Monday, May 20, 2024, 6:00 a.m
The UK has increased its lead as Europe’s top destination for investment in financial services despite the impact of Brexit, according to a new survey from EY.
The UK attracted 108 financial services projects last year, up from 76 in 2022 and well ahead of European rivals. France, in second place, secured only 39 foreign direct investment (FDI) projects in 2023.
This means the UK is now home to a third of all European FDI projects focused on financial services, up from 26 percent in 2022. France and Germany are tied in second place with 12 percent each.
“Last year, Great Britain not only maintained its lead as the most attractive European financial services market, but also significantly expanded it,” commented Anna Anthony, EY UK Financial Services Managing Partner.
“Even amid challenging macroeconomic conditions and geopolitical uncertainty, the stability of the UK financial services sector has ensured foreign investor confidence remains strong.”
The US remained the largest source of investment in European financial services, accounting for 28 percent of all FDI projects. This was the highest proportion of US-backed projects in the last decade.
London attracted the majority of foreign investment, securing 81 projects in 2023. That’s a massive 76 percent increase compared to last year and more than double the level in Paris.
The figures show London remains Europe’s leading financial center despite fears that Brexit could unseat it.
However, the city is likely to face a major challenge from Paris in the coming years. Investors rate Paris, ahead of London, as the most attractive European city for financial investments over a three-year horizon.
“The competition is tough,” Anthony said. “Increasing market attractiveness must be a top priority for both industry and government.”
Maintaining the city’s international competitiveness was an important goal of the government.
At the end of 2022, the government launched the Edinburgh reforms with the aim of revitalizing London as a financial center. In addition, numerous consultations have been launched on various parts of the UK’s financial infrastructure.
Key measures included the introduction of a new secondary mandate for financial regulators to take international competitiveness into account when making regulatory decisions.
Minister for Investment, Lord Johnson, said: “The UK is at the heart of investment in financial services across Europe and this is an unprecedented vote of confidence in our high standing.”
“Given investors’ strong confidence in these brilliant results, I am delighted that we are now an undisputed financial services superpower,” Johnson continued.