France narrows gap with UK in financial investments

Bloomberg

The UK remains Europe’s most attractive destination for financial services investment but its lead has narrowed, according to a survey by the consultants EY.
The UK attracted 56 financial services projects in 2020, still the highest in Europe yet down 43 projects from 2019, marking the largest year-on-year decline in a decade.
Foreign direct investment (FDI) in financial services falls by 23% across Europe in 2020 as the Covid-19 pandemic impacted business confidence and curtailed travel.
France was Europe’s second most popular FDI location last year. It recorded 49 financial services projects, 11 more than in 2019, and overtook Germany for the number two position. France also bucked the overall European trend of fewer projects for the year.
Investor sentiment on the future of UK financial services was positive in the survey, with the nation remaining the most attractive European country and London the leading city for financial services investment. Within the UK, Scotland was the second most attractive region, according to the survey.
“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,” said Anna Anthony, EY’s UK Financial Services managing partner.
In 2019, the UK recorded financial services 99 projects, more than double the total in the second placed country for that year, Germany, with 43.
As markets and economies across the globe start to recover from the pandemic, investor sentiment suggests the UK will continue to outperform the rest of Europe in attracting financial services investment. Global investors ranked the UK highest in Europe for investment-friendly pandemic recovery plans.
In terms of investment into the UK, the US again was the principle source, accounting for 37% of UK financial services FDI — up from 32% in 2019. At a city level, London continues to be seen as Europe’s most attractive destination for financial services FDI, followed by Stockholm and Amsterdam.
The UK field research was conducted in March and April via online interviews representing a sample of 570 international decision-makers. The European research was based on a panel of 550 participants.

Tourism, recreation led UK recovery in May
The UK’s economic recovery accelerated in May, led by the tourism and recreation segment, according to a survey by Lloyds Bank PLC that tracks business activity.
Tourism and recreation recorded the sharpest rise in output growth (to 62.4 in May from 51.9 in April, in the bank’s UK Recovery Tracker) as British hotels and restaurants experienced a release of pent-up consumer demand, with the transportation sector following.
As the UK moved further out of lockdown, 11 out of 14 UK sectors tracked by the survey reported faster output growth month-on-month in May, up from nine in April, according to Lloyds.
All 14 reported employment growth in May, up from 12 in April, with tourism and recreation showing a net gain for the first time since January 2020.
Prices also rise in May across all sectors, and at the fastest clip since 1999, with chemical and metals/mining producers increasing charges the most.
“When we look at the pace of growth, sectors that have been acutely affected by Covid-19 restrictions are now outpacing sectors that have been able to operate more freely during lockdown,” said Jeavon Lolay, head of economics and market insight at Lloyds Bank Commercial Banking.
Of the three sectors showing not reporting faster growth in May, health care slowed most markedly month-on-month (to 52.5 from 58.5), making it the worst performing segment monitored by the tracker for the first time since April 2019.
The tracker includes indices compiled from responses to IHS Markit’s UK manufacturing, services and construction PMI survey panels, covering over 1,500 private sector companies. A reading of 50 is the divider between expansion and contraction.