Top European economies a haven during crisis: study

2nd June 2010, Comments 0 comments

The top four EU economies, Germany, France, Britain and Italy, attracted safe-haven investment during the economic crisis at the expense of eastern and central Europe, a study showed on Wednesday.

The annual study by auditors and consultants Ernst & Young showed that direct foreign investment in Europe fell by 11.0 percent in 2009, but that figure covered wide differences.

There had been a drastic fall in projects for investment in eastern and central Europe and in many countries in western Europe, it said.

The biggest effects were in Poland, Hungary and the Czech Republic. Investment in these countries overall had fallen by 40 percent. Foreign direct investment in Spain and Ireland also fell.

But this benefited bigger economies offering a higher level of safety for investors, such as Britain, France and Germany, said the author of the report Marc Lhermitte.

The number of projects in Britain fell by 1.0 percent, and rose by 1.0 percent in France, by 4.0 percent in Italy and by 7.0 percent in Germany.

Investors based in China or India preferred Britain and Germany to France, the report found.

Germany attracted 41.0 percent of projects by Chinese investors in Europe and Britain 54.0 percent of investment from India.

France took 9.0 percent of Chinese investment and 11.0 percent of investment from India.

Russia, Ukraine and Turkey also did well in attracting investment.

The crisis also affected the weighting of the origin of foreign investment. In 2009, Chinese interests increased their European projects by 30 percent from the level in 2008.

The short-term attractiveness of eastern and central Europe as a destination for investment fell sharply. The study found that 24 percent of international investors considered the region to be attractive, down from 42 percent in 2008, but investors still though that the region should be a priority for investment in the long term.

They said that in the long term, the most attractive destination for direct foreign investment was China with a 66-percent rating, followed by India with 61 percent, then eastern and central Europe, followed by Brazil 53 percent and western Europe 50 percent.

© 2010 AFP

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