Ireland delivered a “Brexit-busting performance” in attracting foreign direct investment in 2018, according to a European-wide analysis of FDI trends published Tuesday.
The annual EY European Attractiveness Survey found that Ireland won 205 new FDI commitments last year, up 52pc from 2017. That cut against the grain of an overall 4pc decline in FDI growth across Europe and a 13pc drop in the United Kingdom, where analysts identified the threat of Brexit as a key factor in spooking investors.
“Ireland’s FDI performance is all the more remarkable given the impact Brexit has had elsewhere in Europe,” said EY Ireland chief economist Neil Gibson. “The survey identified talent, trade, technology and tax as the key themes driving FDI trends in 2018. Ireland’s clear strengths in each of these areas is likely to lie behind its Brexit-bucking performance.”
Survey respondents cited Brexit as the No. 1 issue weakening Europe’s attractiveness as an investment location, rising from fourth place in the 2017 survey. Just one in four identified London as one of Europe’s top three cities for investment, down from 34pc the year before.
While the UK retained pole position in 2018 as Europe’s top target for FDI, attracting a 17pc market share of all new investment, it saw this activity decline by 13pc to 1,054 projects, a four-year low driven by a sluggish manufacturing sector.
Germany experienced a similar 13pc drop, losing its No. 2 spot on Europe’s FDI table to France, where FDI growth stalled after two years of strong gains. Still, for the first time in two decades of EY surveys on the topic, France outpaced the UK and Germany to come top in wooing new R&D and manufacturing investments.
Ireland’s 52pc gain left it in 10th place with a 3pc share of new European FDI. Fourth-place Spain (32pc), fifth-place Belgium (29pc) and sixth-place Poland (38pc) also fared particularly well in growing FDI in 2018.
But the survey also identified signs of waning international interest in investing in Europe. It found that only 27pc of businesses plan to establish or expand operations in Europe this year, compared with 35pc last year. Should this forecast prove accurate, 2019 would mark a seven-year low in FDI growth.
The report also identified signs that investment from U.S. multinationals is waning, cooled by weak American growth and tax reform measures. It said FDI from U.S. sources into Europe grew 3pc in 2018, down from the previous four-year average of 8pc growth.
The EY European Attractiveness Survey excludes portfolio investments and M&A activity to ensure it measures only those FDI projects that create new facilities and jobs.
Read the full EY European Attractiveness Survey here: https://www.ey.com/en_gl/attractiveness/19/how-can-europe-raise-its-game-ey-european-attractiveness-survey-2019