Western Europe still top destination for foreign investment
Western Europe remains the most attractive destination for foreign investment, despite increasingly strong competition from Central and Eastern Europe and China, according to the 2005 Ernst & Young European Attractiveness Survey. Despite a slight reduction in popularity among the surveyed business executives compared with last year, Europe still scored 63 per cent on Ernst & Young's scale of global attractiveness to remain ahead of Central and Eastern Europe on 55 per cent. However, China is undoubtedly the new star of foreign investment according to the survey, as the leading country (and third-placed global zone) on 52 per cent. China's rating has jumped from 37 per cent just twelve months ago, allowing it to leapfrog the US and Canada on 45 per cent. In its detailed findings, the survey reveals that within Europe, Germany has the best image among foreign investors due to the quality of its business environment and its position at the centre of the new Europe. The UK is still the 'undisputed champion' in terms of financial performance, however. France follows closely behind these two countries, thanks to the quality of its environment and human resources, while Poland joins this group of top performers, mainly thanks to low workforce costs. From a sectoral perspective, more than a quarter of foreign investment in Europe during 2004 was in the high-tech sector. Regarding the steps that Europe could take to increase its attractiveness for foreign investment, executives said they would like to see more simplicity and flexibility in regulations and are encouraging innovative policies. Commenting on the survey, chairman and CEO of Ernst & Young James Turley said: 'What makes Europe remain the most attractive destination for investment is the flexibility and the diversity of markets present in the region. Knowledge is a key factor drawing investors to Western Europe, but in the last five years economies in Central and Eastern Europe have been transformed from low-cost workshops into markets with huge potential. We are seeing a similar pattern in China, Russia, India and Brazil - countries which, in the next five years, will become increasingly innovative and present a real challenge to more developed markets.' The 2005 European Attractiveness Survey was based on interviews with 672 international business executives, carried out between March and April 2004 in six different languages.