France Narrows Gap With U.K. in Financial Investments, EY Says

(Bloomberg) -- The U.K. remains Europe’s most attractive destination for financial services investment but its lead has narrowed, according to a survey by the consultants EY.

The U.K. attracted 56 financial services projects in 2020, still the highest in Europe yet down 43 projects from 2019, marking the largest year-on-year decline in a decade.

Foreign direct investment (FDI) in financial services fell by 23% across Europe in 2020 as the Covid-19 pandemic impacted business confidence and curtailed travel.

France was Europe’s second most popular FDI location last year. It recorded 49 financial services projects, 11 more than in 2019, and overtook Germany for the number two position. France also bucked the overall European trend of fewer projects for the year.

Investor sentiment on the future of U.K. financial services was positive in the survey, with the nation remaining the most attractive European country and London the leading city for financial services investment. Within the U.K., Scotland was the second most attractive region, according to the survey.

“While its lead may have narrowed in 2020, most likely only short-term in response to pandemic-related business disruption and Brexit, investor sentiment suggests that the U.K. is looking to a strong future, and will continue to outperform the rest of Europe in attracting post-Covid-19 financial services investment,” said Anna Anthony, EY’s U.K. Financial Services managing partner.

In 2019, the U.K. recorded financial services 99 projects, more than double the total in the second placed country for that year, Germany, with 43.

As markets and economies across the globe start to recover from the pandemic, investor sentiment suggests the U.K. will continue to outperform the rest of Europe in attracting financial services investment. Global investors ranked the U.K. highest in Europe for investment-friendly pandemic recovery plans.

In terms of investment into the U.K., the U.S. again was the principle source, accounting for 37% of U.K. financial services FDI -- up from 32% in 2019. At a city level, London continues to be seen as Europe’s most attractive destination for financial services FDI, followed by Stockholm and Amsterdam.

The U.K. field research was conducted in March and April via online interviews representing a sample of 570 international decision-makers. The European research was based on a panel of 550 participants.

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