Scotland’s financial services industry is more important now than ever

Sue Dawe is Head of Financial Services in Scotland, EY and a Scottish Financial Enterprise Board Member

While it’s long been lauded that Scotland has a financial centre of clout, it’s prominence within the UK and global financial services sector might be about to change – for the better. The most recent data on financial services foreign direct investment (FDI) into Scotland could signal a shift towards further growth and investment in the long-term future of the industry here.

Scotland has proven to be a leading force within financial services for centuries, with key characteristics for success including the ability to be astute, innovative and resilient. These attributes are particularly valuable now as we navigate through the challenges posed by COVID-19 and await the final outcome of Brexit negotiations.

Financial services have provided crucial support to individuals, communities and customers through this pandemic, and the sector will play a vital role in Scotland’s economic recovery and future growth prospects.

As such, there is already alignment between the industry and the key themes set out in The Higgins report from the Scottish Government’s Advisory Group on Economic Recovery published on 22nd June 2020. In common with that report, the financial services community in Scotland values and prioritises education, creating employment and tackling inequalities with an over-arching and ever-increasing focus on sustainable and green finance.

In terms of job creation, it is worth noting that Scotland secured the biggest financial services FDI project in Europe in 2019 with one project in Glasgow announcing plans for 2,700 new jobs.

Further evidence of this alignment can be seen in the wide range of programmes and initiatives run by the industry’s membership organisation, Scottish Financial Enterprise (SFE). For example, the SFE Unified Schools Programme invites children from across Scotland, from all backgrounds to explore a career in financial services.

Securing a positive future for the young people of Scotland is more important now than ever. And while the future of the global economy is uncertain, evidence of the resilience and fortitude of Scotland’s financial services industry offers some optimism.

EY’s latest Attractiveness Report for Financial Services sets out the most recent positive performance of the industry in Scotland. For the seventh consecutive year, Scotland has earned its place as the second most attractive location for financial services FDI in the UK after London. Scotland has not merely retained this position by performing in-step with other financial centres but has increased FDI while the totals for the UK and Europe have fallen.

Also shown by the 2019 figures is the ascendency of Glasgow, which secured 75% of Scotland’s financial services FDI and three times the number of projects than Scotland’s traditional finance hub, Edinburgh. As a result, Glasgow is now ranked as the second most attractive city in the UK for financial services FDI after London.

This data bolsters the view, held by many and promoted collectively by the industry, that Scotland’s financial services industry is an attractive proposition for individuals to build a career and for firms to establish or expand. The well-established and extensive industry infrastructure and interconnectivity with London provides a solid foundation. On top of which there is the enviable access to talent due to a concentration of world-class universities. Operational costs are attractive in Scotland and the financial services community here is of a size and scale where collaboration, within the industry and wider business landscape, can make a significant impact.

Without a doubt, the challenges facing business, society and world economies right now are vast and the recovery will have to be carefully managed. We must look to our sectors of strength and there are few with a track record such as financial services. Our industry has a great deal to contribute to the economy and society, with the right strategy and collaborative approach we stand to further improve Scotland’s performance and position through the immediate recovery and long-term outlook.

Published: 6 July 2020