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After two successive years of growth, the post-COVID-19 pandemic recovery of foreign direct investment (FDI) in Europe has stalled: 5,694 FDI projects were announced in Europe in 2023, down 4% from 2022. Measured by the number of announced projects, FDI remains 11% below the level in 2019, just before the pandemic hit Europe, and 14% below the record high of 2017. The number of jobs created by FDI projects in 2023 fell sharply, down 7% compared with 2022.
International investment decelerated due to disappointing economic growth, high inflation, rising global geopolitical tension and persistently high energy prices, especially when compared with the US.
Radical changes in working practices also impacted investment. Remote working and the growing use of collaborative technology, combined with an ever-increasing focus on cost control amid squeezed margins, means large office spaces are no longer required. Confirming this trend, the number of regional headquarters in Europe fell by more than half (51%) in 2023.
The success of the US Inflation Reduction Act (IRA) may also have diverted some investment from Europe to the US; the number of projects announced by US companies in Europe fell by 15% in 2023.