欧洲外资吸引力调查2023

How

canEurope

attractnext-generationinward

investment?EY

Attractiveness

SurveyEuropeJune

2023Contents34ForewordExecutive

summary1Where

andhow

businesses

invest

inEurope:thenew

location

logic623How

investment

decisionsare

shaped:will2023bea

turning

point?12Building

Europe’s

future:how

to

attract

next-generation

investment?2032Methodology2/attractivenessForewordHanne

Jesca

BaxMarc

LhermitteJulie

Linn

TeiglandEY

EMEIA

Area

ManagingPartner

Markets

&AccountsPartner,

EY

Consulting,Global

Lead

—

FDI&AttractivenessEY

EMEIAAreaManagingPartnerTheinitialanalysis

oftheresults

ofthe22nd

EY

EuropeAttractiveness

Survey,

publishedinMay2023,highlightedtheextent

towhichforeign

direct

investment(FDI)inEurope

wasaffected

bytheshocksthathitthecontinentin2022.GrowthinFDIactivity

stalledinthewake

ofthewarinUkraine,andthehoped-for

post-pandemic

rebound

stumbledintheface

oftheunexpected

economicdisruption.The

overallnumberof

projectsannounced

grew

just1%between2021and2022,whilethenumberof

jobs

created

byFDIdropped

by16%.Thisshiftistaking

place

againsta

backdrop

of

renewed

globalcompetition

for

investment.Other

territories

have

renewedtheirappeal

to

investors,includingtheUSwithits

powerful

InflationReductionAct(IRA)andhigh-growth

economies

aroundtheworld.

Europeneedstobeagileandadaptive

to

enhance

itsattractiveness

relative

tothecompetitionandto

securetheinvestmentsthatwillcountintheyears

to

come.The

question

weaskis:Can

Europedothisatboththegeneralandlocal

levels?

Across

Europe,a

common

focusisrequiredtobuilda

trulycompetitive

environment,

deliveronnet-zeroanddigital

transformation,helpthevalue-creating

businessesof

tomorrow

scale,

deliver

essentialskillsandsupport

astable,

business-friendly

taxandregulatory

environment.Perfect

alignment

ofthestrategies

of

different

countriesorcommunitiesisimpossible,

sopublicactors

mustmanageadelicatemixof

competitionandcollectiveactionto

convincecompaniesthatEurope’s

diversityandcomplexityisacompetitive

advantage.Yet

thesurvey

also

showedthata

highnumberof

companiesplanto

investinEuropein2023.Ina

volatileandfast-changingenvironment,

businesses

knowthatstanding

stillisnotanoption.What

we

see

emerging

todayisa

paradigmshiftasinvestors’priorities

evolve,theinterests

of

communitiesandpolicymakersshift,andglobal

competition

intensifies.Itisusheringinthenext

generation

ofFDIinEurope.Inevery

sector,

inevery

market,

businesses

are

seeking

tosharpentheirstrategicandoperational

edge.

This

meansmaking

their

supply

chains

more

resilient;

acceleratingtheir

ESGcomplianceandworking

toward

net

zero;

rebuildingtheirvaluemodelsaround

transformative

digital

technologies,includinggenerativeAI;developingtheircapacity

for

innovation;andstriving

to

securetheskillsneededto

delivertheirstrategicobjectives,amongother

challenges.

Those

concerns

are

layeredontop

oftheenduringbusiness

imperatives

to

seek

profitabilityandefficiency,

preferablyina

stable

operating

environment.Withthecontribution

ofourexperts,thissecond

phase

ofthe2023Europe

Attractiveness

Surveyaimsto

identifytheleversthatwillenableourcontinentandits

territories,

workingwithitsindustries,multinationalsandinnovative

new

entrants,

to

facethetransformationthatneedstohappenoverthenext

decade.We

hopeitsfindingsspura

fresh

conversationaboutforeigninvestmentandEurope’s

future.AspartoftheEY

commitmenttobuildinga

better

working

world,

EY

professionals

arededicated

tohelpingbusinesses,

sectorsandcountries

recover,transformandthrive.

