GTAI FDI Report
2017 Report: The Brexit Effect
A potential ‘Brexit effect’ has made itself apparent in Germany’s 2017 foreign direct investment (FDI) figures, with the number of UK investment projects jumping by 21 percent.
Report summary
The number of projects coming from the UK has increased noticeably in 2017. Currently, the large share of these projects involves service offices opening, but it will be interesting to see whether production facilities are subsequently set up. Also notable was that the UK was the largest source of merger, acquisition and shareholding investment. The volume of enquiries to GTAI from the UK has also risen sharply.
“We are convinced that this increase in British FDI activity is a direct consequence of the Brexit decision,” said Thomas Bozoyan, Manager of Research at GTAI. He noted that this would be part of a larger trend, which has seen British FDI across Europe increase by 33 percent. Financial services and ICT are the main recipient industries of the investments, but the shareholding acquisition of British companies and investors in German companies has also increased sharply, which adds to the impression that this is a strategy to deal with Brexit.
Key findings
- Altogether, Germany‘s federal states registered 1,910 settlement projects (greenfields, expansions, relocations, not M&A) in 2017 which are set to create around 29,000 jobs in Germany overall.
- Additionally, 1,925 M&A transactions were registered by foreign companies in Germany.
- The US led the way in terms of greenfield projects with 276, while most of the new facilities (more than 40 percent) were from the EU. China registered 218, Switzerland 204, the UK 152, the Netherlands 124 and France 95.
- Foreign investors tend to prefer investing in corporate and financial services. They represent about 20 percent of all new projects, ahead of ICT & software with 16 percent and consumer goods industry at 10 percent.
- The most popular activity remains the opening of sales and marketing offices (39 percent). Production and R&D represent 19 percent while business services account for 18 percent of all investment projects.
- The most important investment project source region for Germany remains the EU, from whose member states 41 percent of all investment projects originate, while China’s influence means that a shade under 25 percent of the investment projects come from Asia.
- Germany is, with 18 percent of all British FDI in Europe, the most popular investment destination for British investments.
