In Europe, in this respect, it is the worst since 2015. Poland is an exception.

• The number of foreign direct investments in Europe in 2024 fell by 5% y/y, to the lowest level in 10 years, while the number of jobs created decreased by as much as 16% y/y.
• Almost all sectors have seen a decline in foreign direct investment, with IT services being the most significant (down 17% year-on-year).
• The leaders in terms of growth in terms of foreign direct investment in Europe are Denmark (86% increase y/y), Romania (57% increase) and Austria (31% increase y/y).

According to EY's annual report "Europe's Investment Attractiveness", the number of foreign direct investments (FDI) on the old continent in 2024 decreased by 5% compared to 2023 (5,383 projects).

The number of jobs generated by foreign direct investment also decreased and was 16% lower year-on-year (269,740 jobs).

Worst investment result since 2015

This is the second year of declines in foreign investments in Europe , and their dynamics is higher than in the previous year (in 2023 it was a 4% y/y decline in terms of the number of FDIs and a 7% y/y decline in terms of jobs generated).

Foreign direct investment in Europe was at its lowest since 2015

Another noticeable trend is the decreasing share of US investments in Europe, which fell by 11% this year, while the share of intracontinental investments in the Old Continent increased to 60%. The level of expansion of entities already present in Europe is also stable, but there are 20% fewer greenfield projects.

- Weak economic growth, persistently high energy prices and geopolitical tensions are key challenges for Europe , weakening its competitiveness towards investors. Long-term structural problems, such as the erosion of competitiveness in the industrial sector towards the US and China, are also significant. At the same time, entities from Europe itself see the advantages of nearshoring and shortening supply chains, which encourage them to invest in neighboring countries, so the trend of investing within the continent may gain momentum in the near future - says Jacek Kędzior, Managing Partner of EY in Poland.

The Improving Investment Attractiveness of the United States

Foreign investment volumes in Europe were also affected by the dynamics of investment from the US and the improving investment attractiveness of the United States, with which Europe competes for capital. The number of projects announced by US investors in Europe fell by 11% compared to 2023 and by 24% compared to 2022.

US investment in Europe is at its lowest level in a decade , accounting for only 18 percent of total FDI projects in Europe, down from 24 percent in 2015.

At the same time, until the end of last year, economic conditions overseas were improving, and stimulus for industry in the US, such as the Inflation Reduction Act introduced in 2022, increased their attractiveness for foreign investment.

- As many as 37% of companies have postponed, canceled or limited their investment plans in Europe in 2024. At the same time, only 59% of investors declared their willingness to implement a new investment in Europe in the coming year (a decrease of 13 percentage points). The main reasons for changing investment plans are the general uncertainty about the market and trade situation, high energy costs, as well as regulatory conditions in Europe - adds Jacek Kędzior.

Pros and cons of Poland's situation in comparison to Europe

The declines in Europe are largely caused by the outflow of investors from countries that are leaders in the inflow of foreign direct investment.

France, in first place, recorded 14% fewer investments year-on-year in 2024 (1,025), while declines were also seen in the UK (down 13% year-on-year, 853), Germany (down 17% year-on-year, 608) and Turkey (down 15% year-on-year, 320).

At the same time, some countries, including Poland, stand out from the overall picture. After a 3% drop in investments in 2023 , Poland attracted 259 investments in 2024, which is 13% more than in 2023.

The leader in European growth in this respect is Denmark (86% YoY growth, 82), followed by Romania (57% YoY growth, 94) and Austria (31% YoY growth, 105).

Poland's investment attractiveness looks slightly different when we look at the jobs generated by planned foreign investments.

Poland is taking advantage of its leading position in logistics

According to EY data, the number of jobs resulting from foreign direct investments announced in 2024 at 18,711 is 16% lower than in 2023.

This is a big contrast to the previous edition of the survey, which showed an increase in this regard of 21% year-on-year (22,378).

This year’s survey also saw declines in job creation in the UK (down 27% y/y, 38,196), France (down 27% y/y, 29,000) and Spain (down 18% y/y, 34,603).

The highest increases were seen in Serbia (56% YoY growth, 17,344), Germany (35% YoY growth, 19,208) and Turkey (29% YoY growth, 27,066).

- Poland's location on the European map means that we are using our leading position in logistics, as well as good experience from many previous production investments and in the SSC/BPO sector. Nevertheless, energy prices, wage growth and the proximity to a region of armed conflicts do have an impact on the decisions of foreign investors - says Paweł Tynel, partner at EY Polska.

The areas that had the greatest impact on the negative result across the continent were manufacturing and business services – both recorded a 9% year-on-year drop in investment.

In the case of processing, the decline is all the more severe because, for the first time in over 15 years, greenfield investments account for less than 1/3 of projects (a 20% drop year-on-year), and the number of jobs generated by planned FDI is 113,179 – 25% less than in 2023.

A negative result was also recorded by investments in the area of ​​sales and marketing (2% decrease y/y) and logistics (6% decrease y/y). In 2024, however, an increase was recorded in terms of investments in R&D (3% increase y/y) and construction of headquarters (13% increase y/y).

Europe is slowly losing its attractiveness

In its study, EY examined investor sentiment regarding their plans for Europe. The results indicate that 37% have changed their investment plans in the Old Continent over the past 12 months.

For the first time since 2021, the number of affirmative answers to the question about whether the company plans to invest in the Old Continent in the next year also dropped (59%, or a decrease of 13 percentage points).

When asked about the regions that they find attractive in terms of investment, for the first time investors were more likely to point to the United States (55%) than to Western Europe (44%).

Further places were taken by Central and Eastern Europe (41%), the countries of the Arabian Peninsula (24%) and mainland China (23%).

The introduction of customs duties or a change in their rates is a factor that completely changes the reality of world trade, and furthermore, investors. Consequently, it affects decisions and the investment attractiveness of Europe and the United States - assesses Paweł Tynel.

He added that 42% of investment decision-makers believe that the US administration's economic policy will reduce Europe's attractiveness, while 27% believe it will increase it.

- Although 62% of them indicated that the attractiveness of the region will increase in the next three years, in the case of China and the USA this indicator is even higher (67% and 74% respectively). According to the respondents, the key to attracting investments to Europe at the moment is a reduction in energy prices, better support for SMEs, increased investment in development areas such as AI and the removal of barriers to trade - sums up Paweł Tynel.