We

firmlybelievethatforeign

investmenthasa

key

role

to

play.Today’s

investments

requirea

new

locationlogic—

andwhilecompanies

are

rethinking

how

to

selecttheoptimal

sites

forinvestment,

countriesandcommunities

are

likewise

rethinkingtheirpriorities.

Thereisa

growingemphasisonenvironmentalandsocial

goals,andonsupporting

regional

development,alongsidethefundamental

considerations

ofjobandwealthcreation.

Quality,

not

just

quantity,isthenew

mantra

foreconomic

development.EY

EuropeAttractivenessSurvey20233Executive

summaryWhat

isonthe

mindof

foreign

investors:The

new

location

logicAmonginvestorsthatthinkEurope’s

attractivenessisthreatened,thetop

risks

are:The

macroeconomic

environment

impacted

Europe’sFDIgrowthin2022:1.

Political

instabilityThere

were5,962greenfieldandexpansion

projects

announcedinEuropein2022(+1%vs.2021).74%5,9622.Increased

costs53%3.

Increased

regulatory

burden

and

reduction

inThere

were343,634jobs

created

byannouncedFDIprojectsinEuropein2022(-16%vs.2021).talent

pool343,63437%Most

investors

haveplansto

establishorexpand

operationsinEuropein2023:Inorder

to

maintain

its

competitive

positionintheglobaleconomy,

Europeshouldconcentrate

its

effortsonthreemainareas:67%in2023Supporthigh-tech

industriesandinnovation+14%26%53%in2022Supportsmall-andmedium-sized

enterprises23%Allow

regulation

to

keep

pacewithtechnologicalandotherdisruptions20%The

top

three

priorities

for

investmentin2023are:1.

Liquidity

of

financial

markets

and

availability

of

capital28%2.

Strength

of

domestic

markets26%3.

Policy

approach

to

climate

change

and

sustainability25%For

moreinformationFor

further

detailonFDIprojectsinEuropein2022andinvestor

sentiment

forthefuture,read

ourinitialanalysis.4/attractivenessWhat

Europe

can

doto

unlocknext-generation

FDIin

Europe?Evenamongexecutiveswhoare

optimisticaboutEurope’s

prospectsasa

destination

for

inward

investment,theviewisthatpolicymakersneedto

actively

work

to

prepare

for

next-generationFDI.We

have

identifiedsixprioritiesthatareparticularlycritical

for

foreign

investors.Refresh

Europe’s

appeal

as

the

natural

home

of

next-generation

businessesMake

the

most

of

Europe’s

leadership

on

climatechange

and

accelerate

on

ESG14Europe

might

face

complex

economicandsocial

challenges,butbusinessesneedto

heara

clear,

confident

message.

Investorswillrespond

positively

toa

visionof

Europethatunderlinesits

economic

resilienceandthestability

of

its

politicalandregulatory

environment,whilealso

committing

tosupport

rapid-growth

sectorsandengagingwiththeera-defining

challenges

ofthedigitalandnet-zero

transitions.Policyonclimatechangeandnet

zeroisoneof

companies’

topthree

considerationswhenthey

choose

where

to

invest.

Theresearch

suggeststhatinvestors

recognizetheadvantages

ofEurope’s

leadershiponnet

zeroandESG.

Europeshouldseekto

head

offthecompetitivechallengeoftheUSIRA

throughmeasuresthatwillaccelerate

investmentingreen

technology.The

survey

also

highlightstheimportance

to

business

oftherisingshare

of

renewablesinEurope’s

energymix.ItisvitalthatEurope

makesfurther

progress,

especiallywhilerisinggeopolitical

tensions

continue

to

threaten

energy

supplies

fromoutside

Europe.

The

approach

mustjoinupwithcommitmentsonskillstoo.Reinforce

support

for

SMEs,

which

remain

thevulnerable

fabric

of

Europe’s

economy2Oneof

Europe’s

biggest

prioritiesinshapinga

competitiveenvironmentfitforthefutureshouldbeto

boostsupport

forSMEsandhelpthemscale

more

effectively.SMEsemployabout100millionpeopleacross

Europeandplaya

vital

roleininnovation.

