A new survey shows that Ireland comes in fourth place in the league table of attractive European locations for foreign direct investment in 2021.
The EY European Attractiveness Survey was conducted among across 47 countries in October.
Survey respondents were asked to select the three European countries they believed will be the most attractive for investment in 2021 with Germany, the UK and France taking the top three spots, followed by Ireland.
The research also revealed shifts in FDI trends and investor sentiment when the last survey was carried out in April.
More investors now feel that Europe will be a more favourable destination for FDI post-Covid-19, with 21% of investors holding this view compared to just 8% in April.
51% of respondents also said they believe that Europe will be equally attractive for investment in a post-Covid-19 world, compared to 43% who held that view in April.
In October, 42% of executives expected a drop in investment plans in 2020, compared to 66% in April of this year. 10% of executives now anticipate investments increasing before the end of 2020 - this compares to no executives who responded in April.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
Just 2% of executives in April said they were not planning any changes to their supply chains, but this rose to a third in October.
"Mirroring this shift of sentiment, significantly fewer companies are contemplating reshoring or nearshoring (37% from 83% in April). Many multinational companies would prefer to avoid disruptive and costly reorganisations right now," EY said.
It said that some companies may relocate selected critical activities to Europe, mitigating future disruption risks, but it will take time and incentives before this drives mass investments in Europe.
Meanwhile, the survey reveals that future investment decisions will be less influenced by national stimulus plans alone. 80% of investors considered national recovery plans to be a major factor in April, reducing to 32% in October.
Work safety is now a growing priority particularly in sectors where employees' health is most vulnerable, EY added.
EY Ireland Partner & Head of FDI Feargal De Freine said that at a time of such global economic uncertainty, it is reassuring to see sustained interest among foreign investors in Ireland as an attractive location for investment over the past six months.
"Ireland's position as the fourth most attractive European country for investment in 2021, behind the three powerhouse economies of Germany, the UK, and France, positions us well to compete for growing levels of global FDI as we navigate 2021," he added.