- 5,845 foreign direct investment (FDI) projects into
Europe in 2016 mark a 15%
year-on-year increase
- UK, Germany and
France attract just over half
(51%) of Europe's FDI in
2016
- 56% of global investors say Europe will regain steady growth after five
years
LONDON, May 23, 2017 /PRNewswire/ -- Foreign direct
investment (FDI) into Europe hit a
record high in 2016, with 5,845 FDI projects recorded (up by 15%
year-on-year). This has led to the creation of 259,673 new jobs
(+19%), according to the 2017 edition of the EY European
attractiveness survey.
The UK, Germany and
France are the top three European
FDI destinations in 2016, capturing more than half (51%) of
European FDI inflows and respectively recording 1,144, 1,063 and
779. Spain reinforced its fourth
position (308), with Poland (256)
rising one position in the FDI rankings, becoming the first country
in Central Europe to enter the top
five investment destinations. Of the top three destinations,
France achieved the highest
increase with 30% growth in FDI projects over the previous year,
followed by Germany (12%) and the
UK (7%). Germany, with 1,063
projects, strengthened its challenge to the UK's longstanding
European FDI leadership.
By number of FDI projects among the top 20 countries,
Sweden, Italy and the Czech
Republic are the top growth performers, with an increase of
76%, 62% and 57% respectively over the previous year. Only
the Netherlands (-5%),
Belgium (-5%) and Switzerland (-2%) recorded negative growth
overall, a slowdown compared to 2015 when they all registered
positive growth.
Despite a positive 2016 for FDI into Europe – a region with more than 500 million
consumers and 30 million companies – geopolitical and macroeconomic
challenges are impacting investor sentiment in the short-term.
Among 505 executives interviewed globally in March this year, only
28% plan to expand their European operations in the next year, down
four percentage points from 32% in 2015. However, investors'
confidence about Europe's longer
term has surged with the proportion of investors expecting a return
to steady economic growth after at least five years rising to 56%
from 45% in 2015.
Andy Baldwin, EY Area Managing
Partner – Europe, Middle East, India and Africa, says:
"Over 2016, geopolitical concerns were top of mind for
boardrooms and policymakers, yet investors continued to invest in
the world's biggest single market and we've seen the Eurozone's GDP
growth outpace the US for the first time since the financial crisis
in 2008. While the slow growth of many emerging markets in 2016
appears to have contributed to Europe's attractiveness, our survey finds that
global investors see Europe's
workforce as a vital asset. The introduction of robotics and
artificial intelligence is also serving to reinforce Europe's traditionally strong manufacturing
and business services sectors."
FDI performance and job creation surge across Europe
Turning to workforce demographics, Central and Eastern Europe (CEE) recorded the strongest
uptick in job creation, with Ukraine and Moldova notably achieving 435% and 220% growth
respectively over the previous year. Poland ranks second in terms of 2016 job
creation (22,074), following the UK, which leads with 43,165 new
jobs attributable to FDI projects.
In 2016, Russia, Serbia,
France and Romania join the ranks of the UK, Poland and Germany in each attributing more than 15,000
jobs to FDI projects.
US businesses are the single biggest investors into
Europe
Recording 1,310 FDI projects, US companies were Europe's biggest investors, accounting for 22%
of all European FDI projects in 2016. FDI projects from the US in
2016 grew by 10% over the previous year.
The majority of FDI into Europe, however, arose from intra-European FDI
flows, which grew by 18% in 2016 to 3,233 new FDI projects,
accounting for 55% of all European FDI projects and 137,387 newly
created jobs. Germany consolidated
its position as the leading home-grown cross-border investor,
launching 651 projects last year – up by 25% over the previous
year. Following Germany, the top
five intra-European investors by FDI projects were France (346), UK (335), Switzerland (289) and Italy (187).
The survey also reveals that Chinese companies were more active
in Europe in 2016, registering 297
FDI projects (25% more than the previous year) and creating 7,919
jobs. Two-thirds of projects generated by Chinese companies were
borne out of sales and marketing, followed by manufacturing and
R&D investments projects – 52 and 22 respectively. This trend
of outward investment was similarly experienced in Africa, which saw a dramatic increase of 106%
in Chinese FDI projects leading China to become the third largest investor in
the continent according to the recent EY Africa Attractiveness
survey.
