Every year, the business advisory firm E&Y produces an authoritative report on how the UK and Scotland have done in the preceding year in attracting foreign direct investment (FDI). Published in mid-June, this year’s E&Y analysis shows Scotland outstripping the rest of the UK and Europe.
“A record 126 inward investment projects were secured by Scotland in 2022 (up from 122 in 2021) maintaining the country’s position as the top UK location for FDI outside London.” says E&Y. Scotland also ranked as the most successful European destination. It achieved a 3.3% jump in projects. Across the UK, FDI flows fell by 6%. Mainland Europe recorded just 1% growth in FDI activity.
Thirty-five of the investments to Scotland are in manufacturing. 29 in digital technology, 27 in Research & Development and 22 in utility supply (mainly in renewable energy). Financial services projects doubled in 2022, scoring eight inward investments. Most of the balance involved business services firms moving into or expanding in Scotland.
After London, Glasgow and Edinburgh are the first pick UK locations, with a third of surveyed businesses saying they planned projects in those cities. Aberdeen also scored highly.
Speaking exclusively to Bylines Scotland, Neil Gray, Cabinet Secretary for Wellbeing Economy, Fair Work and Energy at the Scottish Government, said:
“The whole of Scotland should congratulate itself for building a country that attracts international investment. Our success is based on being a land rich in highly talented, well- educated and hardworking people. On behalf of all of Scotland, I say welcome to the businesses that have recognised Scotland’s advantages and opportunities. These figures are also testament to our engagement led by Scottish Development International, our international office network, and ministerial engagement.”
E&Y say that the biggest influence on business location decisions is access to grants and incentives, ready access to the right sort of business partners and suppliers, a skilled local workforce and the strength of local business networks. In my experience, there are other – often less-tangible factors – that help to seal a deal for Scotland.
A walking marketing billboard for Scotland
Significant portions of my working life have involved the promotion of countries, cities and regions as inward investment destinations. On my CV is Borders Regional Council, where I learned the trade. Being the London representative of Scotland’s five new town development corporations took me into the international arena. The Scottish new towns shared London facilities with the Scottish Council Development & Industry (SCDI), the trade development and inward investment arms of the Scottish Development Agency (SDA) and the Scottish Tourist Board.
When the SCDI’s London man retired, I became the only senior Scot in the building. Sometimes it felt like I was Scotland’s ambassador in London. Flying the flag for Scotland was the greatest honour. It was also the best job I ever had. I was paid to talk about Scotland all day long, and quite often well into the night. I was a cheap, 24 hour a day, walking marketing billboard for Scotland. It would come as no surprise to learn that the men and women promoting Scotland at Scottish Development International and in our overseas offices feel the same thrill and pride as I did when working towards building a better Scotland.
I do not have a shred of doubt that Scotland having offices in key capitals around the world is a very good use of taxpayer’s money. In London, I built networks in finance, big business, embassies and trade boards, in global media and, of course, among the diaspora of Scots at the top of business, media and public life.
My job was to be the eyes and ears of the Scottish new towns and for Scotland in general. I cultivated inward investment leads, making the first steps to understand and evaluate an opportunity before passing the lead onto case handlers in Scotland. Every week, a list of new inward investment enquiries was passed back to Scotland. Most of those enquiries would not have happened without having a live presence in London.
Of almost equal importance was the job of keeping my networks aware of key economic developments in Scotland and arranging for the London editors of some of the world’s greatest newspapers to visit Scotland, ensuring the hospitality machine back home swung into action. Every inch of coverage was positive.
A move into consultancy, saw me running global public relations for the Welsh Development Agency, creating marketing strategies for cities in the UK and overseas, helping Malta become a successful mainstream finance centre and promoting major infrastructure projects across Africa. I had a great career. I made friends in many places. Wherever I went, being Scottish was an advantage. In Wales, I was lauded as a fellow Celt and many a senior African has told me proudly how their great grandfathers learned about Scotland from Church of Scotland missionaries.
The power of brand Scotland
The Scottish brand means a great deal in the world. The word Scotland unlocks a library of positive perceptions in the minds of even the toughest Californian software billionaire or the most laser-focused Hong Kong business Titan.
Brands exist primarily to help maximise profits. The job of the brand is implant in the mind of the consumer the idea that there is no adequate substitute, that nothing else will do but brand X. The more the consumer believes there is no adequate substitute the more they are willing to pay. When that happens, a brand stops being among the also rans and becomes a premium brand.
Scotland is a premium brand in the world. We punch far above our weight. There are many reasons for that. Perhaps above all is our reputation (which I never sought to question) of being a clever people. That seems a useful brand essence to me. Our famous thinkers, engineers, scientists, architects, poets and inventors have all contributed to the perception that we’re nae daft. Being thought by many to be the most beautiful country on the planet must help, as does the romance of the tough but loyal Highlander, the flightiness of Mary Queen of Scots, the roving eye of Robert Burns, the wit of Billy Connolly and the mystique of Scotch whisky.
“Golden goose”
Some years ago, I interviewed Scotland’s premier historian, Sir Tom Devine. His view then was that Scotland’s universities were our golden goose. Should we be making far more of them? Few if any nations of similar size can boast such outstanding centres of excellence in the Arts, humanities, science and technology. I include Scotland’s art schools here. Where would the worlds of TV, cinema, advertising, product and packaging design, fashion and interior design be without the brilliant minds that come out of art schools. They, like those from Arts, humanities, science, engineering and technology disciplines, power multi-billion-dollar industries. Steve Jobs, the late Apple computers guru, married great technology with great design. That’s one reason why Apple today is the world’s biggest business.
As a result of our excellence in higher education we have a highly educated population. Scotland is well placed to build a far bigger knowledge-based economy.
Inward investment and international cooperation are to be welcomed and applauded, but nothing beats the economic benefits of indigenously owned and controlled businesses. We need to get better in Scotland in having sources of capital for new starts. The Scottish National Investment Bank is welcome, but we need more. We need more private sector high risk funds and a Scottish stock exchange to provide more risk capital. London doesn’t seem to like the idea of Scotland building an entrepreneurial risk finance industry. Maybe we’ll have to do it ourselves in our way, in our own economy.
The University of Aberdeen enjoys a worldwide reputation for its expertise in soils science.
Being back in Europe
Brexit has tied one hand behind our national back. Were we back in the EU or the Single Market we would be even more attractive to inward investors. Our universities once again would be part of the great R&D programmes helping Europe stay competitive in the global race for technological advantage. Being back in Europe would be a huge boost for existing Scottish-owned businesses and encourage more people – Scots and others – to see Scotland as a more exciting place to start a business.
The only certain chance Scotland has of being again at the heart of the EU is independence. While that remains a viable possibility, it’s not on the immediate horizon. Right now, the Scottish government should take another look at how Scotland promotes itself to the world.
The Tory Foreign Secretary, James Cleverley and Scottish Secretary Alister Jack want to keep Scotland in a box marked, “Know your place Scotland.” Ignore them. They are already yesterday’s men, both destined for the scrap heap of politics, otherwise known as the House of Lords. Let’s refresh the way Scotland promotes itself to its own business community, how it promotes its higher education sector and how Scotland encourages more risk capitalists to turbo charge indigenous business activity.
Meanwhile, give a big thumbs up for the success of Scottish Development International and the network of offices Scotland operates. They work for us and, as the E&Y report demonstrates, they are doing a very good job.
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