According to a new survey from EY, the UK has extended its lead as Europe’s top destination for investment in financial services despite the impact of Brexit.
The UK attracted 108 financial services projects last year, up from 76 in 2022 and well ahead of European rivals. France, in second place, secured just 39 foreign direct investment (FDI) projects in 2023.
This means the UK is now home to a third of all European FDI projects focused on financial services, up from 26 per cent in 2022. France and Germany are tied in second place at 12 per cent each.
“The UK didn’t just maintain its lead as the most attractive European financial services market last year, it extended it significantly,” Anna Anthony, EY UK financial services managing partner, commented.
“Even through challenging macroeconomic conditions and geopolitical uncertainty, the stability of the UK’s financial services sector has ensured foreign investor confidence remains strong.”
The US remained the largest source of investment into European financial services, making up 28 per cent of all FDI projects. This was the highest proportion of US-backed projects in the last decade.
London attracted the bulk of overseas investment, securing 81 projects in 2023. This was a massive 76 per cent jump on last year and more than double the level of Paris.
The figures show that London remains Europe’s leading financial hub despite fears that Brexit would knock it off its perch.
However, the City is likely to face a stiff challenge from Paris in the years to come. Investors rank Paris above London as the most attractive European city for financial investment over a three-year horizon.
“Competition is fierce,” Anthony said. “Increasing market attractiveness must be a top priority for both industry and government.”
Maintaining the City’s international competitiveness has been a major aim for the government.
In late 2022, the government launched the Edinburgh Reforms with the aim of reinvigorating London as a financial centre. A slew of consultations have also been launched into various parts of the UK’s financial infrastructure.
Among the most important measures was the introduction of a new secondary mandate for the financial regulators to consider international competitiveness when making regulatory decisions.
Minister for Investment Lord Johnson said: “The UK is at the heart of investment in financial services across Europe and this is an unprecedented vote of confidence of our lofty position.”
“With strong investor confidence to match these brilliant results, I am delighted that we are now unquestionably a financial services superpower,” Johnson continued.