Dublin ranked fourth most attractive European city for foreign direct investment

Dublin is the fourth most attractive European city to investors, while the State has a market share of 3 per cent of all foreign direct investment among European countries, a study by accountancy giant EY suggests.

This places the Republic among Europe’s top 10 locations for FDI and follows the attracting of 152 FDI projects to Irish shores in 2021, the EY European Attractiveness Survey found.

Dublin was chosen by 17 per cent of respondents as the most attractive European city for foreign investors over the next three years, placing it fourth on the league table.

The report finds that foreign investment in Europe in 2021 showed a modest recovery of 5 per cent compared to 2020, a year in which Covid-19 caused investment levels to drop by 13 per cent. The recovery in 2021 was also mixed, with a relatively stronger performance in some southern European countries.

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Investment levels in Europe are still 12 per cent below the record high of 2017, and the recovery is slower than after the global financial crisis, when investment levels returned to pre-crisis levels after only one year.

France led the way in 2021 with 1,222 projects, up strongly by 24 per cent. Investment in the UK increased just 2 per cent to 993 projects, while the number of projects in Germany fell 10 per cent to 841.

Although the number of FDI projects in Ireland fell 8 per cent last year as a result of the overall fall in US investment projects to Europe and a reduction in software and IT services investments, the survey found that investor sentiment toward the State remained positive, with a strong majority believing Ireland’s attractiveness would either improve or remain the same over the next three years.

Ireland’s reputation was also reflected in investment intentions, with 43 per cent of respondents planning to establish or expand operations here in the next year. The US accounted for 59 per cent of the State’s FDI projects during 2021, while the UK remains a significant source of Irish FDI and accounted for 19 per cent.

Although businesses are more cautious in their investment outlook due to the war in Ukraine, they are still positive on the long-term prospects for investment in Europe, according to EY.

“There was a strong performance recorded in Ireland, despite global disruptions,” said Feargal de Freine, assurance partner and head of FDI for EY Ireland.

“The future is digital,” he added.

“Businesses have made huge investments in technology since the onset of the pandemic to facilitate remote working, automation and ecommerce. The increased digitalisation of services and industry explains why the level of technology adoption by consumers, citizens and administrations is now the most important factor that determines where businesses invest across Europe.”