Business Irish

Monday 12 November 2018

Ireland falls in FDI ranking as Paris gains to London's cost

Photo: iStock
Photo: iStock
Donal O'Donovan

Donal O'Donovan

Ireland fell out of a top 10 ranking of the most attractive European destinations for foreign direct investment (FDI) last year, slipping to 11th place overall after being overtaken by Finland.

In a rapidly-changing investment climate, Paris beat London as the most attractive European city for investors for the first time in more than a decade.

Ireland’s share of new investment declined last year – although 8,961 jobs were created here. That may be linked to investor fears – highlighted in the report – in relation to uncertainty around the corporate tax environment due to European Union moves and the base erosion and profit shifting (BEPS) global tax reforms. The biggest concerns were Brexit, geopolitical instability, such as  the recent US steel and aluminium tariffs, and the rise of populism.

The Ernst & Young (EY) research published on Monday shows the UK remains Europe’s single-biggest destination for FDI projects, and continues to grow. However, its planned departure from the European Union under Prime Minister Theresa May and the election of French President Emmanuel Macron were among the reasons Paris bumped London for the first time since the survey began in 2003. That’s likely to affect high-value financial services and technology schemes in particular.

London still came in second, followed by Berlin and Frankfurt.

The report, based on a survey of 502 companies and data from EY and IBM, showed FDI in Europe grew 10pc last year, its lowest increase since 2013.

Within the UK, Northern Ireland was the worst-performing region – attracting 19 new investments last year – fewer than half the 2016 tally.

That may be linked to a drop in cross-border activity. The data suggest Irish business made fewer outbound cross-border investments last year – including a decline in the number of investments into the UK.

Among countries, the Netherlands suffered an outright drop in investment inflows last year.

Winners included France, which won 31pc more investments in 2017 than a year earlier – despite an unpredictable presidential election – and Turkey, where the number of FDI projects increased 66pc, also despite political tensions.

In 2017, foreign investors made more than 6,500 decisions to invest in the 50 countries of greater Europe. The data shows the US is still the biggest single investor, but more than half of all FDI projects originated within Europe often into neighbouring markets.

Brexit was one of main factors affecting sentiment. Strikingly the number of companies foreign setting up or relocating their headquarters to the UK plunged last year. In 2016, half of new European headquarters were placed in Britain. That fell to a quarter last year.

Irish Independent

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