EY Survey: Romania Ranks Fourth In Europe By FDI Job Creation In 2016

In 2016, Romania attracted 132 FDI projects (32% more on the year) which generated 17,545 new jobs, EY Romania said in a statement.

The UK holds the top spot with over 43,000 new jobs, followed by Poland, with 22,000 new jobs, and Germany with nearly 20,000 new jobs created through FDI projects.

Foreign direct investment (FDI) into Europe hit a record high in 2016, with 5,845 FDI projects recorded (up by 15% year-on-year). This has led to the creation of 259,673 new jobs (+19%), according to the 2017 edition of the EY European attractiveness survey.

The UK, Germany and France are the top three European FDI destinations in 2016, capturing more than half (51%) of European FDI inflows and respectively recording 1,144, 1,063 and 779. Spain reinforced its fourth position (308), with Poland (256) rising one position in the FDI rankings, becoming the first country in Central Europe to enter the top five investment destinations. Of the top three destinations, France achieved the highest increase with 30% growth in FDI projects over the previous year, followed by Germany (12%) and the UK (7%). Germany, with 1,063 projects, strengthened its challenge to the UK’s longstanding European FDI leadership.

By number of FDI projects among the top 20 countries, Sweden, Italy and the Czech Republic are the top growth performers, with an increase of 76%, 62% and 57% respectively over the previous year. Only the Netherlands (-5%), Belgium (-5%) and Switzerland (-2%) recorded negative growth overall, a slowdown compared to 2015 when they all registered positive growth.

“Over 2016, geopolitical concerns were top of mind for boardrooms and policymakers, yet investors continued to invest in the world’s biggest single market and we’ve seen the Eurozone’s GDP growth outpace the US for the first time since the financial crisis in 2008. While the slow growth of many emerging markets in 2016 appears to have contributed to Europe’s attractiveness, our survey finds that global investors see Europe’s workforce as a vital asset. The introduction of robotics and artificial intelligence is also serving to reinforce Europe’s traditionally strong manufacturing and business services sectors,” said Andy Baldwin, EY Area Managing Partner – Europe, Middle East, India and Africa.

Despite a positive 2016 for FDI into Europe – a region with more than 500 million consumers and 30 million companies – geopolitical and macroeconomic challenges are impacting investor sentiment in the short-term. Among 505 executives interviewed globally in March this year, only 28% plan to expand their European operations in the next year, down four percentage points from 32% in 2015. However, investors’ confidence about Europe’s longer term has surged with the proportion of investors expecting a return to steady economic growth after at least five years rising to 56% from 45% in 2015.

Recording 1,310 FDI projects, US companies were Europe’s biggest investors, accounting for 22% of all European FDI projects in 2016. FDI projects from the US in 2016 grew by 10% over the previous year.

The majority of FDI into Europe, however, arose from intra-European FDI flows, which grew by 18% in 2016 to 3,272 new FDI projects, accounting for 56% of all European FDI projects and 138,431 newly created jobs. Germany consolidated its position as the leading home-grown cross-border investor, launching 651 projects last year – up by 25% over the previous year. Following Germany, the top five intra-European investors by FDI projects were France (346), UK (335), Switzerland (289) and Italy (187).

Greater London ranks as the leading urban area by number of FDI projects in 2016 –accounting for 40% of FDI projects in the UK. This achievement would place Greater London in the fourth place ahead of Spain and Poland. Greater London is followed by Greater Paris with 270 FDI projects. This year’s survey also sees an increase in attraction from Germany’s Düsseldorf and Oberbayern (Munich) areas retained their third and fourth positions respectively, while Spain’s Cataluna (Barcelona) rose one position to fifth place, with year-on-year growth of 5%.

In terms of investor sentiment, London retained its position as the most attractive European city. However, its appeal markedly fell from 52% in 2015 to 32% in 2017. Paris and Berlin were ranked by investors as the second and third most appealing investment destinations – although their appeal has declined compared with the previous year in favor of other European cities, including Frankfurt, Munich and Amsterdam.

Software and business services sectors together accounted for a quarter of FDI projects last year, underpinning Europe’s digital transformation. Software was the biggest source of FDI into Europe in 2016, generating 780 projects – up 12%. Business services followed as the second most active sector for FDI with the number of projects soaring 47% in 2016. This was driven by strong activity in the UK, Germany, France and Spain. Ireland and The Netherlands also posted impressive growth of 343% and 133% respectively in business services FDI projects in 2016.

Europe’s manufacturing sector, which accounted for 29% of FDI projects (1,455) and 53% of FDI jobs in 2015, attracted 1,538 FDI projects in 2016 – up 6% year-on-year. The survey also sees the CEE region increasingly positioning itself as the continent’s “workshop.” In 2016, CEE secured 755 projects, a 15% increase and an overall share of 49% of European manufacturing FDI projects – up from 45% in 2015.

Sales and marketing activities made up 46% of all FDI projects in 2016, up from 41% in 2015. Notably, companies originating FDI projects outside of Europe accounted for 45% of sales and marketing FDI projects.

When asked about the likely impact of Brexit on their operations, 80% of investors established in Europe said they have no plans to change or relocate; however, they highlighted concerns around possible tax, administrative and regulatory consequences. Notwithstanding uncertainty around the current geopolitical climate, 65% of investors interviewed are confident about the future of the European Union.

Education and the urgency to improve skills in Europe emerged as investors’ most important motive in investing in the region (37%, up from 29% in 2015), followed by the need to support high-tech and innovation (34%).

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