London and Île-de-France are Europe’s top city and region of the future

A new report by the Financial Times on foreign direct investment sees London maintaining a lead even after years of Brexit turmoil, but competitors like Dublin and Amsterdam are on its heels

On 16 February, the Financial Times Intelligence Unit published a report on the state of Foreign Direct Investment (FDI) ranking European Cities and Regions of the Future 2023. Despite the Covid pandemic and war in Ukraine putting the brakes on Europe’s economy in the last couple of years, the report states that the Old Continent is still the top region for attracting FDI in the world.

London stood as by far the most attractive city on the continent, despite suffering years of Brexit turbulence for the last seven years, the British capital seemed unaffected. The other nine cities were in the European Union.

At the same time, the Île-de-France region, home of the French capital, Paris, was ranked the Overall most attractive region, beating out the British region of South-East England.

FDI drivers in Europe

According to the report, the biggest driver of Foreign Direct Investment in Europe is renewable energy, which accounted for more than one-third of all FDI with more than 120 billion euros in 2022. This was followed by Transportation and Warehousing with around 24 billion euros and Software and IT Services with about 21 billion.

Researchers claim that the era of megaprojects in Europe has begun. Figures show that in 2022 the continent registered an all-time record of projects that cost over 1 billion dollars – with 47 of these. The previous high was recorded in 2008 when that number reached around 35. Otherwise, after the Mortgage Debt Crisis, the data shows very frugal spending habits on large projects, with most years averaging between 10- and 15-billion-dollar projects per year.

The ‘Major Cities’ category

In the Major Cities category, researchers only looked at the biggest and most financially attractive cities on the continent. They determined that London is still the overall leader and will continue to be in 2023, as it tops three of the categories of the research – Human Capital and Lifestyle, Connectivity as well as Business Friendliness.

On the other hand, the two big Brexit winners – Dublin and Amsterdam, are right on the British capital’s heels. Plus, there is a new contender on the continent – Warsaw, which took second place in Business Friendliness.

Amsterdam is home to Euronext, the pan-European stock exchange which unseated the London Stock Exchange as the continent’s biggest trading venue. This placed Amsterdam second in the overall Major Cities ranking and second on the Connectivity top 10.

Moreover, Dublin has benefited from a post-Brexit influx in financial services companies boosting an already vibrant foreign companies’ scene. Additionally, as the only English-speaking capital in the EU, Dublin is bound to start attracting more human capital, as talent starts avoiding the new and cumbersome British emigration laws.  

However, the big question is whether the Irish capital will be able to handle so many people as the island has been reeling from an unprecedented housing shortage for the past year. Dublin, meanwhile, ranked third in the overall category and first in terms of economic potential in 2023.

The top 10 rankings of Major European Cities in 2023,
Source: European Cities and Regions of the Future report 2023