But

far

fewerSMEsthanlargerfirmsplanto

expandinEuropein2023(57%comparedwith79%),andthey

are

alsoless

optimisticaboutEurope’s

prospectsinthenext

three

years.A

comprehensive

viewisrequired

ofalltheelementsneededformore

EuropeanSMEsto

maketheleap

to

become

potentiallyworld-leading

businesses,

fromtheavailability

of

growth

capitaltotheimpact

of

regulatory

frameworks.Develop

next-generation

talent

and

align

skills

withthe

vision

of

Europe’s

future5Highemployment

levelsinmany

European

countries

meanthatbusinesses

face

intense

competition

for

talentinmost

sectors.For

instance,the

EUSolar

Jobs

Report

2022

estimatesthesolar

workforcewillneedtodoubleto

morethanonemillionby

2030¹.Asjobs

are

disrupted

by

new

technology,itwillbecome

increasingly

important

for

policymakers,

businessesandeducation

to

createopportunitiesfor

both

youngpeopleandthose

alreadyinwork

to

developtheskillsneededfor

next-generation

businesses.Simultaneously

strengthen

Europe’s

capabilities

fordeveloping

technology

and

manufacturing

in

all

sectors3The

2023

survey

confirms

R&D

asthetop

category

forpotential

investment

inEurope

over

thenext

three

years:

64%of

executives

expect

to

increase

theirEuropean

footprint

inR&D

over

thenext

three

years,

butfar

fewer

expect

to

increasetheirmanufacturing

footprint.

Policymakers

shoulddevelopa

clear

framework

to

encourage

investment

inthehigh-tech,high-value

activities

that

are

reshaping

theglobal

economy.

Thismust

includean

ambition

to

putEurope

attheforefront

of

theAI

revolution

by

developing

strong

regulatory

frameworks

thatallow

business

to

reap

its

benefits

whilesetting

clear

parametersaround

its

use.

The

development

of

technology

shouldnotbetheonlyfocus,

however.

Europe

shouldconsider

how

toencourage

investment

throughout

thevalue

chain,particularlyinmanufacturing

capability—

especially

instrategic

industrieswhere

policymakers

seek

to

reduce

theregion’s

externaldependencies

amidrisinggeopolitical

tensions.Build

confidence

with

a

modernized

tax

andregulatory

regime6Investors’

top

priorityontaxationistheprovision

of

R&D

taxcredits,whichcouldbekey

for

accelerating

progress

towardEurope’s

green

goals,andbusinesses

want

tax

rules

tobeaspredictableaspossible.

While

businessisa

tempting

targetforpoliticianslookingto

increase

tax

yields,

maintainingastable

tax

environmenthasa

hugeimpactonconfidence.Clarityandpredictability

are

also

important

for

broaderregulatory

frameworks.

Even

where

policyisstill

emerging—for

example,

aroundthedigital

economy—

policymakerscan

promote

confidence

bygivingclearsignalsabouttheirintentionsandtake

initiatives

to

strengthen

internal

markets.These

mightincludemoves

towarda

capital

marketsunionorstrengthening

aspects

ofthesinglemarket,suchasservicesandinfrastructure,

to

maximizethebenefits

ofa

resilient,continent-wide

marketina

volatile

world.¹

EUSolarJobs

Report

2022,

Solar

Power

Europe,2022.EY

EuropeAttractivenessSurvey202351Where

andhow

businessesinvest

in

Europe:the

new

location

logic6/attractivenessWhere

andhow

businesses

investinEurope:

thenew

location

logicFDI

in

Europe

in

2022in

summaryGrowthinFDIprojectsinEurope

plateauedduring2022,withayear-on-year

increase

of

just1%—

comparedwith5%growththeyear

before—

whilethenumberof

jobs

created

byFDIdroppedby16%.Thenumberof

announced

projects

remains7%lowerthanin2019,immediately

beforethepandemic,and10%belowthepeak

of2017.Figure

1Numberof

FDIprojects

announced

andjobs

created

inEurope

between

2010and20226,6536,4126,3566,0415,9625,8775,5785,0834,4483,9093,9573,7583,797343,634353,469394,280275,955272,625274,935213,536217,6662015186,3482014170,4342012166,2832013158,0362011147,35720102016201720182019202020212022Numberof

jobs

createdNumberof

projectsSource:

EY

European

Investment

Monitor

2023.Europe’s

three

largest

economies

continue

to

attractthebulkofFDIflows,

accounting

for50%of

total

projectsin2022:Oneofthemost

striking

features

ofthe2022dataistheincreaseinFDIprojectsinseveral

Southern,

CentralandEasternEuropean

states,includingItaly,

Poland,

Portugal,

RomaniaandTurkiye.

