Covid-19 has “shifted” the priorities of investors in financial services firms, according to EY’s latest ‘UK Attractiveness analysis for Financial Services’ survey.
Despite foreign direct investment (FDI) being set to stagnate over the next year, around 53% of firms expect the UK to be “more attractive” for FDI in three years’ time.
Some 20% of firms surveyed said they are now planning a “substantial” decrease in investment in the UK over the next 12 months due to the pandemic, with a further 28% planning a minor cut and 18% putting plans on hold for the time being.
Omar Ali, UK financial services managing partner at EY, said: “UK Financial Services entered the pandemic in a very strong position, having led the rest of Europe in attracting overseas investment over the past 20 years.
“Our latest research shows, however, that industry sentiment has dipped, and a significant proportion of global investors are currently viewing sectors like technology and real estate as bigger drivers of UK growth, with interest in healthcare also rising. In some respects, this isn’t surprising given Covid-19 and the sudden shift to remote working and the urgency of finding a vaccine.”
He added: “However, the shift in short-term investment plans suggests the lack of clarity about the relative importance of UK Financial Services in Brexit negotiations and trade discussions, and the future of the economy may have started to affect investor sentiment.
“Hopefully the Chancellor’s commitment to review the listings, fund and overseas regimes, along with the launch of a new National Infrastructure Bank and Long-Term Asset Fund as well as the ambitious vision for making the UK a global leader in Sustainable Finance, will go some way to improving investor sentiment and ensuring the UK retains its dominance in attracting FDI.”