The number of foreign direct investment (FDI) projects secured by Scotland rose to a record 124 in 2023 – a 12.7% rise on the previous year.

According to Ernst & Young’s (EY) Scotland Attractiveness Survey report, it is second to London among the UK in securing inward investment projects for the ninth consecutive year.

Projects in the UK rose by just 6%, while Scotland’s FDI flow saw its share rise to 14.4%, up from 13.6% in 2022.

It is the fifth consecutive year of increase and its highest over the past decade.

The US remained the single biggest originator of FDI projects, accounting for 27, or 19%, of Scotland’s during 2023, the data showed.

Meanwhile, projects from Germany doubled to a decade-high of 20, making it the second largest source of projects into Scotland.

The analysis also showed that utility supply is the leading sector in Scotland with 40 projects secured in 2023 and a rise of 81.8% on the 22 secured in the previous year.

Digital technology, business services and transport and logistics each secured 14 projects.

Scotland’s FDI growth outpaced both the UK and Europe last year, with the latter recording a 4% year-on-year decline – the continent’s lowest since 2020 with 5,964 projects.

Ally Scott, EY Scotland managing partner, said: “Scotland has demonstrated yet another very strong performance both in attracting FDI and retaining the confidence of investors.

“Utilities, including renewable energy, plays a strong role in Scotland’s FDI growth story as the country leads in sustainability and low-carbon power generation.”

But he said: “There is no room for complacency. We still hear frustrations from clients and the market that Scotland’s tightening economic policies, including the latest income tax hikes and issues around city and infrastructure quality, are causes for concern.”

Mr Scott added that Scotland must “capitalise” on its strong performance for future years as other UK nations close in on Scotland’s lead.

Deputy First Minister and Economy Secretary, Kate Forbes, said: “Attracting inward investment is critical to economic growth and driving forward strategic objectives in key sectors.

“These results show a record performance, with Scotland once again outpacing the UK as a whole and the European Union when it comes to securing foreign direct investment projects, delivering on the actions and priorities we have set out in Government.

“From being at the forefront of the energy transition to the rapidly emerging cutting-edge technologies, we have an enormous opportunity to capitalise even further.

“We will continue to work with our economic development agencies as part of a Team Scotland approach to attracting foreign direct investment and bringing more high quality jobs across Scotland.”