Cities retain appeal despite investor sentiment
decline
Greater London ranks as the
leading urban area by number of FDI projects in 2016 –accounting
for 40% of FDI projects in the UK. This achievement would place
Greater London in the fourth place
ahead of Spain and Poland. Greater
London is followed by Greater
Paris with 270 FDI projects. This year's survey also sees an
increase in attraction from Germany's Düsseldorf and Oberbayern
(Munich) areas retained their
third and fourth positions respectively, while Spain's Cataluna (Barcelona) rose one position to fifth place,
with year-on-year growth of 5%.
In terms of investor sentiment, London retained its position as the most
attractive European city. However, its appeal markedly fell from
52% in 2015 to 32% in 2017. Paris
and Berlin were ranked by
investors as the second and third most appealing investment
destinations – although their appeal has declined compared with the
previous year in favor of other European cities, including
Frankfurt, Munich and Amsterdam.
Sector breakdown
Software and business services sectors together accounted for a
quarter of FDI projects last year, underpinning Europe's digital transformation. Software was
the biggest source of FDI into Europe in 2016, generating 780 projects – up
12%. Business services followed as the second most active sector
for FDI with the number of projects soaring 47% in 2016. This was
driven by strong activity in the UK, Germany, France and Spain. Ireland and The
Netherlands also posted impressive growth of 343% and 133%
respectively in business services FDI projects in 2016.
Europe's manufacturing sector,
which accounted for 29% of FDI projects (1,455) and 53% of FDI jobs
in 2015, attracted 1,538 FDI projects in 2016 – up 6% year-on-year.
The survey also sees the CEE region increasingly positioning itself
as the continent's "workshop." In 2016, CEE secured 755 projects, a
15% increase and an overall share of 49% of European manufacturing
FDI projects – up from 45% in 2015.
Sales and marketing activities made up 46% of all FDI projects
in 2016, up from 41% in 2015. Notably, companies originating FDI
projects outside of Europe
accounted for 45% of sales and marketing FDI projects.
Looking ahead: the future of Europe rests upon talent and
innovation
When asked about the likely impact of Brexit on their
operations, 80% of investors established in Europe said they have no plans to change or
relocate; however, they highlighted concerns around possible tax,
administrative and regulatory consequences. Notwithstanding
uncertainty around the current geopolitical climate, 65% of
investors interviewed are confident about the future of the
European Union. Data show that the free movement of goods,
services, capital and labor across the EU's 28 Member States is
still providing a fairly attractive environment in which business
is thriving, adapting and investing – creating jobs and
profits.
Education and the urgency to improve skills in Europe emerged as investors' most important
motive in investing in the region (37%, up from 29% in 2015),
followed by the need to support high-tech and innovation (34%).
Baldwin concludes: "Businesses and policymakers need to build on
Europe's strong position and
further develop its attraction around software, business services
and talent. To foster Europe's
digital future and our own tech giants, we need to see a continued
focus on the creation of a digital single market; to connect and
support the various tech ecosystems; and see more investment in
education and skills, particularly around STEM subjects."
About EY
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help build trust and confidence in the capital markets and in
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This news release has been issued by EYGM Limited, a member of
the global EY organization that also does not provide any services
to clients.
About EY's European attractiveness surveys
EY's attractiveness surveys analyses the attractiveness of a
particular region or country as an investment destination, and is
designed to help businesses make investment decisions and
governments remove barriers to growth. A two-step methodology
analyses both the reality and perception of FDI in the country or
region.
We define the attractiveness of a location as a combination of
image, investors' confidence and the perception of a country or
region's ability to provide the most competitive benefits for FDI.
The research was conducted by the CSA Institute in March 2017, via telephone interviews with a
representative group of 505 international decision-makers.
Raffaella Santarsiere
EY Global Media Relations
+44 (0) 7467 441509
raffaella.santarsiere@uk.ey.com
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