Cross-border investment flows involving the EU have fallen sharply in 2004, according to figures published by Eurostat.
Foreign direct investment (FDI) into the EU decreased by more than 50%, from 125 billion in 2003 to 58 billion in 2004. The main reason for the fall was a decrease of almost 80% in foreign investment coming from the USA, which had accounted for two thirds of the EU’s FDI inflow in 2003.
Surprisingly, in the year of the EU’s biggest ever enlargement, investment flows between the 25 member states decreased by 45%. Foreign direct investment into the new member states remained modest at only 7.9 % of intra-EU investment and 5.5 % of FDI inflow into the EU.
The United States have ceased being the EU’s most important partner for inward and outward investment flows with Switzerland investing 157% of what the United States invested in the EU. In terms of outward flows, Europeans have invested 20.5 billion dollars in Japan, while the US suffered, in spite of the cheap dollar, from an EU disinvestment of 17 billion dollars.
Within the EU, the United Kingdom has taken the lead as the main recipient of FDI; Luxembourg, whose banking sector formerly attracted about a fifth of the EU’s FDI streams, has suffered from an almost 60% decrease in extra-EU investment and a decline of almost a third in investment coming from the other 24 EU countries.