Increased innovation and an improved startup ecosystem in Europe have been cited as key reasons for the continent’s growing appeal to US and Chinese investors over the last five years, according to a survey by an association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors.
It says global investors are set to increase investment in Europe, with the following key findings:
- Eurozone stability, economic growth main drivers behind investor appetite
- 74 percent of investors surveyed recognize Europe’s leadership in sustainability
- Investors in China more likely to invest in UK and EU following Brexit
- Europe lags US in global market access, innovation and capital market efficiency
The majority of global investors polled in a new survey for the launch of believe Europe has become a more attractive investment destination and expect investment to increase. For the Global Investment Decision Makers Survey, commissioned by Invest Europe, Ipsos MORI surveyed 360 senior-level corporate and financial investment decision makers at companies from the US, China, Germany, the UK and France. It found that over three-quarters of investors in China and 71 percent of their US peers believe Europe is a more attractive investment destination than it was five years ago. Nine out of ten respondents from China believe investors will increase investment in Europe over the next five years and 74 percent from the US agree.
Lower taxes should be a priority for policymakers if Europe is to attract more investment according to 43 percent of investors in France, 38 percent in the US and 37 percent in China. The need for better investment incentives was ranked highly by 37 percent of respondents from the US and China, and 26 percent in Germany.
“There is clearly robust appetite among global investors for European investment opportunities but policymakers need to consider what more they can do to attract capital,” said Michael Collins, CEO, Invest Europe. “These findings underpin the importance of bringing together European policymakers, investors and entrepreneurs at forums such as Invest Week to discuss how best to harness this interest.”
Europe leads on sustainability
When asked to compare Europe, the US and China as investment destinations, 74 percent of respondents listed Europe as the strongest performer on its commitment to sustainability and the environment. Almost three-quarters of respondents asserted that sustainability is an important issue in their investment decision making, indicating strong potential for drawing more capital into Europe. Eurozone stability, improved economic growth and higher returns on investment were cited as factors in Europe’s increased attractiveness. This month the European Commission forecast the highest Eurozone economic growth rate in ten years with real GDP growth forecast at 2.2 percent.
Europe’s strength in sustainability is reflected in the industries in which it is seen as a global leader: 55 percent of respondents rate the region ahead on energy and the environment, while 44 percent said Europe leads in finance and insurance. Almost two thirds of investors in China highly regard Europe’s world-leading biotech and healthcare sector.
Europe makes progress on capital markets and innovation
- Closer integration of Europe’s capital markets has been a draw for almost half of investors in China and two out of five in the US
- While two out of three investors rate Europe as above average for the efficiency of its capital markets, the US leads Europe in this area, underlining the need for the successful delivery of the EU’s Capital Markets Union initiative
- Access to global markets is an area where Europe is above average compared to other investment destinations according to 68 percent of investors
- Two out of five respondents picked increased innovation in Europe as a reason for its growing appeal over the last five years, while 36 percent cited the improved startup ecosystem. Nevertheless, the US still leads on innovation over Europe and China, reflecting the country’s strength in nurturing tech startups
- Over a fifth of US respondents would like policymakers to prioritise increased investment in innovation to make Europe more attractive as an investment destination, while four out of ten Chinese investors say closer integration of the EU single market for goods and services could increase Europe’s appeal in future
International investment appetite undimmed by Brexit
With the UK set to leave the EU on 29 March 2019, 58 percent of respondents from China say they are more likely to invest in the UK over the next five years as a result of Brexit and 47 percent more likely to invest in the EU. The majority of US respondents envisaged no change to their investment strategies for the UK or the EU as result of Brexit. However, 55 percent of investors based in Germany and 52 percent from France say they are less likely to invest in the UK because of Brexit.
93 percent of respondents in China and 77 percent from the US agree that EU policymakers are serious about appealing to international investors. French, German and British investors were less positive, with only 43 percent responding positively from Germany.