Europe has become less appealing to foreign investors over the past year, according to a survey by the consultancy firm EY. Traditionally strong performers such as France and Germany experienced a sharp decline in foreign investment projects, whereas Belgium recorded a more modest drop.
The survey revealed a 22 per cent decrease in foreign investment projects in Europe over the course of two years. A “worrying” trend, according to EY partner Tristan Dhondt. Last year, countries such as France, the UK and Germany recorded a decline of around 15 per cent in investment projects.
Europe is suffering from geopolitical tensions, high energy costs and weak economic growth, according to the consultancy firm. However, Southern and Eastern Europe are becoming more attractive: Spain recorded a 15 per cent increase in foreign direct investment projects and Poland a 13 per cent increase.
Modest drop for Belgium
Belgium is holding up relatively well, with a decline of just two per cent, and has retained its eighth place in the European rankings. The number of jobs created by foreign investment also increased by 10 per cent. However, Dhondt notes that the recovery is relative, as 2023 saw a sharp 39 per cent decline in foreign investment in Belgium.
According to a survey of business leaders, the strengths of Belgium are its strategic location, robust infrastructure, and high-quality personnel. Although the number of projects in the region is at its lowest level since 2020, Flanders remains by far the most important destination for foreign investors in Belgium.
US Import tariffs
After a sharp decline in 2023, the United States has once again become the most important investor in Belgium, with 43 projects and 1,905 jobs. The survey was conducted before US president Donald Trump imposed sweeping import tariffs, a move that EY fears will cause foreign investment in Europe to fall further still.
The high level of uncertainty is already having an impact, with 45 per cent of surveyed business leaders saying they have postponed, cancelled or scaled back their investment plans for Belgium.
Conversely, 60 per cent plan to invest in Belgium in the coming year, and 70 per cent expect the country’s attractiveness to improve over the next three years. The outlook for Europe as a whole is slightly less optimistic: only 59 per cent of respondents plan to invest, and 61 per cent expect the region’s attractiveness to improve.