Thisispartlya

result

ofthereconfiguration

of

globalsupplychainsanda

trend

toward

cost-competitive

locations

formanufacturingandback-office

operations.

Meanwhile,

Irelandrecordeda

substantial

increase,partlyreflecting

its

agile,

pro-businessagendaandappeal

to

largeUScorporates.•

France

had1,259projects

(up3%on2021).•

The

UKhad929projects

(down6%).•

Germany

had832projects

(down1%).EY

EuropeAttractivenessSurvey20237Where

andhow

businesses

investinEurope:

thenew

location

logicFigure

2Share

of

market:

To

p

10host

countries

for

FDIprojects

in2022293United

KingdomBelgium–6%–4%92910Germany184Ireland+21%–1%2378322348Poland+23%11,259France+3%2433215732464248TurkiyePortugal+24%+22%Spain–10%Italy+17%Source:

EY

European

Investment

Monitor

2023.PortohasbecomeahotspotforforeigndirectinvestmentinSouthernEurope,attractingover2.7billioneurosininvestmentprojectsandbeingabletocreate17,400jobsoverthelastthreeyears.Ricardo

ValenteCity

Councillor

forEconomy,

EmploymentandEntrepreneurship,Porto8/attractivenessWhere

andhow

businesses

investinEurope:

thenew

location

logicThe

outlook

for

2023The

factorsthatshapedthebackdrop

for

FDI’s

disappointingtrajectoryin2022have

notgoneaway.

Theseincludewidespread

macroeconomic

pressuresandrisinggeopoliticaltensions—

notonlythewarinUkraine

but,

increasingly,intherelationshipwithChina.Despitethechallengingenvironment,

there

are

still

reasons

tobeoptimisticabouttheprospects

forFDIinEuropein2023:67%ofthebusinesses

we

surveyed

have“plansto

establishorexpand

operationsinEurope

overthenext

year,”

a

metricthathasreboundedsharplysincethepandemic.New

challenges

are

emerging

too.

The

IRA,

for

instance,isalready

attracting

investors

totheUS,

affecting

Europe’sstrategic

industriessuchasenergy,

automotiveandadvancedmanufacturing.Ithasthepotential

to

reshape

transatlanticcompetition

for

inward

investment.Figure

3Does

your

company

have

plansto

establish

orexpandoperations

inEurope

over

thenext

year?

“Yes”answers

only.67%WeareinaphaseofincreasinggeostrategictensionswhichareleadingtoaglobalreconfigurationinwhichEuropeisalsoseekingtoreduceitsexternaldependencies.Thefundamentalstructuralshiftsthatareunderwayarecreatinghugeinstability,andthisisexpectedtolastforacoupleofyearsascountriesandbusinessesadapt.Thisiswhatwedescribeas‘stabilizedvolatility.’Goingforward,volatilitywillbeperpetuatedbutitislikelytobeatamoreconsistentlevelthanin2022.53%40%27%2020202120222023Source:

EY

Attractiveness

Survey

EuropeJune2023

(total

respondents:508surveyed

between1

Februaryand20March2023).Famke

KrumbmüllerEY

EMEIALeader,Geostrategic

Business

GroupEY

EuropeAttractivenessSurvey20239Where

andhow

businesses

investinEurope:

thenew

location

logicThis

headline

figure

conceals

important

differences:Only53%of

companies

headquartered

overseas

say

they

haveplanstoexpandorestablish

operationsinEurope,

comparedwith77%of

European-headquartered

executives.

