There was a 13% drop in the number of foreign direct investment (FDI) projects across Europe in 2020, reflecting a trend across the continent, according to Ernst & Young’s EY Attractiveness Survey.
The survey, conducted each year, showed that the number of FDI projects fell from 6,412 to 5,578 between 2019 and 2020. This 13% decline was reflected in the individual figures for the four highest-ranked countries.
France, ranked first in terms of overall project numbers, saw an 18% fall to 985 from 1,197; the UK saw a 12% drop from 1,109 to 975; Germany, ranked third, had 930 projects, as opposed to the previous year’s 971, a fall of 4%; and Spain was down 27%, 486 projects to 354.
Per capita, the best-performing country in the survey was Ireland, despite recording a drop from 191 projects.
In an accompanying statement, Feargal de Freine, assurance partner and head of FDI, EY Ireland, said: “Our data illustrates how FDI was impacted across Europe in 2020 as the pandemic took hold. Despite our own reduction in FDI in line with our European peers, Ireland has held up well and in the last three years alone, we have secured over 550 projects which is truly remarkable for a country of our size.”
What has Brexit meant for Britain?
While the UK has placed second in the survey since falling from the top spot two years ago, Ernst & Young said that the country had closed the gap with France over the last year.
Digital technology projects reportedly account for the largest share of foreign investment, 33%, in the country, However, there was a notable decline of 25% in the number of digital projects between 2019 and 2020, a rate double the European average.
Alison Kay, managing partner for client services at EY UK & Ireland, said: “The UK has demonstrated resilience and adaptability in attracting investment. Key sectors have changed over time, and the UK attracted the most ‘new’ projects in Europe in 2020 rather than relying on reinvestments. However, its former dominance of the FDI market has been replaced by a competitive three-way tussle with Germany and France.
“To regain its place as the market leader, the UK will need to build on its strengths. The investors we spoke to for this year’s survey identified digital technology and health and wellbeing as being key growth areas for the UK, and these are areas where the country already excels.”
She added: “But there is catching-up to do elsewhere. In increasingly vital areas, such as clean technology, the UK trails Europe. COP26 in Glasgow should provide some impetus to improve, while investors tell us they value green policy and regulatory certainty as well as support to develop green supply chains. There is an opportunity for holistic, targeted initiatives to attract FDI in the priority areas that should form the core of a ‘Building Back Better’ strategy: innovative research and digital technology; ‘cleantech’; and levelling-up the UK’s economy.”