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Report: Foreign investment into Europe declines as Brexit stirs uncertainty

Foreign direct investment into Europe dropped 4%, to 6,356 projects, in 2018. This is the first time Europe has seen a decline in such inflows in six years, according to EY's European Attractiveness Survey.

Despite the drop, the level of foreign direct investment, or FDI, to Europe was the second-highest since 2000, the survey said. Germany and the U.K., which have the two largest economies in Europe, saw a decrease of 13% each in FDI, whereas Spain, Belgium, Poland and Turkey saw increases in 2018, the survey added.

The U.K. had only 48 newly established headquarters in 2018, compared to 98 in 2017, which could have led to a decrease in high-paying job creation. Production in the automotive sector of Germany dropped 7%, EY said.

FDI to France grew 1% in 2018, compared to 31% growth in 2017. On a positive note, the country saw the highest number of manufacturing and research and development projects in Europe in 2018.

The technology sector received 1,227 FDI projects in 2018, reflecting an annual rise of 5%. Transport, chemicals and machinery industries saw a 4% rise in projects.

Projects from the U.S., which add up to 22% of European FDI, increased 3% in 2018, against the average 8% rise in the previous four years.

Business outlook turned pessimistic as 27% of the surveyed businesses plan to begin or expand operations to Europe in 2019, down from 35% in the prior year, amid low demand from China, U.S. tariffs and the prospect of a no-deal Brexit. About 38% of businesses cited Brexit as the main reason to avoid working with Europe.