FRIDAY, 7 OCT 2022

 

CONNECT

Facebook Linked In Twitter
IMH LTD

President Anastasiades To Take Part In Informal European Council In Prague

Biden Says Nuclear Risk Highest Since 1962 Cuban Missile Crisis

IMH LTD

SERVICES

brought to you by Barclays

Foreign Direct Investment In Europe: A Game Of Two Halves

Foreign Direct Investment In Europe: A Game Of Two Halves

Europe’s attractiveness for FDI has shown signs of recovery following the COVID-19 pandemic with a 5% increase in the number of projects announced in 2021 compared to 2020, according to the latest annual EY European Attractiveness Survey.

At the same time, the new geopolitical and economic environment, mainly created by the war in Ukraine, means that the immediate attractiveness of Europe for investment may be challenged. However, the long-term attractiveness of Europe remains robust with 64% of investor respondents believing Europe’s attractiveness will improve during the next three years.

The EY European Attractiveness Survey is based on qualitative research – conducted between February 2022 and April 2022, with 501 international investors across a range of industries, business types and locations – and quantitative analysis of FDI projects announced in 44 European countries in 2021. It is worth noting that Cyprus is included this year among the European countries where attractiveness surveys were conducted. The findings of the survey are expected to be presented in October.

The survey finds that, a post-pandemic rebound and “Macron reforms” caused investment in France to excel 24%, to 1,222 projects in 2021. Investment in the UK remained steady, increasing 2% to 993 projects; London remains the most attractive city for FDI with 34% of executive respondents ranking it as a top-three city for investment. In contrast, the number of projects in Germany fell 10% to 841. However, it also attracted large, industrial projects, especially in the automotive and electronics sectors. In terms of job creation, the story differs, with the average FDI project creating 68 jobs in the UK, 45 in Germany and only 38 in France.

Further nuances add color to the picture across Europe

Manufacturing, logistics and R&D projects rebounded 22% in 2021 partly due to supply chain reorganizations, which are set to continue. Fifty-three per cent of respondents are considering ‘nearshoring’ – bringing operations closer to customers (more than double compared with last year). Forty-three per cent of respondents are considering “re-shoring” – bringing activity back to their domestic market – compared with 20% in 2021. This industrial rebound is a partial reason for the high performance of many Southern European countries.

Western Europe suffered compared to the rest of Europe, owing to its reliance on services investment, the need for which has declined owing to an increase in hybrid and remote working. For instance, businesses announced 25% fewer sales and marketing offices in 2021.

Europe’s long-term attractiveness hinges on five priorities

Investors remain optimistic about Europe’s attractiveness despite the war in Ukraine. If supply chains are disrupted to the point that businesses begin to either re-shore or nearshore operations back to Europe, then manufacturing investment in Europe may increase. The most likely outcome is that sanctions and supply chain disruption will persist and there will be impacts on commodity price inflation, geopolitical tension and, heightened risks of cyber-attacks on large businesses and critical infrastructure.

Beyond the current economic and geopolitical context, the survey highlights many structural factors that could impact the continent’s long-term attractiveness to FDI. The survey data reveals five top priorities:

  1. Investment in digital: the most important factor that determines where businesses invest is the level of technology adoption by consumers, citizens, and administrations
  2. Sustainability as a competitive edge: businesses ranked policy approaches to climate change and sustainability as the second-most important factor that determines where they invest
  3. The need for new talent: new skills among the workforce is one of the top two priorities in assessing for FDI among those surveyed, particularly in relation to Europe’s green and digital transitions
  4. Tax flexibility and pragmatism: the degree of digitalization of tax authority systems is the most important tax-related factor that determines where businesses invest
  5. Support for small to medium enterprises from policymakers: small and medium-sized businesses (revenues less than EUR1.5bn) were hit hardest by the pandemic and are less likely to have rebooted their FDI plans (83% of large businesses versus 44% of SMEs)

Commenting of the survey’s findings, Stelios Demetriou, Partner and Head of Strategy and Transactions Services of EY Cyprus, said, “Even though the war in Ukraine has impacted investors’ optimism, Europe retains its attractiveness as an investment destination and investment plans have not been greatly affected. However, in this uncertain and rapidly evolving environment, some sectors and countries are performing better than others. At the same time, supply chain disruptions may be driving investors to relocate closer to home, a trend from which several Southern European countries are benefitting. We are awaiting with interest the findings of the Attractiveness Survey for Cyprus, which should provide the government and Cypriot corporations with meaningful insights.”

 

 

MORE ON SERVICES

Christos Yiacoumis Joins Kyndryl

Based in Cyprus he will carry out expanded duties for the region of Central-Eastern ...

Gear Education Joins Google Cloud Partner Advantage

Cyprus can elevate education with Google Workspace for Education’s simple, flexible, and ...

ECOMMBX: From Revolution to Evolution

In the early 1980s, when ATMs made their first appearances in the walls, when credit ...

FROM AROUND GOLDNEWS

   

European Parliament Calls For EU Sanctions On Iran Over Repression Of Street Protests

Members of the European Parliament have called for EU sanctions against Iranian security forces over their "widespread, intentional and ...
   

TheSoul Publishing Names Longtime COO Arthur Mamedov As CEO

COO Arthur Mamedov will transition to the role of CEO. At the same time, Anastasiia Vinogradova will become Chief Creative Officer (CCO).
   

How Expensive Is Your Cup Of Coffee?

Data released by EU’s statistical agency Eurostat for August 2022 show that the price of coffee in the EU was on average 16.9% higher than in August 2021.
   

Elon Musk: Twitter Won't 'Take Yes For An Answer'

Billionaire Elon Musk has said he aims to complete his purchase of Twitter by the end of the month, but the company "will not take yes for an answer".
   

House Prices Up In Q2 2022, Cyprus Central Bank Says

An acceleration in the increase of house prices was recorded in the second quarter of 2022, mainly due to increased construction costs, the Central Bank of ...
   

President Anastasiades To Take Part In Informal European Council In Prague

President of the Republic of Cyprus, Nicos Anastasiades is attending the Informal European Council in Prague where the leaders of the 27 EU member states will ...
   

Biden Says Nuclear Risk Highest Since 1962 Cuban Missile Crisis

The risk of a nuclear "Armageddon" is at its highest level since the 1962 Cuban Missile Crisis, US President Joe Biden has said. Mr Biden said ...
   

One-Stop-Shop Framework For Shipping Companies

The plenary of the House of Representatives unanimously passed a law on Thursday that provides for the establishment of a one-stop-shop framework for shipping ...
 

YOUR COMMENTS

HEADLINES

MOST POPULAR

gold september issue
maritime_cyprus_conference_9/8-11/10

IMH LTD