The number of opened foreign direct investment (FDI) projects in Europe decreased in the first half of 2025 (H1 2025) compared to the same time period in the previous year, a new report has found.
According to GlobalData’s FDI Trends in Europe (2025), opened projects declined by an estimated 40%, despite an increase in capital expenditure (capex) during that same period. The report attributes this decline to “war and weak macro conditions”.
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Following a post-pandemic rebound in 2022, when projects reached a recent peak of 5,663, growth in Europe has declined.
“Despite visible FDI opportunity, Eurozone GDP [gross domestic product] growth stunted at 0.9% in 2024 with structural issues like low productivity, rapidly increasing bond yields and energy costs weighing on industrial competitiveness,” the report outlined.
However, performance varies widely by country and by sector. The report highlighted that despite Germany’s mixed trajectory in the past few years (particularly around manufacturing frailty), its industrial strategy and fiscal stimulus are strengthening investor confidence. Other European countries such as Spain and Poland are expected to benefit from environmental, social and governance and manufacturing projects, respectively.
While the report was published a week ahead of former French Prime Minister Francois Bayrou’s ousting, it anticipated that “political fragmentation” would be detrimental to the country’s inward FDI intake. Despite this, France remains one of Europe’s top three FDI destinations, following the UK and Germany.
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By GlobalDataThe UK continues to be the continent’s top FDI destination. Despite Brexit, London is “still perceived to be a global vantage point between European and US markets, while also functioning as a gateway to Africa and the Middle East”.
The report outlined that while European levels of FDI between the first quarter of 2024 (Q1 2024) and Q1 2025 have mostly declined from source countries, this is consistent with a global downward trend.
“The level of FDI projects announced in H1 2025 is relatively consistent with 2023 and 2024 levels,” it said.
The top sources of investment into the continent have also remained consistent. The US leads the ranking with a total of 954 projects between 2023 and H1 2025. China, the United Arab Emirates (UAE) and Japan have also continued to invest in Europe. However, the report highlighted that “UAE investment has slowed down from a high-base effect set in 2023.”
Intracontinental FDI investment also demonstrated resilience between 2023 and H1 2025, showing the “benefits of a consolidated EU and compatible regulatory frameworks”.
