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Inward investment boost

Inward investment projects into Scotland rose by eight per cent last year to a near-record 82, and the Scottish share of UK research and development projects rose from 20 per cent to 33 per cent.

A 70 per cent rise in science and technology inward investments to a new high of 17 helped widen ­Scotland's competitive advantage over the English regions, which have lost ground since the scrapping of regional development ­agencies four years ago.

The strong Scottish showing in Ernst & Young's annual Attractiveness Survey will fuel the debate over how the referendum vote may or may not change perceptions of Scotland among investors.

The survey cautioned that the country's perception rating fell from 4 per cent in 2013 to 2 per cent this year when investors were surveyed on the most attractive UK region. But the English regions also suffered from a shift in sentiment towards London and South-East England in foreign direct investment (FDI).

Scotland also lagged behind the UK in attracting projects from the emerging economies, but was more successful in securing French, Norwegian, Swedish, Canadian and Irish investments and in attracting new investors rather than reinvestments. Jim Bishop, Ernst & Young Scotland senior partner, said: "Scotland must increase efforts to sell its advantages to global investors if its impressive track record of securing FDI is to be maintained.

"The country is expected to gain a boost to its international profile this year as a result of the exposure afforded by the Glasgow 2014 Commonwealth Games and Ryder Cup, and this should be harnessed as a competitive edge."

Last year's 82 reported projects were just six short of the record number of 88 secured in 1997. However, the increase compares with a 15 per cent rise in projects for the UK (up to 799 from 697) so Scotland's market share fell slightly from 10.9 per cent to 10.2 per cent.

Mr Bishop said the growth rate had moderated following a sharp rise in 2012, but added: "However, any increase in project numbers is laudable given the fierce competition for investment between the rest of the UK and Europe."

The US remains Scotland's biggest source of FDI, accounting for 39.5 per cent of projects, in line with the past decade. Employment generated by FDI fell by 14 per cent, and by 8 per cent in the UK as a whole, as more labour-intensive projects migrated to lower-cost regions. Some 18 per cent of Scottish projects and 16 per cent across the UK were in manufacturing.

Ernst & Young noted that total projects secured by the English regions outside London and the south-east of England were 20 per cent lower in 2013 than 2010, the last year of the defunct Regional Development Agencies.

Mr Bishop said: "The replacement of the English RDAs with Local Enterprise Partnerships appears to have coincided with a decline in the total number of projects secured by the English regions. In contrast, Scotland, supported by Scottish Enterprise, is now enjoying a sustained increase in projects."

Neil Francis, international ­operations director of Scottish Development International, said: "The upsurge in the proportion of R&D projects is extremely encouraging as it reinforces ­Scotland's leading edge in science and technology."

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