Financial crisis saw massive drop in EU investment
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The Grand Duke's palace in Luxembourg, the biggest EU destination for outside money (Photo: Cesar Poyatos)
The worldwide financial crisis, which erupted in late 2008, saw foreign investors massively cut their flow of money to the EU.
The European Commission put out the figures, covering 2010, on Monday (27 June), on the eve of a vote by Greek MPs on further austerity cuts designed to win credibility among institutional lenders like the International Monetary Fund, and the private sector.
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The numbers show that foreign direct investment (FDI) to the EU, which includes investment in foreign businesses but not purchases of sovereign debt, fell from €216 billion in 2009 to €54 billion in 2010.
The steepest fall came from offshore financial centres, which injected €46 billion into the EU economy in 2009 and just €4 billion the year after. The biggest overall drop came from the US, from €97 billion to €28 billion. Investment from Switzerland and Russia also plunged. But inflows from Canada (up €16 billion) and China (up €12 billion) went up.
Luxembourg - a financial services centre - took a big hit as the EU's largest normal recipient of outside money.
The commission report said the overall drop "continues the trend of recent years" and noted that FDI into the EU was eight times higher in 2007, before the crisis struck, than in 2010.
EU investors also tightened their purse strings.
EU investment around the world in 2010 fell from €281 billion to €107 billion. EU companies held back money primarily from offshore investment centres and the US. But investment also plummeted in Switzerland, going from €44 billion in 2009 to a net extraction of €7 billion.
EU outward investment was five times lower than in 2007.
