France has retained top spot as Europe’s top destination for foreign direct investment (FDI), despite a 7% fall in European projects since the pandemic, according to Ernst & Young (EY).
The management consultant’s report, Navigating Through Turbulence, stated there were 1,259 projects in France in 2022, making it the biggest recipient of projects in Europe for the fourth consecutive year. The number of projects, the report said, rose by 3% between 2021 and 2022. The UK was in second place with 929 projects and Germany was third with 832.
“In 2022, the number of FDI projects recorded across Europe edged up by 1.4%, from 5,877 in 2021 to 5,962 in 2022,” said the report’s authors. “Our global survey of executives shows the modest scale of this rise largely reflected the challenging economic environment triggered by the war in Ukraine, which pushed energy prices and inflation upwards and boosted geopolitical uncertainty. As a result of these factors, the number of direct investments in Europe is still below pre-pandemic levels – down from the 6,412 projects secured in 2019.”
The figures in EY’s report suggested a recovery is stuttering forward after the number of projects fell sharply from 6,412 in 2019 to 5,578 in 2020. That recovery seems to have slowed a little, however, with the number of projects reaching 5,877 in 2021 and 5,962 in 2022. These figures were gleaned from the EY European Investment Monitor, 2013-22.
Strong year for digital tech
Drilling down by sector, the report’s authors noted: “At the European level, the top sectors by number of projects in 2022 were digital technology (software & IT services) with 1,182, an 8% increase on 2021; business services & professional services with 765, a 27% increase year-on-year; and transportation manufacturers & suppliers with 470 projects, a 7% decrease. Business services, professional services and the utility supply sector – which includes renewables projects, and which was also up 27% – had a very strong year.”
Elsewhere, the report said: “A comparison between the European countries that rank highest for digital investments shows the UK, Spain and France have seen a decline in project numbers in 2022. However, powered by strong performances from their respective capital cities, Germany and Portugal have been able to attract more digital investment projects despite the challenges facing the sector globally in 2022. Understanding the success of the Berlin and Lisbon tech investment scenes should be a priority for policymakers in this area.”