Britain shrugged off the Brexit vote to remain the main destination for foreign investment in financial services in Europe last year, although Germany and France are proving increasingly attractive to investors following the EU referendum, a new study has found.
The UK’s finance industry drew 99 foreign direct investment projects in 2016, up 5pc on the year and the most for a decade, according to a report by accountancy giant EY.
However, EY said that Germany and France also grew in popularity among overseas investors, with the former attracting 39 financial projects and the latter drawing 25.
For France, that marked a 25pc rise, while Germany enjoyed an 18pc jump.
The continuing lure of Britain for financial services came in the face of the vote to leave the European Union a year ago, which surprised the City and raised fears London could lose its status as Europe’s banking powerhouse.
London is used by many international banks, asset managers and insurance firms as the base for their EU operations. Firms have drawn up contingency plans to ensure they can still access the EU’s single market after Britain leaves, including proposals to move jobs to European cities such as Paris, Frankfurt and Dublin.
Bruno Le Maire, France’s finance minister, on Thursday said the country planned to establish a court that would deal with disputes over financial contracts that are governed by English law after Brexit. Such a court could bolster Paris’ appeal to financial services firms looking to move operations. English law is used widely in international finance.
EY found that 69 of the financial projects the UK attracted from foreign investors last year went to London, compared with just 19 for the French capital and 12 for Frankfurt.
The US and China were the biggest sources of foreign direct investment in financial services in Britain.
“Despite the referendum, UK financial services continued to attract record levels of investment last year,” said Omar Ali, UK financial services leader at EY. “However, the outlook for 2017 and 2018 isn’t so certain.
“We can see from our study that investors have concerns about what Brexit may mean for the future and they want greater clarity on corporate taxation and incentives for foreign investors.”