An IMGlobalWealth.com News Report
Europe remains one of the world’s major destinations for foreign investment, but the latest figures suggest that international capital is becoming more selective, more strategic, and less concentrated in the continent’s traditional economic heavyweights.
According to EY’s European Attractiveness Survey 2026, Europe attracted 5,026 foreign direct investment projects in 2025, a 7% fall from the previous year and the lowest level since 2014. The decline was not merely statistical. FDI-related job creation fell by 25%, reflecting weaker investor appetite for large labour-intensive projects and a shift towards more technology-driven activity.
“AI, defence and low-carbon energy are attracting fresh investment, and 60% of surveyed executives expect Europe’s attractiveness to improve over the next three years”
France retained its position as Europe’s leading destination for foreign investment for the seventh consecutive year, with 852 projects. Yet even France saw a 17% decline. The UK ranked second with 730 projects, down 14%, while Germany remained third with 548 projects, a 10% fall and its weakest performance in years. Germany’s long-term decline is particularly striking: its project count is now 44% below 2019 levels.
The more interesting story, however, lies beyond the top three. Capital is increasingly flowing towards Southern, Central and Eastern Europe, where lower costs, available industrial land, EU-backed infrastructure investment and improving digital ecosystems are reshaping the competitive landscape. Turkey recorded 383 projects in 2025, up 20%, while Spain rose 7% to 376. Poland continued its upward path, with 285 projects, up 10%.
This shift does not mean that Europe’s smaller economies are irrelevant. On the contrary, some are performing strongly when viewed through a more nuanced lens. Ireland attracted 75 FDI projects in 2025, unchanged from 2024, placing it 15th in Europe overall but tenth on a per-capita basis. More than half of its projects came from US investors, while software, IT and R&D remained key strengths.
Luxembourg also illustrates the limitations of ranking countries solely by the number of projects. It recorded 35 cross-border FDI projects in 2025, up 6%, with financial services accounting for just over half of the total. Malta, while too small to feature prominently in pan-European project rankings, continues to show strong investor sentiment: EY Malta’s 2025 survey found that 79% of foreign-owned companies viewed the country as attractive for investment, up from 54% a year earlier.
The broader global picture is more sobering. UNCTAD reported that global FDI fell in 2024, while Europe suffered a particularly sharp decline. Yet EY’s survey also shows that Europe is not being abandoned. Artificial intelligence, defence and low-carbon energy are attracting fresh investment, and 60% of surveyed executives expect Europe’s attractiveness to improve over the next three years.
Europe’s challenge, therefore, is not simply to win more projects. It is to compete for better ones: higher-value, innovation-led investments that reward stability, talent, infrastructure and regulatory credibility.
