Scotland keeps position as UK’s second most attractive FDI destination

Scotland secured 135 foreign direct investment (FDI) projects in 2024 and has cemented its reputation as the top UK FDI location outside London, according to data from EY.

Despite a drop of seven projects (-4.9%) on the year before, this is still the second highest annual number of projects recorded.

The UK recorded 853 FDI projects in 2024, a 13% decline from 2023, making it Europe’s second-best performing country for attracting inward investment. Scotland was the sixth-best performing region.

Against a UK and European backdrop of a marked decline in project numbers, Scotland’s share of projects has increased year-on-year and now sits at 15.8%, up from 14.4% in 2023, and with a 10-year average of 11.5%.

Glasgow (27 projects) became Scotland’s leading city for FDI for the first time in five years, a position that Edinburgh held between 2020 and 2023, and the second most popular UK city outside London, after Manchester (44 projects).

Scotland’s three major cities are once again in the UK top 10 cities, with Edinburgh having secured 24 projects and Aberdeen 12 projects.

The US remained the single biggest country of origin for Scotland’s FDI projects, with US projects rising by 37% to 37 projects, accounting for 27.4% of Scotland’s total during the year, above the 23.7% of UK projects originating from the US.

Projects from Germany fell by 40% to 12 projects, maintaining its position as the second-biggest source of projects into Scotland, followed by France with eight.

Ally Scott, EY Scotland managing partner, said: “Put simply, Scotland continues to punch above its weight with inward investment. While project numbers slipped back slightly in 2024 from their record high the previous year, a much sharper fall in projects into the UK overall saw Scotland’s share increase for the sixth year running. In doing so, Scotland consolidated its decade-long position in second place for UK FDI.

“While FDI is only one part of the Scottish economy, the challenge is ensuring the policy landscape continues to react to changing business and demographic needs. Many priorities of international investors considering Scotland are very similar to those of our homegrown business community, future-proofed infrastructure, an efficient planning system, a skilled workforce, simplified tax structure, improve these levers and you’re activating broader economic growth.

Peter Arnold, EY UK chief economist, added: “Tech has been the consistent lead sector for UK FDI over the last twelve years, and London has continued to hoover up the lion’s share of digital projects. But the sector and activity mix outside London remains diverse, which could be an advantage for the UK in the years ahead.

“The prominence of manufacturing in the North West, logistics in the Midlands and R&D activity in the South East, alongside renewable energy opportunities in Scotland and the North East, means the UK has various hubs that could potentially lead Europe in the years ahead.”