Foreign investors prefer Britain

Swiss Re's 'Gherkin' is an example of a global firm investing in London

Britain remains the favourite European destination for foreign investment projects, according to a new report.

It won 315 projects in the first half of 2006 - 22% of all European deals and more than Germany and France combined, consultants Ernst & Young said.

Its European Investment Monitor had most British schemes coming from the US, but showed that Indian firms were rapidly expanding their UK operations.

London was the top foreign investment location, winning 133 projects.

India looks west

The overall number of projects done in Europe rose to 1,432 in the first six months of the year, compared to 1,144 in the same period of 2005.

The increase was largely down to a rise in the number of deals driven by US, UK and Indian investors.

The importance of India as a foreign investor was one of the key trends to emerge.

FOREIGN INVESTMENT DEALS 1. UK - 315 2. France - 181 3. Germany - 133 4. Spain - 90 5. Belgium - 63 Figures are for Jan-June 2006 Source: Ernst & Young

As befits a country with an economy growing at about 9% year-on-year, Indian companies are looking for more clients in western Europe and are opening sales and customer support offices across the continent.

Indian firms more than doubled the number of European projects to 36, and came second behind the US as investors in the UK.

The main losers in the report were Poland, Hungary, Russia and the Czech Republic, with a combined 12.8% share of European foreign investment, down from 19.3% in the same period of 2005.

FOREIGN INVESTORS IN UK 1. USA - 145 projects 2. India - 21 projects 3. Canada - 18 projects 4. Germany - 17 projects 5. Japan - 17 projects Figures are for Jan-June 2006 Source: Ernst & Young

The report's authors put this down to the relative decline in the number of manufacturing projects compared to a boom in the number of new sales and marketing offices, which tend to locate in the UK, Germany and France.

For major projects creating over 500 jobs, eastern and central Europe continue to be the most popular locations, winning 26 of 39 deals during the period.