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UK 'still Europe's top destination for financial services investment'

Jun 24
Tags: Ernst & Young LLP
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UK 'still Europe's top destination for financial services...

The UK has retained its position at the top of EY's latest Attractiveness Survey for Financial Services, having attracted 99 investment projects in 2019.

Across the whole of Europe, foreign direct investment (FDI) in financial services declined by almost 12.6% compared to the previous year, while the UK witnessed a drop of 11.6%.

UK cements top spot

The UK has consistently been the leading location for financial services FDI in Europe over the last 20 years, according to the research. The country experienced its third strongest year in the past decade in 2019, registering more than twice as many projects as Germany, which was second in the ranking with 43.

London was the top European city, with 67 investment projects in the sector last year, compared to 29 for Paris, which appeared in second place.

The US was the leading source of foreign investment in the UK financial services sector in 2019, accounting for almost a third (32%) of all projects. The largest investment schemes in the UK also came from America.

Australia and Germany tied for second place in the list of key sources of FDI for the industry, with eight projects each.

The post-Covid picture

The Covid-19 crisis continues to dominate the investment picture in many countries around the world.

EY noted that investor sentiment suggests the UK will continue to outperform the rest of Europe in the race to attract financial services investment after the pandemic.

Four out of ten investors (40%) said the UK will be more attractive for financial services FDI post-Covid, while only 8% said the same about Europe as a whole.

Discussing the research findings, Omar Ali, UK financial services managing partner at EY, said it wasn't a surprise to see a year-on-year decline in overall FDI projects across Europe and the UK in 2019. This was largely caused by the record activity that occurred in 2018 as the industry prepared for Brexit.

He noted that the UK "should remain in a good position" to attract further investment in its financial services industry this year, despite the challenges created by Covid-19 and a weaker economy.

"The UK has extended its lead over the rest of Europe despite Brexit, which is impressive," Mr Ali continued.

"Financial services remains one of the most important sectors supporting and driving economic growth in the UK, and it's good to see that, thanks to the depth and breadth of our capital markets and the faith people have in our regulatory system, investors have confidence in the sector's ongoing strength and resiliency."

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