Foreign investment into the EU falls by €66bn in a single year

AFTER a boost from 2010’s dismal performance, foreign direct investment (FDI) into the European Union has slumped dramatically, falling by €66bn (£56bn).

Eurostat, the statistical service of the EU, released data which confirmed the decline yesterday.

FDI coming into the 27 countries of the EU from the rest of the world drooped from €225bn in 2011, down to €159bn in 2012.

The figures are an improvement on the €104bn seen in 2010, when investment fell by more than half, but are still considerably depressed from the recovery last year.

A clear majority of investment into the EU came from the United States, with its €99bn making up over 60 per cent of the total inflow. The USA was the largest investor last year too, when it made up just over half of incoming finance.

Other countries with major stake in the EU are Canada, Japan, Russia and Hong Kong, all of which have more than €7bn in Europe.

The EU is still a net financier of the rest of the world, investing €171bn outside of Europe in 2012. The biggest destinations for capital leaving the EU were offshore financial centres, Canada, India and the US.

Despite this, the amount of money invested in offshore financial centres, a group of 38 countries, fell by more than two thirds.

The euro area, which includes 17 of the 27 EU countries, has been in recession for six quarters now, giving some indication as to the depressed business activity in the region. Many analysts suggest that Europe will remain in recession next quarter.

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