Ireland ranks ninth in Europe for foreign direct investment

The Republic ranks ninth out of 48 countries in Europe for foreign direct investment (FDI), according to a study of the most attractive locations for global investors by accountancy giant EY.

On the basis of the largest number of projects per million population, the Republic emerges on top, it said.

Some 165 FDI projects were drawn to the State last year by its calculation, down 13 per cent on 2019.

Decline

The same decline was witnessed across Europe, EY said, with some 5,578 projects announced across the continent in 2020.

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EY’s report examined the performance and perceptions of Europe as a destination for FDI and included a survey of 550 international investors exploring the impact of Covid-19 on their investment decisions.

Although the number of FDI projects confirmed for the Republic has dropped for two consecutive years, this is largely due to the “Brexit bounce” that brought a record 205 projects to the State in 2018, EY said.

Over the past five years, the Republic has maintained a steadily high level of FDI at an average of 167 projects per annum, with the US continuing to be the most active investor country, accounting for 58 per cent of projects.

It is followed by the UK, which accounts for 17 per cent, and Germany, which accounts for 5 per cent.

Reduction

"Despite our own reduction in FDI in line with our European peers, Ireland has held up well, and in the last three years alone, we have secured over 550 projects, which is truly remarkable for a country of our size," said Feargal de Freine, assurance partner and head of FDI at EY Ireland.

The report predicts that investment will rebound this year, with 40 per cent of investors saying they plan to establish or expand operations in Europe in the next 12 months.

Some 63 per cent believe Europe’s attractiveness as an investment destination will improve during the next three years, while only 5 per cent said they think it will deteriorate.

Location

Four-fiths believe western Europe in particular will be the most attractive global location for FDI after the pandemic.

More than nine out of every 10 respondents said environmental sustainability was either critical or important to their investment strategy, while the availability of talent with technology skills was also deemed critical or important to a similar number.

France was Europe's top destination for FDI for the second year running, attracting 985 projects, or an 18 per cent annual decrease.

Despite Brexit, the UK maintained its second place position with 975 projects, down 12 per cent on 2019, while Germany in third place secured 930 projects, down just 4 per cent.