In 2023, Ireland saw a decline in Foreign Direct Investment (FDI) projects, a trend reflective of the broader economic challenges facing Europe. According to the latest EY European Attractiveness Survey, Ireland attracted 100 FDI projects, slipping from 10th to 11th place on the European league table of investment destinations compared to the previous year.
Dublin, however, maintained its position as the 7th best city in Europe for attracting FDI over the next three years, ranking behind major cities such as London, Paris, and Munich.
Several factors contributed to the downturn in FDI across Europe, including slow economic growth, high inflation rates, energy-related challenges, and a volatile geopolitical environment. These conditions led to a 4% year-on-year decline in FDI projects continent-wide, marking the lowest total since 2020.
Despite the challenges, Ireland’s performance remained relatively resilient, with Feargal de Freine, Assurance Partner at EY Ireland, highlighting the country’s ability to maintain its position in the annual ranking of investment destinations. Notably, Dublin continues to be viewed as an attractive location for future investment opportunities.
The Irish economy has traditionally relied heavily on FDI from the United States, particularly in sectors such as technology and global business services. Although global adjustments impacted these sectors in 2023, US investment remained a significant driver of FDI projects in Ireland.
Looking ahead, there are positive indicators for Ireland’s attractiveness to investors. A majority of surveyed executives expressed intentions to expand or establish operations in Europe over the next 12 months, indicating continued interest in the region. Additionally, investor sentiment regarding Ireland’s medium-term attractiveness remains favourable.
To maintain its appeal to investors amidst a rapidly changing global landscape, Ireland will need to remain focused on ensuring its economy is adaptable and future-proof. Continued efforts to foster innovation, support business growth, and navigate economic challenges will be essential in sustaining Ireland’s position as an attractive destination for foreign investment.
