The European Attractiveness Survey, by accountants Ernst & Young, found that foreign direct investment (FDI) in the UK was down just one percent in 2009, despite the recession.
“When seen in the context of 12 months during which the European economy suffered a deep recession, the resilience of the UK in securing FDI is a remarkable economic success story,” James Close, a partner at Ernst & Young, told Reuters.
For the eighth year running, London remained the most popular European city for foreign investment, securing 263 projects in 2009. The city's closest rival, Paris, came second with 99 projects. The largest investor in Britain was the United States, followed by France, Germany and India.
Across Europe as a whole, the survey showed mixed results. While overall investment was down a modest 11 percent in 2009, it is clear that investors preferred the security of larger economies, such as Germany, France and Italy, along with the UK. Spain and Ireland, who were particularly hard hit by the recession, saw a decrease in the amount of foreign investment coming in. Central and Eastern Europe, which had previously seen promising growth, saw a substantial drop in new projects.
Marc Lhermitte, Ernst & Young advisory partner and the author of the report said, “Investors, whether internally within Europe or externally from the US and the Far East, have focused on proven markets with scale. Central and Eastern Europe generally, and many of the smaller countries in Western Europe, have seen dramatic drops in project numbers as investors have flown to the safety of bigger, safer economies like the UK, France and Germany.”
The survey forecasts a modest improvement for 2010, but warns that sustained economic growth will require practical actions to encourage enterprise and investment.