By: Dr. Mike Campbell
Following a recession, job creation is a lagging indicator of economic recovery since businesses want to be sure that the worst of the crisis is passed and that orders are picking up before taking on staff to meet demand. The same is true with investment in new ventures.
Data from a survey conducted by Ernst and Young, show that the level of inward investment to Europe is at its highest level since the global financial crisis. The resurgence in European investment has been led by America. American money has seen a 24% increase in projects being funded in 2010. It is credited with generating up to 137,000 jobs. The report’s authors suggest that if the trend continues, Europe will overhaul China as the country (region) attracting the highest level of inwards investment.
The data has been further broken down by country within Europe and shows that 728 projects were funded in the UK whereas France and Germany sat 562 and 560, respectively. The increase was not restricted to established EU members either; Poland, Hungary saw a strong growth in inwards investment as did Russia and the Baltic states. This picture reflects “the strong economic recovery in the region and its growing attractiveness to business", Ernst & Young said. Unsurprisingly, the picture was not uniformly rosy with Portugal, Greece and Spain showing a fall in the number of new projects starting compared against the previous data. This reflects concerns over sovereign debt problems which are particularly acute in these countries.
The survey shows that car manufacturing attracted the greatest rise in investment, but this was coming off a low base. Business services, software development and renewable energy projects also showed good growth.