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Investment by international businesses in Germany falls as UK remains steady

France outperformed every other European country in terms of the number of announced foreign investment projects last year, according to accountant Ernst &Young's EY Europe Attractiveness Survey 2022.

The company's annual research report, which is a recognized key source of insight into foreign direct investment, or FDI, showed that a post-COVID-19 pandemic rebound caused investment in France to surge by 24 percent, to 1,222 projects last year.

In contrast, the number of projects in Germany fell 10 percent to 841, while investment in the United Kingdom remained steady, increasing 2 percent to 993 projects.

In 2020, France, Germany and the UK were practically equal as the main beneficiaries of FDI within Europe.

The Daily Telegraph reported that France has seen an upturn in FDI since 2019 when President Emmanuel Macron launched a drive to entice deals through pro-business policies, including tax cuts and labor market reforms.

It said Macron has made a concerted effort to lure financial services from London, hosting many investment summits to capitalize on uncertainty caused by the UK's exit from the European Union, known as Brexit, which the British public voted for in 2016 and formally happened in January 2020.

However, EY said the investments secured by the UK in 2021 were typically larger and created more jobs than France. It also said London remains the most attractive city for FDI with 34 percent of executive respondents ranking it as a top-three city for investment.

Speaking to the Telegraph, Peter Arnold, UK chief economist at EY, said Macron had been "very successful in showcasing France as a place for inward investment", but suggested that as confidence in the UK improves, the difference between Britain and France in terms of FDI would contract.

He added: "The UK is in a pretty strong position and certainly since the EU-UK Trade and Cooperation Agreement was signed, we've seen a big increase in the UK's net attractiveness score."

Across the whole of Europe, the EY survey showed foreign investment levels recovered in 2021 following a year in which the COVID-19 pandemic caused investment across the continent to drop by 13 percent.

EY noted that in 2021, businesses around the world announced a total 5,877 FDI projects in Europe, which is a 5 percent annual increase.

Investment in 2021 remained 8 percent below 2019 levels, the last full year before the pandemic hit Europe, and 12 percent below 2017, a record year for FDI in Europe.

EY warned that the signs of recovery in 2021 might be temporary due to consequences of the conflict in Ukraine, such as global supply chain disruption.

In comments released with a summary of the survey, Julie Linn Teigland, area managing partner for Europe, the Middle East and Africa of EY, said: "In times of crisis, there is an obvious need to focus on the 'now' rather than the 'next'. But this should not happen at the expense of fortifying Europe's long-term attractiveness to foreign investors."