EU27 Foreign Direct Investment: EU27 Investment In The Rest Of The World Up By 50% In 2007 - Investment In EU27 Up By 90%

In 2007, EU27 FDI¹ (foreign direct investment) in extra-EU27 countries (outflows) rose by 53%, from 275 billion euro in 2006 to 420 bn in 2007, while FDI into the EU27 from the rest of the world (inflows) increased by 89%, from 169 bn to 319 bn. In 2007, intra-EU27² FDI flows rose by 13% compared with 2006.

In 2007, the EU27 invested 113 bn euro in the USA and 58 bn in Canada, compared with 79 bn and 30 bn respectively in 2006. EU27 investments in Offshore financial centres³ rose from 50 bn to 84 bn. Investments grew also in Switzerland (from 23 bn to 34 bn), Russia (from 11 bn to 17 bn) and India (from 3 bn to 11 bn).

The USA invested 145 bn euro in the EU27 in 2007, compared with 74 bn in 2006. Investments in the EU27 from Offshore financial centres³ (from 30 bn to 98 bn), Switzerland (from 18 bn to 29 bn), Japan (from 14 bn to 18 bn) and India (from 1 bn to 10 bn) also increased, while Canadian investment remained stable at 9 bn.

EU27 FDI flows with China (excluding Hong Kong) remained modest in 2007, with EU27 investment of 2 bn euro in China and Chinese investment of 1 bn in the EU27.

These figures⁴, published by Eurostat, the Statistical Office of the European Communities, come from first FDI results for 2007 and revised data for 2006⁵.

The United Kingdom, Germany, Luxembourg and France main actors in extra-EU27 FDI flows

The United Kingdom, with outflows of 121 bn euro, and a 29% share of the EU27 total, was the largest investor in extra-EU27 in 2007, followed by Luxembourg (78 bn or 19%) and Germany (52 bn or 12%). With regard to extra-EU27 inflows, the United Kingdom, with 87 bn, and a 27% share of the EU27 total, was the main recipient of FDI, ahead of Luxembourg (50 bn or 16%) and France (23 bn or 7%). The role of Luxembourg in EU FDI is mainly explained by the importance of its financial intermediation activity⁶.

In 2007, the EU27 was a net investor in the rest of the world, with outflows higher than inflows by 101 bn euro (0.8% of GDP). In 2006 outflows were also higher than inflows, by 106 bn (0.9% of GDP). Among the Member States, Germany was the highest net investor outside the EU27 in 2007, with a difference of 50 bn. With inflows higher than outflows by 15 bn, Ireland was the largest net recipient of FDI from extra-EU27.

France main actor in intra-EU27 FDI

France (125 bn euro), Germany (71 bn) and Italy (64 bn) were the main investors inside the EU27 in 2007. The main recipients of investments from other Member States were France (86 bn), the Netherlands (67 bn) and the United Kingdom (49 bn).

1. Foreign direct investment (FDI) is the category of international investment that reflects the objective of obtaining a lasting interest by an investor in one economy in an enterprise resident in another economy. The lasting interest implies that a long-term relationship exists between the investor and the enterprise, and that the investor has a significant influence on the way the enterprise is managed. Such an interest is formally deemed to exist when a direct investor owns 10% or more of the voting power on the board of directors (for an incorporated enterprise) or the equivalent (for an unincorporated enterprise). FDI flows presented here include re-invested earnings. In comparing 2007 and 2006 data, it should be kept in mind that 2007 data are preliminary estimates, while data for 2006 are semi-final. Updated figures for 2007 will be released by the end of 2008.
2. There is a statistical discrepancy between intra-EU inflows and outflows for both 2006 and 2007. The annual rate of change has been calculated based on the average of inflows and outflows.
3. Offshore Financial Centres (OFC) is an aggregate used in Eurostat FDI data which includes 38 countries. As examples, the aggregate contains European financial centres, such as Liechtenstein, Guernsey, Jersey, the Isle of Man, the Faroe Islands, Andorra and Gibraltar; Central American OFC such as Panama and Caribbean islands like Bermuda, the Bahamas, the Cayman Islands and the Virgin Islands; and Asian OFC such as Bahrain, Hong-Kong, Singapore and Philippines.
4. The figures presented are based on data received up until 30 March 2008 from the Member States. Data for the EU aggregate takes into account confidential data, estimates for Member States missing data and data for Special Purpose Entities (SPEs), that are additionally collected by Eurostat and the ECB from Member States not including SPEs’ FDI in national data. This ensures adherence to international standards, exhaustiveness of the EU aggregates and explains why the total of Member States’ flows differs from the EU aggregates. SPEs are mainly financial holding companies, foreign-owned, and principally engaged in cross-border financial transactions, with no or negligible local activity in the Member State of residence.
5. With respect to the latest figures published on the Eurostat website, referring to data for 2006, EU27 outflows to extra-EU27 are revised 6% downwards. EU27 inflows from extra-EU27 are revised 7% upwards.
6. SPEs account for approximately 85-90% of Luxembourg's FDI inflows and outflows.

EU27 FDI flows: 2007 preliminary results by main partner, billion euro

Minus sign stands for disinvestment.
* Data for EU aggregates take into account confidential data, estimates for Member States missing data and data for Special Purpose Entities (SPEs) that in some cases are additionally collected by Eurostat and the ECB from Member States not including SPEs FDI in national data (see footnote 4).

** Data excluding SPEs

*** Estimate

: Data is confidential or not available

- Less than 50 million euro

EU27 FDI flows: 2006 revised data by main partner, billion euro

Minus sign stands for disinvestment.
* Data for EU aggregates take into account confidential data, estimates for Member States missing data and data for Special Purpose Entities (SPEs) that in some cases are additionally collected by Eurostat and the ECB from Member States not including SPEs FDI in national data (see footnote 4).

** Data excluding SPEs

: Data is confidential or not available

- Less than 50 million euro