I admit – I like numbers, and the European Commission’s fifth annual report on foreign direct investment screening is packed with them. But since not all readers share my enthusiasm for statistics, this post highlights the most striking observations.
Last month, the European Commission (Commission) published its fifth annual report on foreign direct investment (FDI) screening, summarizing key trends in foreign investment across the EU and their legal implications for Member States. The report has one limitation: Although released recently, it covers the year 2024 – and since then, the geopolitical landscape has hardly become any easier.
Still, the report offers valuable insights into ongoing trends. It confirms that Europe remains a magnet for global capital and that FDI screening continues to allow the vast majority of foreign-investor deals to proceed without significant hurdles.
Steady investments from the usual suspects
Despite a backdrop of geopolitical turbulence – Russia’s ongoing war against Ukraine, Middle East tensions, and looming trade frictions – the EU’s FDI stock grew by 7.5% in 2024, meaning foreign ownership of EU assets keeps rising. Yet FDI inflows fell, driven by a 19% drop in greenfield projects, even as M&A deals rebounded slightly (+2.7%).
Key observations:
- Origin of investors: The US and UK remain dominant, accounting for more than half of all deals. China (including Hong Kong) rebounded strongly, with a 23% increase after a sharp decline in 2023.
- Destinations: Germany, France, and Spain lead for M&A, with Germany the only one of the top three showing growth. Poland (+39%) and the Netherlands posted the strongest increases. For greenfield projects, Spain tops the list, followed by Germany and France.
- Sectors: The top five sectors – manufacturing, ICT, professional/scientific activities, finance & insurance, and retail – account for about 80% of all FDI. Manufacturing and ICT dominate equity acquisitions, while retail drives greenfield investments.
Screening trends in Member States
Before looking at screening trends in the Member States, here’s a quick recap: The FDI Screening Regulation is EU law, but it does not change the fact that screening remains a national responsibility. Each Member State decides whether to approve, condition, or block a deal. The EU FDI Screening Regulation introduced a cooperation mechanism – an information-sharing network that allows the Commission and Member States to flag potential security or public order risks. Decisions are not (yet) centralized in Brussels; the system is simply meant to ensure that no one is operating in the dark when strategic assets are at stake.
Having said that, the Commission’s report also dives into Member States’ screening activity. In 2024, Member States handled a staggering 3,136 authorisation requests and ex officio cases – a sharp rise from 1,808 in 2023 and 1,444 in 2022. The main driver? Sweden’s first full year of screening inflated the totals. But even without Stockholm, the trend is clear: Screening has moved from niche to mainstream.
Of these cases:
- 41% underwent formal screening.
- 86% were cleared without conditions.
- 9% required mitigating measures.
- 1% were blocked outright.
- 4% were withdrawn.
These figures largely mirror previous years, showing that more screening does not automatically mean more restrictions. Blocking remains rare, reserved for investments posing “very serious threats” to security or public order.
What is next for Europe’s investment landscape
Looking ahead, the EU’s investment landscape is set for further evolution. The Commission has already proposed a revision of the FDI Screening Regulation aimed at harmonizing national regimes and introducing minimum standards. At the same time, Member States are asked to keep an eye on past and ongoing outbound investments of companies established in their respective territories and assess potential risks and security concerns about outbound investments, in particular as regards semiconductors, AI and quantum technologies.
In short, Europe’s doors remain open – but with stronger guardrails on both inbound and outbound flows. Expect more scrutiny, more coordination, and yes, even more numbers to analyze next year.
Photo from Markus Krisetya on Unsplash
Antitrustpolitics.com 