FDI into western Europe grew by 17% during 2008, below the global average of 30%. The UK maintained its leading position as western Europe’s top destination country, receiving 845 projects (22%), and $58bn in capital investment (27%) and creating 118,138 new jobs (25%) through FDI. The UK increased its market share by 2% during 2008 and overtook Spain in terms of number of new jobs created.
The top five recipient countries attracted 70% of projects, 72% of capital investment and 72% of jobs created through FDI in the region. These top five countries have remained relatively unchanged for the past five years, with only occasional movement in the fifth position between Italy, Ireland and Belgium.
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Although Ireland was not in the top five during 2008, it had a strong year with an annual increase of 58% in projects, with 67 more than in 2007. However this was still not as high as 2005 figures, when Ireland had a record year and came fourth in the league table for western Europe. The data suggests that Ireland has placed a strong focus on increasing existing investment, with 30% of projects in 2008 involving expansions of existing facilities, compared to only 18% for western Europe on average and 14% globally.
Norway made some of the biggest advances during 2008, securing almost twice as many projects and jobs and five times as much capital investment than it had in 2007.
Belgium continued to rank within the top 10 destinations, coming seventh in 2008; however, it experienced a decline in project numbers after a record year in 2007 when it ranked in fifth position. Sweden and Denmark also experienced a small reduction in number of projects, with Luxembourg declining by 27%.
London continued in its leading city position in western Europe, attracting 288 projects (7% of the region’s total), $17bn in investment (8%) and 29,923 new jobs (6%) through FDI in 2008. Not only did London maintain the top spot but it also increased its lead in terms of both capital investment secured and jobs created, compared with other cities in Europe.
There was a mixed picture throughout Germany, with Frankfurt experiencing a decline of 49% while Munich and Berlin witnessed an increase of 18% and 57%, respectively, in terms of number of projects recorded. Investment in Germany is much more spread out, with five of its cities in the top 25, compared with most other European countries, which have very clear leading cities.
After steady growth for the past five years, Madrid, although staying in third position, showed signs of decline, attracting less project numbers, capital investment and new jobs. Madrid fell from the top western European city in terms of jobs created during 2007 to sixth place in 2008, with a decline of 42% on a year-on-year basis.
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Slight slowdown
The area classified as ‘the rest of Europe’ grew by 14% in the number of FDI projects, 33% in capital investment and 27% in jobs created between 2007 and 2008. Although these figures seem positive at first glance, there has been a slowdown, at least in terms of the number of new projects being established in the rest of Europe in comparison with the high growth years of 2004 to 2006. Fifty-seven fewer projects were recorded in 2008 than in 2006.
Russia remained the top country in the rest of Europe for FDI, with a tremendous 52% growth in the number of projects from 2007 to 2008. Russia attracted 22% of total projects, 29% of capital investment and 28% of new jobs created in the region through FDI. However, Romania and Poland remain in pursuit, having closed the gap in 2007 when Romania attracted virtually the same number of projects as Russia. However, they both failed to maintain momentum during 2008 and Russia excelled ahead of them to a record year.
Although Romania conceded second position to Poland in terms of the number of FDI projects established, it maintained second position in terms of number of jobs created and also overtook Poland in terms of capital investment received.
Hungary lost ground in terms of number of new projects established and jobs created, with declines of 32% and 21%, respectively. Bulgaria also experienced declines of 17% in terms of number of jobs. This was all despite the 27% growth in jobs created through FDI in the region as a whole.
Turkey showed impressive growth of 83% in jobs created and entered the top 10 destinations in terms of job creation in 2008. Belarus and Latvia also grew in terms of jobs created. Macedonia, Belarus and Latvia all grew in terms of capital investment during 2008.
Moscow back on top
Following a brief lapse in 2007 when Bucharest attracted more FDI projects, Moscow regained its lead as top destination city for FDI projects in the rest of Europe. FDI projects into Moscow increased by 32% between 2007 and 2008, but the average annual growth figures between 2003 and 2008 show that Bucharest grew at a faster rate, with an average yearly growth of 36%, compared with Moscow’s 2% average. Bucharest ranked top in terms of both capital investment received and new jobs created through FDI.
St Petersburg, Istanbul and Riga all showed strong annual growth in terms of both the number of FDI projects established and capital investment secured. Riga also displayed strong growth in terms of new jobs created through FDI.
By contrast, in Sofia and Gdansk there were declines in the number of projects in 2008, with job creation also falling in Sofia.
The top five destination cities accounted for 16% of projects, 16% of capital investment and 23% of new jobs into the region.
Growth Comparisons: Countries in Western Europe
Growth Comparisons: Cities in Western Europe
Growth Comparisons: Countries in Rest of Europe