PARIS — American investors were souring on Europe even before Donald Trump returned to the White House.
A study released by consultancy EY on Thursday found that investment by U.S. companies in Europe fell by 24 percent from 2023 to 2024. Over the same period, foreign investment into the United States increased by 20 percent.
Several of the surveyed companies said they chose to invest in the United States because of subsidies and tax breaks such as the ones afforded to them by the $369 billion Inflation Reduction Act and lower energy costs — factors that were “almost irresistible,” according to Marc Lhermitte, the EY partner in charge of the study.
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Lhermitte said that during the same time period, American investors were spooked by geopolitical tensions, spiking energy costs and sluggish growth.
The coronavirus pandemic and the rise of energy prices set off by Russia’s invasion of Ukraine have plunged Europe in period of industrial decline.
“A region with no growth during three years is exhausting,” Lhermitte said.
The situation is likely to get worse, especially with Trump’s threat to raise across-the-board tariffs on European goods from 10 percent to 20 percent as he seeks to convince foreign companies to produce more goods in the United States.
“Companies tell us that this is a major reason for concern,” said Lhermitte.
Many of the surveyed companies agreed with Mario Draghi’s call for massive private and public investment to help Europe compete with China and the U.S..
An official from the cabinet of French trade minister Laurent Saint-Martin said France registered a “positive result” and insisted that the decline of U.S. investments in Europe was part of a broader wave of reshoring and “regionalization of supply chains.”
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France on top
Despite a year of political instability, the study showed that France remained Europe’s most attractive country for foreign investors in 2024.
But Paris has little reason to celebrate: the study found that foreign investment in France dropped by 14 percent year-on-year.
French President Emmanuel Macron is expected to announce several major foreign investments on Monday during the annual “Choose France” summit. The event, which takes place at the Versailles palace, is expected to draw CEOs from companies from all over the world.
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Giovanna Coi contributed to this report.
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