This

suggests

Europe’sreputation

couldbestrengthenedamongbusinesses

beyondthecontinent.Inflationandelevatedinterestratescontinuetoweighheavilyonbothhouseholdpurchasingpowerandinvestmentdemand–yetEurope’seconomyhasprovenmoreresilientthanmanyexpected,leadingtoanupwardrevisionofourGDPforecastforEuropein2023.Withincreasedpublicinvestmentonthehorizon,especiallyinenergyandtechnologyinfrastructure,theimprovingoutlookmaystimulateanincreaseinprivateinvestmentasbusinessesseektoacceleratetheirdigitalandgreentransitions.Figure

4Supply

chainredesign52based

supplymodels.%

are

creating

more

regionally47customers.%

are

nearshoring

closer

toMarek

RozkrutEY

Chief

Economist

—

Europe

&

CentralAsia,EMEIAEconomists

UnitHead46to

domestic

markets.%

are

reshoring

activity

backSource:

EY

Attractiveness

Survey

EuropeJune2023

(total

respondents:508surveyed

between1

Februaryand20March2023).10/attractivenessWhere

andhow

businesses

investinEurope:

thenew

location

logicRisks

to

current

plansDespite

significant

geopolitical,economic,andmorerecently,bankingvolatility,financialservicesFDIacrossEuroperoseand

the

regionrecordeda

20%

yearonyearriseinrelatedjobcreation.Thisspeakstotheunderlyingresilience,capabilityandskillsfoundinEurope’sfinancialcenters,anddemonstratessustainedconfidencefromglobalinvestorseveninturbulenttimes.Aswelookahead,Europe’sDespitetheoptimistic

picture

of

investors’plansfor2023,theeconomic

environment

remainschallenging.Growth

forecastsare

modest:

According

tothelatest

EY

forecast,theEUeconomywillgrow

by

0.7%in2023²,whiletheEYITEMClubforecastsUKgrowth

of0.2%³.Geopolitical

risks

also

persist:

Fornow,

thereisnoendinsight

forthewarinUkraine,whiletherelationshipwithChinaisgrowing

more

tense.

To

make

mattersworse,thestability

oftheglobal

banking

sectorisanongoingconcernasinterest

rates

rise

(havingbeenheadline

newswhileoursurvey

fieldwork

wasinprogress,asSilicon

Valley

Bankcollapsed).

Similarly,

Credit

Suisse’s

failure

shows

howfinancialinstability

couldcloudtheoutlookfor

Europe.economies

are

expected

to

bounce

back

andattract

increasing

levelsofinward

financialservicesinvestmentfromlate2023.These

economicandgeopolitical

challenges

are

reflectedininvestors’

assessmentthatrisinginterest

ratesandinflation

arethefactors

most

likely

to

affect

investmentin2023.²

EY

European

EconomicOutlook—

April2023,EY,

2023.³

EY

ITEMClubSpringForecast,

EY,

2023.OmarAliEY

EMEIAFinancialServices

ManagingPartnerFigure

5Which

three

of

thefollowing

economic

risks

willimpact

your

2023investment

plansinEurope

themost?Rising

interest

ratesandtighteningfinancialconditionsInflation

andimpact

onconsumer

demandLevel

ofpublicdebtandimpactontaxesTightlabormarketincertain

regionsTightsupplychainsandsourcing

difficultiesSlow

growthinEurope45%40%36%35%34%29%28%28%The

warinUkraineSoaring

energy

costsThelingeringCOVID-19

pandemic22%Source:

EY

Attractiveness

Survey

EuropeJune2023

(total

respondents:508surveyed

between1

Februaryand20March2023).EY

EuropeAttractivenessSurvey2023112How

investment

decisionsare

shaped:

will

2023

be

aturning

point?12/attractivenessHow

investment

decisionsare

shaped:will2023bea

turning

point?For

companiesmakingdecisionsaboutwhere

they

are

located,thecalculusischanging.Asbusiness’s

priorities

evolveandtheinterests

of

communitiesandpolicymakers

shift,anew

locationlogicisemerging.theavailability

of

capital.

Similarly,

theJanuary2023

EY

CEOOutlook

Pulse

found

thatuncertain

monetary

policy

andthecostof

capital

were

amongCEOs’

top

concerns.

For

theEU,

thatmayimprove

thecase

for

developing

thecapital

markets

union.The

core

imperatives

of

competitiveness,

agilityandspeedare

still

important,butnew

issues

arerisinguptheagenda.Businesses

are

enteringanew

era

of

scarcity—

particularlyintalent,landand,more

recently,

energy.

