Record high for foreign investment in Scotland Published duration 23 May 2017

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Scotland won a record number of investments from overseas in 2016, although growth was substantially lower than the previous year.

There were 122 foreign direct investment deals done over the course of last year, up from 119 in 2015.

The EY Scotland Attractiveness Survey showed Scotland was the second most popular part of the UK to invest in behind London.

This is the fifth year in a row that the country has been in that position.

However, Scotland won a smaller share of overseas investment in 2016 than previously, with 10.7% of deals coming north of the border compared with 11.2% in 2015.

Foreign Direct Investment (FDI) in Scotland grew by 2.5% in 2016 - lower than the 7% increase recorded across the UK for that year and significantly down from 2015 when investment in Scotland grew by 51%.

'Halo effect'

Mark Harvey, EY's senior partner in Scotland, said a "halo effect" from events such as the Commonwealth Games and the Ryder Cup may have resulted in "abnormally high" levels of investment in 2015.

Scotland's share of the jobs created from overseas investment last year was half what it was in 2015, with 6% of UK posts created by foreign companies' investment in Scotland compared with 12.7% in 2015.

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Deals involving overseas firms created fewer jobs per project, with the average falling from 45 positions in 2015 to 24 the following year.

Three Scottish cities were in the UK's top 10 for attracting FDI in 2016, according to the research, with Glasgow fifth after a 27% increase in the number of such projects in 2016.

Edinburgh fell three places in the list to sixth but Aberdeen went from 10th to seventh place.

'Attractive destination'

Mr Harvey said: "Scotland's attractiveness in the eyes of investors is more in line with previous years.

"In 2015 it was perhaps abnormally high as a result of the 'halo effect' from high-profile events held in 2014, including the Commonwealth Games and Ryder Cup.

"Insight from investors indicates there may be a shift towards more London-centric investment in the future, which suggests Scotland needs to take action to ensure it secures a healthy share of FDI into the UK.

"Scotland has firmly secured its position as an attractive destination for FDI in the UK, with a further increase of projects from the record-breaking surge of inward investment in 2015."

Economy Secretary Keith Brown said: "For the second year in a row we have attracted more projects than ever before - with 2016 up 2.5% on 2015's previous record - and Scotland has been the top UK region outside London in every one of the past five years.

"We enjoy resources few nations can match, including one of the most highly-educated work-forces in Europe, a long-standing reputation for innovation and an internationally-regarded brand.

"Today's attractiveness survey indicates these assets continue to be recognised on the world stage, with a substantial number of projects from the US, France and Germany.

"In fact, more than one in 50 of the investment projects across the whole of Europe are located in Scotland."