Where Edinburgh excels after capital grabs top billing for foreign direct investment

Edinburgh has overtaken Greater Manchester as the most attractive location in the UK outside of London and the south east for foreign direct investment, according to a new study.

The analysis of the UK’s 50 largest cities examined eight indicators related to growth potential, local infrastructure and the availability of local skills. Edinburgh climbed two places to secure the sixth position in the latest study - the top five being three areas of London, Brighton and Oxford.

Produced by law firms Wright, Johnston & Mackenzie (WJM) and Irwin Mitchell, the “Investment Attractiveness Index” was compiled by a team of experts at the Centre for Economics and Business Research (CEBR) think-tank.

Edinburgh climbed two places to secure the sixth position in the latest study - the top five being three areas of London, Brighton and Oxford.

While Edinburgh managed to secure the sixth position, its overall attractiveness score was 5.7 points lower than the previous year. This decline aligned with the trend observed in most of the other 50 cities analysed. The reduction in the overall score was primarily attributed to a decrease in “growth potential”, driven by lower predicted output expansion in 2024 compared to last year. Despite this, the report revealed that Scotland’s capital performed “impressively” in the local skills area having the highest score out of all 50 locations for qualification levels.

Glasgow also performed well in the study. Although, like Edinburgh, its attractiveness score dipped, it moved up the rankings into 11th place, rising by four places. Aberdeen was some distance behind in 39th place but the Granite City increased its relative position by three places, boosted by improvements in the area of local skills, where it rose two places to now rank 12th.

Fraser Gillies, managing partner at WJM, said: “We spelled out some concerns last year about investment levels in Scotland from overseas, so it is encouraging to see Edinburgh is back on the rise. From my perspective, I can only hope that other city hubs such as Glasgow and Aberdeen soon follow suit.

“Often working in the city, it is clear to see Edinburgh’s strength lies in its infrastructure, skilled workforce, and competitive marketplace across the financial services industry, with over 30,000 people working in the sector. With a sophisticated supply chain and a growing specialism in financial technology, it’s no surprise to me that it has again become such an attractive proposition for investors.”

Bryan Bletso, partner and head of international at Irwin Mitchell, added: “The results in our report point to challenging conditions and mirror the sentiment amongst both businesses and overseas investors that we are speaking to. Edinburgh excels in the pillars of local skills and local infrastructure.”

According to EY’s latest annual Scotland Attractiveness Survey - published earlier this month - a bumper 124 projects categorised as foreign direct investment (FDI) were secured by Scotland in 2023, an increase of about 13 per cent on the previous year. With projects into the UK as a whole rising by a more modest 6 per cent, Scotland’s increased FDI flow saw its share of all UK projects rising to 14.4 per cent, up from 13.6 per cent - the fifth consecutive year of increase and its highest over the past decade.