Drastic drops in European investment trends during 2010

Following the economic crisis, foreign direct investment (FDI) by European Union countries in the rest of the world (outflows) declined significantly in 2010, falling from €281 billion in 2009 to €107 billion in 2010 (62%). Simiarly, foreign direct investment into European Union countries from the rest of the world (inflows) dropped from €216 billion to €54 billion (75%).

The preliminary figures were announced by EUROSTAT, which also said that Malta received half a billion (€50 million) in foreign direct investment from non-European Union countries during 2010. A breakdown of how much came from which country however was either not available or confidential.

Simiarly, local figures which detail what investment Malta made in non-Eu countries were not supplied, as they were either confidential, not available, or below the €50 million mark.

This figures’ overall results follow trend of recent years, with European Union outflows in 2010 standing at more than five times lower than in 2007, and inflows around eight times lower.

The figures show that the strong fall in EU27 investments in the rest of the world in 2010 is explained by the significant declines recorded with the offshore financial centres (from €89 billion euro in 2009 to €21 billion in 2010), the USA (from €79 billion to €12 billion) and Switzerland (from €44 billion to disinvestment of €7 billion).

The USA was the main source of investment in the EU27, although down strongly from €97 billion euro in 2009 to €28 billion in 2010.

Investments in the EU27 also decreased significantly from Switzerland (from €25 billion to €6 billion) and Offshore financial centres (from €46 million to a disinvestment of €4 billion).

However, investments increased strongly from Canada (from €12 billion to €28 billion), Hong Kong (from €1 billion to €11 billion) and Brazil (from €0.4 billion to €4 billion), and to a lesser extent from Japan and China.

Luxembourg, with outflows of €38 billion euro, was the largest investor outside the EU27 in 2010, followed by Belgium (€36 billion), Germany (€29 billion) and France (€23 billion).

 Luxembourg (€48 billion) was also the main recipient of FDI inflows from outside the EU27, ahead of the United Kingdom (€28 billion), Ireland (€21 billion) and Germany (€14 billion).

The role of Luxembourg in EU FDI is mainly explained by the importance of its financial intermediation activity.

As in previous years, the EU27 was in 2010 a net investor in the rest of the world, with outflows higher than inflows by €53 billion euro. Among the EU Member States, Belgium was the largest net investor outside the EU27 in 2010, with net investment of €38 billion, followed by Sweden (€22 billion), the Netherlands (€19 billion), France (€15 billion) and Germany (€14 billion).

With inflows higher than outflows by €16 billion, the United Kingdom was the largest net recipient of FDI from outside the EU27, followed by Ireland (€14 billion) and Luxembourg (€9 billion).