Stabilityisinshortsupplytoo.

The

impact

ofgeopoliticsontheeconomy

wasvividlyillustrated

bythewarinUkraineanditswidereconomicconsequences.

The

threat

of

new

crisesloomslarge—

witnessnervousnessaboutthebanking

systeminthefirsthalfof2023.Businesses

alsoneedto

assesswhichlocations

canhelpthemacceleratetheirtransition

to

net

zeroorprovide

favorableconditions

forbuildingnew

digital

business

models.We

also

see

investors

attracted

to

strong

domestic

markets:Larger

economies

may

offeradditionalstability.

The

third

mostinfluential

factoristhepolicy

approach

to

climatechangeandsustainability,whichfeaturesamongthetop-three

priorities

forthesecond

year,

having

ranked

second

from

bottomasrecentlyas2021.This

ranking

correlateswiththeneardoublingintheprioritization

ofnationalstimulus

packages

(up

to19%),whichcanbeseeninthecontext

oftheUSIRA’s

successinattractinggreen

investment.

HowwillEurope

respond?The

cost

of

energyandtheenergymixappear

tobelesscritical

location

factorsthanother

considerations.

Yet

higherenergy

costs

drivehighermaterials

costsandelevated

inflationrates—

andourbroader

discussionswithinvestors

indicatethatenergy

remainsa

fundamental

concern

for

many.

The

resultsmay

reflectthestepsthatcompanies

have

taken

to

diversifyandsecure

energy

supply.

Moreover,

they

are

confidentthatEuropean

policymakerswillhave

to

stay

focusedonenergysecurityasa

majoraspectof

strategic

competitiveness:Otherwise,gasreserves

couldrunoutinwinter2023–24,andhighcosts

could

severelydamageEurope’s

manufacturing

base.Investors

alsoneedtobeaware

oftheevolving

priorities

ofcommunitiesandpolicymakersatalllevels

across

Europe,whichseek

inward

investment

notonlytosupport

jobsandwealthcreationbutalsotheirwiderenvironmentalandsocialaimswhilekeepinginmindthegeostrategic

environment,whichisdrivinga

move

toward

greater

self-sufficiency.Against

thebackdrop

of

changingrequirements

andgeopoliticalandeconomic

uncertainty,

thisyear’s

survey

shows

thatthemostsalient

criteria

for

investment

decisionsare

market

liquidity

andInvestmentdecisionsarenotjustabouthowattractivecertaincountriesareforcompanies–theyarealsoabouthowattractivecompaniesaretocountries.Localcommunitiesmaynotwelcomeinvestmentsinprojectsthatwouldbeheavilypolluting,forexample.Forbusinessesandcountriesalike,theeconomic,environmentalandsocialconsiderationsneedtobebalanced.JanNiewoldEY

EMEIAClimate

ChangeandSustainability

LeaderEY

EuropeAttractivenessSurvey202313How

investment

decisionsare

shaped:will2023bea

turning

point?Figure

5Ofthefollowing

factors,

whichthree

are

themost

important

whenchoosing

a

country

to

invest

in?vs.

2022Liquidity

offinancialmarketsandavailability

of

capitalStrength

ofthedomestic

market28%26%25%24%24%22%22%21%19%17%16%25%19%28%24%26%29%24%24%10%17%14%10%16%9%Policy

approach

to

climatechangeandsustainabilityReliabilityandcoverage

oftheinfrastructureSkillsandavailability

oftheworkforceLevel

of

technology

adoptionQuality

of

life,

diversityandcultureStability

ofthepoliticalandregulatory

regimeWeight

ofnationalstimulus

packagesandtheirimpactR&DandinnovationLegalandregulatory

environmentLaborandotherinputcosts16%16%Level

of

successinaddressingtheCOVID-19crisisTax

environment12%10%Cost

of

energyandenergymix—Source:

EY

Attractiveness

Survey

EuropeJune2023

(total

respondents:508surveyed

between1

Februaryand20March2023).Foralotofbusinesses,thepriceofenergyandsecurityofsupplyarestillthebiggestissueswhenitcomestomakinginvestmentdecisions.Thepictureisbetterthan12monthsago,buttherearealotofpoten