In 2023, European foreign direct investment (FDI) experienced its first decline in three years, with the number of projects decreasing by 4% and jobs falling by 7%. France remained at the top of the foreign investment league table, although investment decreased by 5%. The UK saw a 6% increase in investment, moving up to second place, while Germany dropped to third after a sharp 12% decline.
Despite the decline in FDI, 72% of businesses plan to establish or expand operations in Europe in the coming year. However, risks remain, with businesses citing increased regulatory burden, volatile energy prices, and political instability as the top concerns impacting investment decisions.
Throughout 2023, Europe saw a decrease in FDI projects compared to the previous year, with total investment now 11% lower than in 2019, just before the COVID-19 pandemic. France and Germany saw decreases in FDI projects, while the UK saw an increase. Economic challenges, including slow growth and high inflation, have contributed to the downturn in FDI.
The report highlights concerns about Europe’s ability to remain competitive in the face of increasing competition from other global powers. Despite the challenges, there is optimism for the future, with many businesses still planning to invest in Europe. However, urgent action is needed to create the conditions for investment to flourish and ensure Europe’s long-term attractiveness to foreign investors.
