Western Europe still remains the most attractive region for foreign investment according to the annual Ernst & Young European Attractiveness Survey to be launched tomorrow at the World Investment Conference in La Baule, France.

The survey found that Europe is still on a par with its competitors as a viable zone for investment and is standing up to the dual challenge of the United States and China in attracting foreign investors.

Despite a slight reduction in the popularity of Western Europe as an investment destination among executives surveyed, it scored 63% on the global scale of attractiveness, (down 5% on last year) and remains ahead of Central and Eastern Europe, with 55%.

As the new star of foreign investment, Chinas impressive growth and the potential of Chinas domestic market is attracting a number of investors. China is now the leading country and the third-placed global zone for foreign investment. In twelve months, Chinas attractiveness has increased to 52% from 37%, allowing it to leapfrog the USA and Canada (45%).

Other key findings:

  • 31% of international investment is directed towards Central and Eastern Europe, more than France, Germany, Spain and Belgium combined.
  • Within Europe, Poland and Hungary are challenging the traditional supremacy of Germany, the UK and France, particularly due to their competitiveness in terms of labour costs.
  • In terms of job creation by new establishments, 6 countries in Central and Eastern Europe figure in the European top 10, headed by the UK, Poland and France.
  • The most dynamic sectors in Europe in 2004 were automotive, with 11.6% of international investment in Europe and hi-tech, with 10.9%.
  • Central and Eastern Europe represent a viable alternative to China for the automotive, consumer goods and heavy industry sectors.
  • Decision makers overwhelmingly view the service and software sectors as the future drivers of the Western European economy.
  • Business leaders remain sceptical regarding an improvement in the attractiveness of Europe over the next 3 years (37% against 45% in 2004).
  • Investors would like to see an easing of regulatory and fiscal policies to encourage investment in Europe.

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