Scotland business

Scottish decline share reported in inward investment

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Scotland's share of inward investment projects has fallen, according to the latest figures from the new UK Department for International Trade.

There were 108 inward investment projects counted in the 2015-16 financial year.

In the previous two years, there were 122 and 119.

The number of jobs created was well below a proportionate share of the British jobs, at 4,200.

The British numbers had another strong showing in both projects and jobs supported.

Foreign investment in the UK reached more than 2,200 projects, up 11%.

This Whitehall report says nearly 83,000 jobs were created that way, down slightly, but the second highest since the data began.

The projects counted in these figures included new factories and branch offices, expansion of existing plants, and firms being taken over.

The sectors most affected were in finance, professional services, and manufacturing.

Although London dominates, with 889 projects attracted last year, Scotland is rated as being attractive to foreign investors.

Scottish Enterprise

In a separate annual survey by the business consultancy EY, it has recently come second, after London.

It has been helped by the experience built up in Scottish Enterprise and the government agency Scottish Development International. By contrast, in recent years, English regions' efforts have had to adapt to the dismantling of regional development agencies.

They may now be catching up. Northern England saw 228 new projects in 2015-16, a rise of 24%, linked to 10,700 jobs. Wales secured 97 projects, with 5,400 jobs attached.

Commenting on the most recent figures, International Trade Secretary Dr Liam Fox said they show "the UK continues to be the place to do business".

He added: "We've broadened our reach with emerging markets across the world to cement our position as the number one destination in Europe for investment.

"This continued vote of confidence in the UK will help attract foreign investment to create jobs, security and opportunities for people across the UK."


Analysis

The UK government report does not say why Scotland's share of projects and jobs created has fallen.

But among possible explanations: the competition from England is getting tougher, the slump in oil and gas has hit Scottish numbers, and investors may be discouraged by political uncertainty.

We never know how many potential projects go elsewhere, because it's very rare for a foreign company to announce which options it has rejected.

With political and economic uncertainty resulting from the European Union referendum, a key test of the UK government and its trade secretary Dr Liam Fox will be how well inward investment performs in 2016-17 and beyond.

One of the main reasons given for locating factories and offices in the UK has been its access to the European Union's single market, and it is far from clear whether that will be retained after the UK leaves.


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