Foreign direct investment in Europe
Foreign direct investment (FDI) is critically important to Europe’s economy.
Ernst & Young (EY) just published the EY Europe Attractiveness Survey 2023. This report aims to answer the question: How can Europe turn on the taps of foreign investment?
As main topics, we highlight:
- How did foreign investors react to the geopolitical and economic crisis in 2022?
- Where has the investment grown, been maintained or reduced? In which European countries?
- In which sectors have the effects of this new crisis been most noticeable?
- How has Europe — both collectively and its individual countries — been impacted by and reacted to the situation?
- Does Europe still count in the eyes of international investors?
- After the economic shocks of 2022, is investment in Europe set to soar?
The effects of the Economic and financial difficulties, along with the energy crisis brought by the Ukraine conflict, are visible in the number of projects in Europe through 2022. There are 5.962 greenfield and expansion projects in 44 European countries, which translates into an increase of only 1% when compared with the 5% growth in 2021. The impact of geopolitical, energy and economic crises also has an impact in the employment: the number of jobs created in 2022 by foreign investors dropped by 16% in 2022.
The FDI pictures by project varies considerably across Europe.
According to the EY’ graphic below, the countries with the most number of projects are France, the United Kingdom (UK), and Germany (1.259, 929 and 832 respectively).
Portugal is in 6th position, with 248 projects in 2022. In 2021 there were 200 projects, which corresponds to a growth of 24%, representing 21.944 jobs in 2022. As seen below, France, UK and Germany had a variation of +3%, -6% and -1% respectively, in the number of projects in 2021/22.
When analyzing the number of jobs created per project in 2022, it can be seen a crucial change in the ranking, with France, UK, and Germany previously in 1st, 2nd and 3rd positions are now not even at the top 10. Our country relies on 9th position, with an average number of 131 jobs created per project in 2022 and unemployment (as % of extended labor force) of 11,2%.
When analyzing the foreign investment project in the renewable energy sector in the top 10 FDI destinations in Europe in 2022 (graphic shown below) France, UK and Spain are leading the energy projects with 39, 37 and 37 respectively). Portugal is also in a very good position, in 6th place, with 7 projects in the energy sector.
Focusing on the Research and Development (R&D) projects in 2022, the top 5 are led again by France, UK and Germany, followed by Portugal in 4th place, with 144, 127, 52 and 39 projects created, respectively). In 2021 Portugal had created 42 projects in R&D, which represents a decrease of 7%.
