Although the UK maintains its 20-year lead as Europe’s top financial services investment destination, its lead has closed significantly.
- Financial services foreign direct investment (FDI) fell by 2.8% across Europe in 2021 — representing the third annual decline in succession.
- The UK, however, saw a reverse of this trend, attracting 7 more projects than the year before and recording a total of 63 projects in 2021.
- The US remains Europe’s main source of financial services FDI, but France gets the lion’s share of US investment for the first time – with 19 projects.
Many businesses hoped that 2022 would be a year primarily defined by recovery and growth, with the most severe effects of the COVID-19 pandemic firmly behind us. Yet the last few months have shown new challenges in the form of growing geopolitical unrest, which is creating economic uncertainty across the world.
Against this backdrop, EY undertook an annual sentiment survey of global investors, canvassing their views and market-confidence levels to illustrate how attractive the UK financial services sector currently is as a location for investment. Our survey ran between March and May 2022 and — for this update — is set against the latest FDI data, which reports on 2021.
An initially positive picture
I was initially pleased to see that, despite financial services FDI falling across Europe in 2021, the UK’s project numbers increased in the same period (by 12.5%) and continues its 20-year lead as Europe’s top destination for such investment. To give some context, the UK market has averaged 78 projects per year over the last decade. Although overall UK project numbers decreased in 2020 to 56 (likely a response to pandemic-related business disruption and the aftermath of the final Brexit deal), it has picked back up again. Whilst the rise recorded in 2021 (63) is below the decade average, it demonstrates the increased confidence investors have in the UK’s financial services market, despite many challenges. Hopefully, this is the start of a new upwards rise.
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