UK’s top foreign direct investment ranking under threat

UK holds number one spot but attractiveness as investment destination falls - By Jessica Tasman-Jones

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May 23, 2017

The UK retained its ranking as the top destination for foreign direct investment into Europe in 2016, but Germany is catching up and London’s attractiveness has fallen significantly.

FDI projects in the UK rose 7 per cent to 1,144, while Germany saw inflows into 1,063 projects, up 12 per cent. France rounded off the top three rising 30 per cent to 779 projects, an EY survey released today shows.

While London retained its position as the most attractive European city, its appeal fell from 52 per cent in 2015 to 32 per cent in a survey of investor sentiment.

EY EMEA area managing partner Andy Baldwin says investors continued to invest in Europe despite geopolitical concerns being “top of mind” over 2016.

“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.”

Potential Brexit barriers

The European Union’s four freedoms of goods, services, capital and labour were noted for creating an attractive environment to invest in.

Sixty five per cent of investors said they were confident about the future of the European Union, while 80 per cent of investors into Europe said they had no plans to change or relocate due to Brexit.

However, concerns were highlighted around the impact Brexit could have on tax, administrative and regulatory consequences.

Overall, FDI into Europe rose 15 per cent year-on-year to 5,845 projects leading to 259,673 new jobs.

Poland moved into fifth place behind Spain with 256 projects becoming the first Central European country to enter the top five.

Among the top 20 countries, Sweden, Italy and the Czech Republic were the top growth performers, with an increase of 76 per cent, 62 per cent and 57 per cent respectively.

Software and business services sectors together accounted for a quarter of FDI projects last year.

FDI into business services rose 47 per cent in 2016 with the UK, Germany, France and Spain driving most activity.

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