Within Europe, foreign investors are particularly drawn to France. Germany is falling behind, as a study by the consulting firm EY shows. The experts warn of a loss of competitiveness.
Europe and its largest economy, Germany, are attracting less foreign investment, according to a study. Last year, the number of new settlements and expansions on the continent fell by four percent – to a total of 5,694 projects, as the consulting firm EY announced today.
The level achieved in 2019, i.e. before the start of the corona pandemic, will be undercut by eleven percent.
France most popular location
France remained the most attractive location, despite a decline of five percent to 1,194 new settlements and expansions. In Germany the decline was much larger at twelve percent to 733 projects.
Referring to Germany, EY wrote: “Industrial investors were deterred by the recessionary environment, high energy prices and concerns about the security of energy supplies.” Complex bureaucracy and high labor costs continued to limit Germany’s ability to attract more foreign companies.
London leading as Investment region
Second place was therefore lost to the United Kingdom, which bucked the trend and recorded an increase of six percent to 985 projects.
London established itself as Europe’s leading investment region – followed by Paris. Foreign software and IT providers in particular were drawn to the British capital.
France as a Brexit beneficiary
A look at the long-term trend also shows that Germany has obviously become less attractive for foreign investors: the number of investment projects has fallen by 35 percent since 2017. In Great Britain the decline was 18 percent during the period. France, on the other hand, grew by 20 percent.
“France is the big winner from Brexit. Germany, on the other hand, has lost even more investments than Great Britain,” said Henrik Ahlers, Chairman of the EY Management Board.
“Wake-up call for the entire continent”
EY expert Julie Linn Teigland emphasized: “Europe urgently needs foreign investment and this study should be a wake-up call for the entire continent.”
Investment strengthened the European economy by creating jobs, promoting innovation and boosting exports. “Urgent action must now be taken to ensure that Europe remains competitive in the face of increasingly fierce competition from the US and China,” said Teigland.