Germany sees ‘sharp rebound’ as EU investment rises, says UN report

Out-Law News | 03 Jul 2014 | 3:46 pm | 1 min. read

Foreign direct investment into Europe was $251 billion over the past year, an increase of 3% from 2012, according to a new report by the UN Conference on Trade and Development (UNCTAD).

The UN Conference on Trade and Development’s (UNCTAD) 'World Investment Report 2014' said European Union (EU) member states accounted for $246bn of the regional figure, an increase of 14% from 2012.

Of the major economies, inflows to Germany were $27bn, which UNCTAD said was a “sharp rebound” compared to the “exceptionally low volume” of $13bn in 2012. Switzerland became Europe’s largest direct investor.

UNCTAD said FDI outflows from Europe increased by 10% to $329bn in 2013, of which $250bn was from EU member states.

According to the report, outflows from North America dropped by another 10% to $381bn, due in part to US transnational corporations transferring funds from Europe, raised in local bond markets, back to the US.

However, the EU and US remain “important investment partners, much more so than implied by the size of their economies or by volumes of bilateral trade”, the report said.

For the US, 62% of inward FDI stock is held by EU countries and 50% of outward stock is located in the EU, UNCTAD said. “For the EU, the US accounts for one third of FDI flows into the region from non-EU countries.”

UNCTAD said that among the developed economies, Germany, France, the UK, US and Japan are ranked as “the most promising developed-economy investors, underscoring their continuing role in global FDI flows”.

Looking forward to 2014, the report said “positive economic news appears to be spreading to a growing number of developed countries, which should boost executives' confidence”.

UNCTAD’s report was published as the European Commission prepares to host a sixth round of EU-US trade talks in Brussels starting on 14 July. The EU said the talks will focus on a new trade and investment deal, known as the ‘Transatlantic Trade and Investment Partnership’. According to the EU, the talks are aimed at giving extra support to Europe’s small and medium-sized businesses, which are seen as “the backbone of Europe's economy”.

In its 2013 European attractiveness survey (48-page / 2.62 MB PDF), consultancy Ernst and Young said: “Perhaps counter to expectations, this year’s study shows that tough times have not destroyed investors’ faith in the continent. It seems that they have become accustomed to the economic situation in Europe, learned to live with it, and do not want to miss out on the scarce, but rich, opportunities there.”

EY said: “Though understandably concerned about Europe’s economic prospects, foreign investors seem optimistic that the continent will weather these hard times and emerge stronger.”