Foreign direct investment (FDI) in Europe’s financial services sector rose by 13% to 329 projects in 2023, with the UK retaining its position as the top destination. The country secured 108 projects, representing a 42% jump from 2022.

France ranked second with 39 projects, reflecting a 13% decrease, while Germany was third with 38 projects, a 23% increase. According to the EY Attractiveness Survey for Financial Services, the UK’s market share of financial services FDI in Europe grew to 33% from 26% in 2022. France and Germany each accounted for 12%, while Spain sealed 5%.

Record high in new financial services projects

The number of new financial services projects across Europe reached its highest since 2019, with 233 new projects in 2023, up from 215 in 2022. The UK recorded 85 new projects, a 25% increase from 68 in 2022, raising its market share of new projects to 36%, the highest in a decade. Germany saw a significant rise in new projects from 12 in 2022 to 32 in 2023, while France experienced a decline from 26 to 22.

Job creation from financial services FDI increased across Europe in 2023, particularly in the UK, Poland, and Portugal. Projects that disclosed headcount numbers created 12,675 jobs, up 18% from 10,708 in 2022. The UK led with 5,019 jobs, a 93% increase from 2022. Poland and Portugal followed, with 3,259 and 1,340 jobs, respectively.

Anna Anthony, EY UK financial services managing partner, stated: “The UK didn’t just maintain its lead as the most attractive European financial services market last year, it extended it significantly. Even through challenging macroeconomic conditions and geopolitical uncertainty, the stability of the UK’s financial services sector has ensured foreign investor confidence remains strong.

“However, competition is fierce – both from European peers and further abroad – and increasing market attractiveness must be a top priority for both industry and government.”

London: premier destination for financial services FDI

EY’s report found that London remains the leading European city for financial services FDI, with its 81 projects last year indicating a 76% increase from 2022.

London’s total projects were more than double that of Paris, which secured 31 projects, an 11% decline. Madrid placed third with 11 projects, down from 22 in 2022, and Milan followed with seven projects, down from 16.

For new projects, London attracted the most in 2023 (69), followed by Paris (18), Frankfurt (12), Madrid (10), and both Amsterdam and Lisbon (eight each).

US a key investor in Europe’s financial services sector

The US remained the largest source of financial services investment into Europe in 2023, with projects increasing by 15% to 91, representing 28% of all financial projects in Europe. The UK was the primary recipient, with an 81% increase in US-backed projects, from 21 in 2022 to 38 in 2023.

EY EMEIA (Europe, the Middle East, India, and Africa) financial services managing partner Omar Ali commented: “While FDI in tech and business services sectors fell across Europe last year, it continued to rise in financial services – even amid challenging macroeconomic conditions and geopolitical uncertainty. Foreign investors remain drawn to the trusted capabilities, expertise, and skills found in Europe’s major financial centres…”

Looking ahead, investor sentiment remains positive towards Europe, with a survey indicating the UK as the most attractive European country for financial services investment in 2024, followed by France, Germany, and Spain. Three-quarters (75%) of investors believe the UK will retain or improve its attractiveness over the next three years.

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