The UK continues to be Europe’s most attractive location for foreign direct investment (FDI) into financial services, according to EY’s latest Attractiveness Survey for Financial Services.
According to EY’s survey, The UK attracted 76 financial services projects in 2022, an increase of 13 projects from 2021, and has extended its lead over second-placed France, which secured 45 projects in 2022.
EY suggests that Financial services FDI across Europe grew 5% from 277 projects in 2021 to 292 projects in 2022, outpacing overall European FDI project growth, which only rose 1% during this period, impacted by the war in Ukraine, high energy prices and inflation.
“The UK is now home to more than a quarter of all European financial services FDI projects, having boosted its market share from 23% in 2021 to 26% in 2022,” explains EY.
By comparison, France secured 15% of Europe’s financial services FDI projects, and both Germany and Spain each secured 11%.
In addition to the expansion of existing projects, the UK also recorded a year-on-year increase in the number of ‘new’ financial services projects, which EY says represents a new footprint for firms and is a recognised means of assessing a country’s investment dynamism and ability to attract fresh investors.
According to the survey, of the 76 UK financial services projects recorded in 2022, 68 were new, up from 54 in 2021.
This was in contrast to the major eurozone markets, which recorded declines in the number of new projects.
Anna Anthony, UK Financial Services Managing Partner at EY, commented, “The strength of the UK financial market has meant that – even through challenging times – investors see it as the most attractive European financial services market.
“A lot has happened in the seven years since the EU referendum, and the UK has faced strong competition from its closest competitors.
“Our research shows that investors recognise the strength, gold-standard governance and resilience of the UK’s financial system and see it as the preferred destination for growth, innovation and access to top talent.
“Of course, we can’t be complacent. Industry and government focus on raising market attractiveness is key and should align with what matters to investors – such as levelling up, enhancing social infrastructure and upskilling local talent – to ensure UK financial services retains and continues to extend its leading role on the global stage.”
Per city, EY found that London remains the leader in Europe for attracting financial services FDI, securing 46 projects in 2022, up from 39 in 2021.
Paris placed second despite recording a slight decline, from 38 projects in 2021 to 35 in 2022. Madrid placed third, and also recorded a fall, from 29 projects in 2021 to 22 projects in 2022.
The largest source of financial services investment into Europe in 2022 was once again the US, with US-backed projects up 7%, from 74 to 79 projects.
EY states that US investment currently comprises 27% of all financial projects into Europe.
The UK was the leading recipient of US investment, securing 21 projects, which marked an increase of 24%.
Omar Ali, EMEIA Financial Services Managing Partner at EY, said, “Despite significant geopolitical and economic challenges facing markets over 2022, financial services FDI across Europe rose and the region recorded a 20% year-on-year rise in related job creation.
“This speaks to the underlying capability, expertise and skills found in Europe’s financial centres, and demonstrates sustained confidence from global investors even in turbulent times.”
Ali continued, “While the UK continues to lead Europe on the number of projects, the eurozone’s major markets are performing strongly – France and Germany, in particular, attracted big banking projects in 2022.
“The global banking sector has experienced considerable volatility over the past months, yet Europe’s financial markets have remained resilient, and as a result, confidence levels aren’t expected to significantly deteriorate.
“As we look ahead, the eurozone economies are expected to bounce back by the end of 2023 and into 2024 and attract increasing levels of inward financial services investment.”
