Inward investment from foreign companies continues to grow faster in Ireland than the EU average, according to a new study from Ernst & Young. It shows that inward investment here in the first six months was 50 per cent ahead of the EU average, compared to a 27 per cent increase for Europe as a whole.

The Ernst & Young European Investment Monitor said there were 42 projects announced in Ireland in the first six months of the year, with the remainder being greenfield projects. It calculates that the Irish market share of foreign direct investment in Europe is 3 per cent for the first six months of 2004, in comparison to 2 per cent in 2003. The UK gets the largest share of inward investment, with 22 per cent of the total.

The most striking trend in the figures is strong growth in Eastern Europe, with Hungary, the Czech Republic, Poland and Russia winning 283 projects compared to 156 in the same period last year, a total of 20 per cent of all investment in Europe.

Traditional locations for foreign direct investment such as France and Spain continue to see a fall-off, according to Mr Des McCann, head of project finance at Ernst & Young, but Ireland is continuing to hold its market share. "Given the continued trend towards the east, this remains a very credible performance," he added.

Manufacturing is the main investment activity in Ireland, accounting for over one-quarter of all projects, with the rest coming in headquarters operations, research and development, and sales and marketing.

The US remained the largest investing country in Europe, with 396 projects in the first half of the year, representing 28 per cent of the total. Japan, the UK and Germany are the next largest outward investing countries. If the growth trend for early 2004 continues, it is expected that Asia will be among the top five outward investors for the year. The monitor is researched by Oxford Intelligence.