London remains top pick for investors in fresh blow to Remoaners

London continues to prove Brexit doubters wrong by leading the rest of Europe in its attractiveness to investors. Britain’s share of foreign direct investment (FDI) has reached the highest level in a decade, according to a survey by Ernst & Young released on Monday (May 20).

Remoaners have long argued the UK’s exit from the European Union would hit London’s competitiveness as a leading financial centre on the global stage.

But EY’s survey of 900 experts shows Britain continues to be Europe’s most attractive location for FDI in financial services, extending its lead over other European markets.

The accounting giant’s latest Attractiveness Survey for Financial Services shows Britain attracted 108 financial services projects in 2023 – an increase from 76 projects in 2022.

It beat second-placed France, with Paris securing 39 projects in 2023, down from 45 in 2022, according to EY’s survey.

Anna Anthony, EY UK Financial Services Managing Partner, said Britain didn’t just maintain its lead as the most attractive European financial services market last year, it extended it significantly.

She added: “Even through challenging macroeconomic conditions and geopolitical uncertainty, the stability of the UK’s financial services sector has ensured foreign investor confidence remains strong.

“However, competition is fierce – both from European peers and further abroad – and increasing market attractiveness must be a top priority for both industry and government.”

Ms Anthony said efforts to boost attractiveness should build on the UK’s strengths, focusing on what matters most to investors. This includes shaping frameworks to drive innovation, leading on gold-standard regulation and attracting the best talent.

EY reported London remains the leading European city for attracting financial services FDI, with 81 projects secured in 2023, up from 46 in 2022 – a 76 percent increase.

The total number of financial services projects in London last year was more than double that of second-placed Paris, with 31 projects – an annual 11 percent decline.

Third placed Madrid recorded a fall from 22 projects in 2022 to 11 projects in 2023 while Milan, in fourth place, similarly saw projects fall from 16 in 2022 to seven last year.

In securing new projects, London attracted the highest number last year (69), followed by Paris (18), Frankfurt (12), Madrid (10), Amsterdam (eight) and Lisbon (eight).

But the survey data of investor sentiment found Paris is London’s second biggest rival after New York. Investors ranked the French capital above London as the most attractive European city for future financial investment over a three-year horizon.

The United States was the largest source of financial services investment into Europe, with projects up 15 percent, from 79 in 2022 to 91 in 2023.

This represents the highest proportion of US-backed projects in the last 10 years and was 28 percent of all financial projects into Europe.

Britain was the leading recipient of US investment, recording an 81 percent increase, from 21 projects in 2022 to 38 projects in 2023. Second-placed France secured 15 projects from the US last year, an increase from 13 in 2022.

Omar Ali, a Financial Services Managing Partner at EY, said while FDI in tech and business services sectors fell across Europe last year, it continued to rise in financial services amid challenging macroeconomic conditions and geopolitical uncertainty.

He added: “Foreign investors remain drawn to the trusted capabilities, expertise, and skills found in Europe’s major financial centres and place value on the region’s broad business ecosystem that also connects them to leading advisory, legal, and tech services.

“Our future-looking sentiment research finds that investors not only remain confident in Europe’s financial centres today, but that they are looking to increase investment in the region over the next three years – in both established and emerging financial markets.”