The UK has the most investment friendly Covid-19 recovery plan in Europe, a survey shows.
Investor are sounding a more bullish note on the City’s prospects, and expect the UK to continue outperforming the rest of Europe in attracting financial services investment as markets rebound in the wake of the coronavirus pandemic.
According to consultancy EY’s latest UK Attractiveness Survey for Financial Services, 48% backed the UK’s recovery plans as the most investor friendly in Europe, while 50% said it was the most attractive destination for investment currently. Germany was placed second on both metrics, favoured by 38% and 33% of respondents respectively, with France and Switzerland tieing for third place with 21% support.
London also dominated other European centres when it came to its attractiveness as a destination for foreign direct investment, with a clear lead over its peers Stockholm and Amsterdam. London was scored highest by 44% of investors, a 25 percentage point advantage over the Swedish capital, which ranked in second place.
The results echo the finds of a recent report from think-tank New Financial, which found that despite Brexit, London maintained its dominance in markets including foreign exchange and derivatives trading.
The EY research suggests that global investors are looking to double down on UK operations after a period of uncertainty during the Covid-19 crisis.
Half of those polled said they planned to establish or extend operations in the UK over the next year, a dramatic rise from 10% recorded in September 2020, while 54% of those with pre-existing investment plans said they were pushing ahead with them despite the pandemic.
“While its lead may have narrowed in 2020, most likely only short-term in response to pandemic-related business disruption and Brexit, investor sentiment suggests that the UK is looking to a strong future, and will continue to outperform the rest of Europe in attracting post-Covid 19 financial services investment,” EY UK financial services managing partner Anna Anthony said. “Investors have consistently been drawn to the strength and resilience of the City, its deep capital markets, gold-plated regulatory system and for the innovation and talent it offers. Despite the challenges of the last few years, the evidence points to this not only continuing, but growing in strength, ensuring the UK remains a world-leading financial services centre.”
However, the impact of Brexit still looms large over the City.
Next Wednesday marks the fifth anniversary of the UK’s vote to leave the European Union. EY estimates that 7,600 jobs have moved from the UK to EU hubs, along with more than £1.3trn in assets, expecting more movement going forward as a new economic relationship develops.
“The overarching call from the sector five years on is for a clear and well-articulated strategy that supports and boosts the UK’s attractiveness by promoting it as an innovative global financial services market with gold-plated regulatory, tax and immigration regimes, a leading voice on sustainability, and access to top talent,” Anthony said.
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