FactFiction2 FactCheck: Does Scotland look bonnie to foreign investors?The claim

“The reality is, as the evidence shows, that some of the world’s biggest companies are voting with their feet by bringing jobs and investment to Scotland. The threat to jobs, investment and prosperity for Scotland comes, not from the promise of self-determination, but from Cameron, Osborne and Clegg’s disastrous economic policies.”
Alex Salmond, First Minister of Scotland and leader of the SNP, The Independent, 12 January 2011

The background

Downing Street says that global corporates are sounding the alarm over the prospect of a referendum on Scottish Independence.

Businesses don’t like the uncertainty surrounding Scotland’s place in the Union, says Number 10, and have told the PM that foreign investment is under threat.

Well, that’s not the view from up north says Alex Salmond in The Independent. Some of the world’s biggest companies are setting up shop in Scotland, he argues, and they are not threatened by the prospect of a referendum, or indeed an independent Scotland.

FactCheck asks some of the companies investing in Scotland if Mr Salmond is right, and tots up the official stats on the foreign money coming in.

The analysis

It may not come as a surprise that London boasted the most foreign direct investment (FDI) projects across the whole of Europe in 2010 – the only entire countries to beat the London region were France, Germany and Russia in 2010, according to Ernst and Young.

But what might raise a few eyebrows is E&Y’s discovery that in 2010, the leading location within the UK when it comes to spinning jobs out of FDI – was Scotland.

16 scotland fc FactCheck: Does Scotland look bonnie to foreign investors?

They are decent jobs too, foreign investment in 2010-11 created 2,046 “high value” jobs. Almost three quarters of these were in IT, a further 400 in water transport and almost 350 in business services.

What’s more, bar a dip in 2007, Scotland’s success in securing FDI projects has been climbing steadily since 2002. London meanwhile has seen foreign investment level off since 2008.

The regional gap between London and Scotland is still wide – with GVA (gross value added) per capita in London resting at £35,026 and £20,220 in Scotland (a smidge lower than England’s at £20,974).

But the gap’s closing. Edinburgh came second after West London in generating growth for the UK economy in 2010, and Auld Reekie pushed East London into third place with its GVA of £32bn. Glasgow and Aberdeen also made it into the top ten.

So who’s investing and are they worried?

The Scottish Development International (SDI) lists some of the deals crunched in 2011 – naming companies such as Amazon, Sky, human resources firm Ceridian, wind energy giant Gamesa, Swiss financial software group Avaloq, IT services group Atos and the asset management group The Bank of New York Mellon.

Ceridian announced plans last year to create a new flagship office in Glasgow, which will create 300 jobs over 5 years and represents a £16m investment in Scotland.

Doug Sawers, Ceridian’s MD, told FactCheck that Glasgow wasn’t the cheapest option in the UK but was very competitive, and that when you balance that against the available resources, it was a “clear winner”.

According to DTI analysis, the main reasons for investing in Scotland are divided evenly between serving European markets, being close to customers and close to centres of research. In the last 10 years for example, Scotland has won 19 per cent of all research and development projects in the UK.

BNY Mellon, which manages assets of £733bn and has been operating in Scotland for 20 years, is increasing the number of staff in its Edinburgh offices by 10 per cent.

A spokesman for the asset manager told FactCheck that it was bulking up in Edinburgh because there are good transport links, high quality staff and skills on offer.

The question of Scotland’s independence isn’t an issue for these companies.

“Regarding a future Scottish referendum, at this stage, we are not worried,” Mr Sawers told FactCheck. “In the event that the country chooses independence, we have faith in the Scottish Government’s approach to making Scotland more, not less, competitive. Recent news and speculation has not damaged Scotland’s and Glasgow’s prospects.”

The Swiss software company Avaloq told FactCheck it chose Edinburgh primarily for its “large pool of highly qualified IT specialists”. A spokesman for the company also pointed out that competition with other employers was “much lower” and the “cost situation is very attractive”.

Avaloq plans to open shop in Edinburgh in February and said it will “ramp up in the next few years”. The spokesman told us: “We do not see any reason (to) and do not intend to adapt our model to any political evolution”.

BNY Mellon also brushed off concerns, telling us it “deals in multiple currencies, multiple jurisdictions and changes within these all the time”.

The IT group Atos said it was still very much committed to business in Scotland, with a spokesman for the group adding that the prospect of Scotland joining the EU was a decision “a long way off”.

In fact, Scotland’s independence is more of an issue for home grown businesses. A survey by the Scottish Business Insider last month found that 67 per cent of the 109 top companies polled believed that independence would not have a positive effect on their business.

The Scottish industrialist Jim McColl told local reporters: “What many of us are convinced about is that a productive and prosperous future for this country depends on securing real economic powers for the Scottish parliament through constitutional change”.

Scottish Financial Enterprise, which represents the financial services industry, also wants more answers. Chief Executive Owen Kelly told FactCheck: “It is important that some uncertainties are removed.

“Issues like currency, membership of the EU, regulation and the possible impact on the UK as a single market can be clarified ahead of the referendum. And they need to be clarified so that companies, employees, customers and shareholders can understand the changes that independence will bring.”

The verdict

London may attract the lion’s share of foreign investment in the UK, but in the Capital and the South East investment has levelled off since 2008. In Scotland however, investment has largely been on the rise for 10 years and in 2010 Scotland’s deals attracted more jobs than anywhere else in the UK.

More than 4,000 jobs were created – with just over half of them deemed “high value” – compared with the creation of less than 3,500 jobs in London.

Alex Salmond then is right to claim Scotland is a bonnie investment. And according to the companies we spoke to, the matter of Scottish independence is of little concern.

However, as for the claim that Westminster’s “disastrous economic policies” are a greater concern to investors, Mr Salmond may want to look closer to home – where many Scottish business owners are worried that a divorce from the UK may not equal financial power.

By Emma Thelwell

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