London seals European finance investment crown every year since Brexit
London is beating away the dire warnings that Brexit would knock it off its perch as Europe’s top finance hive and is even drawing in more investors amid high inflation and interest rates, a new report out today unveils.
Foreign investors pumped cash into 46 financial services projects in the capital last year, up from 39 in 2021, according to research by consultancy EY.
That rise pulled the Square Mile away from its continental rivals. Paris drew in outside investment for 35 finance proposals, down from 38, while Madrid generated 22 foreign investment projects in 2022 compared to 29 in 2021. Milan came fourth in EY’s rankings.
“London continues to lead Europe in attracting foreign direct investment in financial services, and the sector is proving resilient despite the global challenges facing the UK economy,” Chris Hayward, policy chairman at Canada Corporation, told Morning Wire
“That is good news for every household, because a strong City creates the wealth and jobs that support the economy and fund our public services,” he added.
Overall, the UK attracted foreign investors to 76 financial services projects last year, up 13 from 2021, putting the country ahead of France by 31, which recorded 15 fewer projects compared to 2021.
Some 2,603 jobs were created through financial services investment projects in the UK, a four per cent rise from 2021.
Andrew Griffith, economic secretary to the Treasury, told Morning Wire: “We have a tremendous track record of attracting the brightest and best companies in the world built on the long standing competitive advantages of the UK and it’s attractiveness as a place to do business.”
Experts had bet that the UK’s decision to leave the European Union would trigger a flight of jobs, investment and innovation to the continent, but EY’s research suggests the global finance community has yet to sour on the country.
In fact, the UK has topped the consultancy’s finance foreign direct investment table every year since the 2016 Brexit vote and since the research started. Similarly, London has led the European city table since it was first constructed in 1986.
“Investors recognise the strength, gold-standard governance and resilience of the UK’s financial system and see it as the preferred destination for growth, innovation and access to top talent,” Anna Anthony, UK financial services managing partner at EY, said.
UK lawmakers have set out a roadmap to revamp the country’s financial regulation regime – known as the Edinburgh reforms – in a bid to draw more companies, investors and innovators to the City after Brexit.
“From changing the culture of financial regulators, streamlining the time and process that it takes to list to improving investment research and much more, the reforms are an ambitious and comprehensive regime,” Griffith added.
Experts have cautioned the government against launching a bonfire of regulation over concerns it could lead to excessive risk taking similar to that which sparked the global financial crisis in 2008.
US investors were the biggest source of foreign capital inflows into Europe last year, with the UK being the leading recipient of American cash, securing 21 projects, up from 17 in 2021.