutility

projects,includingrenewables.Scotland’s

share

of

all

UK

projects

continued

to

rise,reaching

13.6%in2022

from

10%in2019and12.3%in2021.…investors’

intention

to

invest

in

the

UKhas

never

been

strongerand

finance

—and

R&D

—particularly

positive

…Intention

to

investintheUKisespecially

stronginthechemicalsandpharmaceuticals

sector,

where

84.6%

ofinvestors

areplanningto

undertakea

UK

projectinthenext

year,

an

intention

also

voiced

by

thevast

majority

offinancial

investors

(82.5%).

Also,

most

investorsinUK

R&Dprojects

arelookingto

increasetheir

footprintintheUK,with

53.8%

sayingthisistheirexpectation,risingto

70%

ofR&D

investorsintheindustrials

sector.

Again,thisappearsto

reflecttheeffects

ofthepolicy

pivot

towards

valueover

volume.More

positively,andincontrast

to

thedownturninshort-term

sentiment,

an

impressive

65%

of

investors

surveyedwereplanningonmakingan

investmentintheUKin2023—thehighest

level

ever

recordedinthisresearch.

Meanwhile,expectations

oftheUK’s

attractiveness

overthenextthree

years

have

remained

largelyunchanged,with

48.6%believingtheUK’s

attractivenesswillincrease

comparedto

49.4%in2022.

Where

respondents

foreseea

declineinattractiveness,themain

reasons

are

an

increased

regulatoryburden

(55.6%),higher

costs

(54.2%),anda

reduced

marketsize

(38.9%).Regional

perceptions:

London

still

leads,followed

by

Scotland

…London

remainsthemost

attractive

region

oftheUKinwhichto

establish

operations,

cited

by

41%

of

respondents(up

from

27%

last

year),

with

Scotlandinsecond

placeon11%

(down

from

15.8%),andtheEast

ofEnglandthirdon9%

(up

from

5.2%).

Significantgainsinperceivedatt