June 4, 2019 / 4:08 PM / 14 days ago

Fewer FDI projects in Britain and rest of Europe amid Brexit uncertainty

BRUSSELS (Reuters) - The number of foreign direct investment (FDI) projects dropped last year in Britain and the rest of Europe amid rising concern about the uncertainty caused by Brexit, an industry report showed on Tuesday.

FILE PHOTO: European Union and British flags flutter in front of the chancellery ahead of a visit of British Prime Minister Theresa May in Berlin, Germany, April 9, 2019. REUTERS/Hannibal Hanschke

The number of completed FDI projects fell across Europe by 4% last year, the first fall since 2012. The number in Britain, still the top destination for FDI in Europe, fell by 13%. Germany’s figure saw a similar decline, while France was flat and Italy and Ireland saw sharp increases.

The survey of 506 businesses was carried out by Ernst & Young, an accounting firm. It looked at the number of completed foreign investment projects, rather than the value of the investments.

The percentage of businesses planning to establish or grow operations in Europe this year also dropped.

More than a third of the businesses surveyed cited uncertainty caused by Brexit as the primary risk to Europe’s attractiveness. That was followed by concern over political instability in the EU, the rise of populism and protectionism and global political uncertainty.

“Prolonged uncertainty about the UK’s future relationship with the EU following the Brexit vote is undoubtedly denting FDI in the country,” the report said.

France saw stalled growth in the number of FDI projects, mostly because of concerns over the impact of weekly “yellow vest” protests, though Paris remained the most attractive European city for investment.

Despite political turmoil and a slowing economy, Italy saw the number of FDI projects grow by 63% last year.

Ireland also recorded a 52% increase in FDI projects, intercepting capital fleeing from Britain.

“Brexit is undoubtedly boosting Ireland’s attractiveness as an alternative to the UK,” the report said.

Reporting by Daphne Psaledakis; Editing by Peter Graff

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