European Financial Investors Still Rank London as Their First Choice, with Paris Coming in Second

London continues to lead European cities in luring foreign direct investment into the financial services sector; according to an Ernst & Young survey, the UK’s share of new projects hit its highest level in a decade.

The New York-based consultancy said in a report following a survey of 900 decision-makers that London secured 81 projects in 2023, 76% more than the previous year and more than twice that of second-placed Paris, which saw an 11% decline. In addition, it stated that Paris was gradually gaining favor and would probably challenge London’s hegemony in the years to come.

“The stability of the UK’s financial services sector has ensured foreign investor confidence remains strong,” stated Anna Anthony, UK financial services managing partner at EY, despite difficult macroeconomic conditions and geopolitical uncertainty. She did, however, issue a warning about “fierce” competition from peers in Europe and overseas.

According to the results of the EY survey, investors continue to see the UK as a trustworthy location for business, despite worries about its competitiveness being raised by Brexit and the underwhelming performance of London’s equity markets. Recent years have seen a decline in trading volume, and data compiled by Bloomberg indicates that the London Stock Exchange raised just over 2% of the approximately $12 billion raised through initial public offerings this year—the smallest percentage in decades.

According to EY, the United Kingdom has secured a third of all European financial services projects, increasing its advantage over its nearest rival France. In 2023, 108 projects were drawn to Britain, up from 76 in 2022. This places it well ahead of other European travel destinations, such as Germany and France, which scored 38 and 39 projects respectively.

Securing 39 financial services projects last year was a 13% decrease from the previous year. France is trying to position itself as an appealing post-Brexit alternative to the City of London.

However, according to the data, investors found Paris to be more alluring than London as the best European city for potential financial investment over three years, according to EY. Paris has been hailed by many Wall Street titans as Europe’s next major financial hub.

Additional Takeaways from the Study:

• With 5,019 jobs connected to foreign direct investment in the financial services sector created in the UK in 2023—93% more than in 2022—the UK accounted for 40% of all jobs created in Europe last year.
• It reached its highest level in a decade last year when the UK market share of new financial services projects increased to 36% from 32% the year before.
• In the upcoming year, approximately 57% of investors stated they intend to start or expand financial services operations in the UK; this is a decrease from 67% in the survey conducted in 2022.
• FDI in financial services is still growing faster than FDI in all other sectors on the continent, despite notable downturns in business and technology services, which saw year-over-year declines in project numbers of 27% and 19%, respectively.