56% of global investors want to grow in Europe
Research by EY has revealed that 56% of global investors have plans to expand their presence in Europe over the next three years.
The firm's 2017 European Attractiveness Survey: 'Plan B for Brexit' found an increased interest among investors in business on the continent despite geopolitical uncertainty.
Europe’s talent, innovation capacity and large, integrated market and production systems reportedly outweigh concerns about instability in capital markets and currency volatility. The findings contrast a 2016 survey by EY that showed just 36% of European investors had a positive investment outlook.
Andy Baldwin, EY Area Managing Partner for Europe, Middle East, India and Africa, said: “It is encouraging that the investors we are tracking continue to have strong investment appetite in Europe despite the instability and mixed geopolitical environment.
"However, investor patience is finite. Europe’s historical investor appeal was built on certainty and predictability. Europe is in danger of developing an emerging market ‘geopolitical risk profile’ without commensurate returns.
"For the foreseeable future, pure economic factors will vie alongside political considerations in influencing final investment decisions.”
Germany was identified as the preferred destination for the 14% of foreign investors who plan to relocate European operations outside of the UK, followed by the Netherlands and France.
Top risks impacting investment appetite in Europe
- 37%: High volatility in currencies, commodities and other capital markets.
- 32%: Economic and political instability in the EU (not including Brexit).
- 28%: The impact of Brexit.
Source: EY 2017 European Attractiveness Survey
The survey also revealed that the impact of Brexit is a larger investment concern for business with an established presence in the UK (33%) than those without (15%). The latter group consider wider EU instability (31%), coupled with the slowdown in trade flows (30%) to be more urgent risks.
However, more than 70% of foreign investors reported some impact in at least one area of their business operations in Europe following the UK’s referendum on EU membership.
Andy commented: "European businesses and investors need certainty and want clarity on the future trading relationship between the UK and the EU27. In the meantime, we will likely see a pick-up in businesses reconfiguring supply chains and distribution arrangements to mitigate currency volatility and cost pressures. Flexibility and agility will be key.”
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