Foreign investors are keen on Europe, yet cautious EY point of view Since then, however, investors have lost much of their confidence Negotiations ahead in Europe’s ability to weather post-crisis storms. Amid an upsurge UK companies need to have realistic expectations for the Exit Treaty of populism, investors have noted Italy’s rejection of political negotiations. The process will be intensely political. UK Prime Minister reforms, and the presidential and parliamentary elections Theresa May will seek outcomes that achieve her objectives. Yet looming in 2017 in France, the Netherlands, Italy and Germany. the goals of EU negotiators will be to achieve what they believe best Events in Poland, Hungary and Austria have also caused unease. for the EU. That includes ensuring that club membership remains The possibility of other dramatic policy changes, in a region attractive. They must avoid a crisis for the EU itself, so the European hitherto regarded as a bastion of stability, transparency and good Commission’s goal will be to keep the 27 member states aligned. But governance, is deeply unsettling for investors. for purely domestic reasons, the member states are likely to have divergent priorities. Given the UK red line on regaining control over its borders, continuing UK access to the EU Internal Market, as it stands Today, the EU could be weakening its biggest competitive today, is looking far from certain. Companies need to plan accordingly. advantage in the global contest to secure foreign investment (5,083 decisions by foreign investors to invest in Europe in Jeremy Jennings 2015 alone10 ). In EY’s 2015 European attractiveness survey, EY EMEIA Regulatory and Public Policy Leader decision-makers made clear that stability and predictability are the most critical factors underpinning their investment decisions, and they singled out Europe’s stable and predictable business environment as its strongest attractiveness feature. Flashback to 2015: key criteria for investors to select a location and Europe’s features they valued the most What do investors want? What do they like about Europe? 1 Stability and transparency of political, legal and regulatory environment (46%) 1 Stable and predictable business environment (49%) 2 The country’s or region's domestic market (37%) 2 Research and innovation capacity (35%) 3 Transport and logistics infrastructure (30%) 3 Market size (31%) 4 Potential productivity increase for their company (29%) 4 Diversity and quality of labor force (31%) 5 Labor costs (24%) 5 High purchasing power (19%) 6 Local labor skill level (22%) Percentage weight given by the investors to that particular factor. Source: EY’s 2015 European attractiveness survey (total respondents: 808). 10 EY’s European attractiveness survey 2016. 8 EY’s European attractiveness survey January 2017