The below presented Ernst & Young's 2010 European attractiveness survey is based on an original two step methodology that reflects Europe's real attractiveness for foreign direct investors. The analysis takes into account the economic recession in Europe and the rise of the BRIC countries, and discusses the related challenges and opportunities Europe is facing..
Editorial: Waking up to the new economy
When the European economy started to contract in 2007, few could have predicted the scale and drama of the events that have followed. Even as the recession ends, economic growth may well be weak for the short term, and it looks certain to be very different and more volatile in the longer run.
Our global economy has turned into a multi-polar world in which China, India, Brazil and the Middle-East have joined the traditional players of North America, Europe and Japan as both the destination sand sources of global investment. Capital is now clearly fl owing in multiple directions. New corporate giants are emerging to compete. Opportunitie sand challenges have grown as a consequence. Old assumptions have been found wanting but the new rules of competitive success have yet to be established.
In this new environment, Europe is still perceived as lacking clarity in direction or the necessary commitment and speed to adapt. Our interviews with 814 of the world’s most demanding business leaders, all in search of their next international investment opportunities, indicate that Europe needs a wake-up call if it is not to lose ground to its more dynamic competitors. Ernst & Young’s2010 European attractiveness survey shows that Europe is vulnerable both on its Eastern front (left to rebuild its fi nancial and social systems) and Western front (less cost competitive by the minute and not perceived as a “hot spot” for know ledge intensive investments).
Foreign investors are setting the alarm clock. They have a vested interest in and a strong in fluence upon Europe’s economies, its industrial champions, banks and regulators. They clearly demonstrate, at the same time, their commitment and sense of urgency with an impressive 3,303 investment decisions in 2009, only 11% fewer than in 2008. Although their projects will be smaller, more selective and more regionally concentrated, they will ride on the demand for technology, services, consumer goods infrastructure and, of course, all things green and renewable. We all have an interest in making surethat the decision makers in Europe hear the alarm.
As in all transitions, the issue is its direction,shape and impact on decisions to create and invest in Europe. In what state will foreign investors find European countries and regions, clusters and industries after two years of recession? How will they perceive Europe’s competitive advantages and distinct opportunities in the future? In their global decisions, how will they make choices between the various destinations of our new world order?Which companies truly have long-term confi dence in Europe? What will be the substance and size oftheir future projects? While there is no easy soluton to Europe’s current situation, finding new ways forthe continent to benefi t from globalization will bea priority: how can governments and business esassure Europe’s future prosperity?
These issues form the core of Ernst & Young's 2010 European attractiveness survey. We hope you find it interesting and useful in helping to shape the necessary debate.