Foreign direct investment (FDI) in Spain was up 32% in 2018 over the previous year, which allowed Spain to recoup its fourth place in the European ranking after losing it in 2016. Spain registered a record-breaking 314 projects, up from 308 in 2016. Although the number of projects increased that year, Spain dropped to fifth place and to sixth one year later.

These are the data revealed by the European Attractiveness Survey report, published in June with figures from 2018. This study is compiled by the consulting firm EY to analyze Europe's attractiveness for foreign direct investment.

Significant increase in the digital sector
As explained in the report, Spain's increase occurred “as a result of a significant increase in investment in the digital sector, which more than doubled to 70 projects last year”. There was also substantial growth in the transport, logistics and finance sectors. Additionally, as explained by the consulting firm, “possibly anticipating greater demand, the number of sales and marketing projects rose by 77%, from 65 in 2017 to 115 in 2018”.

It is precisely sales and marketing that continue to be the favorite sector for FDI, with 2,511 projects, although the figure was 11% less in 2018 than the previous year. Next comes manufactures with 1,869 projects, and R&D with 605 projects. At the European level, investment in the digital sector rose by 5% in 2018, whereas it was down 18% in business services.

The United Kingdom continues in first place in the ranking in spite of a 13% reduction in FDI projects. Germany was down by the same percentage, in this case losing its second place, which it surrendered to France which was up a modest 1%. Spain is followed by Belgium, Poland and Turkey, which have pushed the Netherlands and Russia out of their fourth and fifth places to eighth and ninth place respectively.

4% fall for the continent as a whole
In spite of the spectacular growth of some countries like Spain – with around 30% – the survey on which the report was based shows that the number of investment projects in Europe was 4% lower in 2018 than the previous year. This is mainly due to the decline in FDI projects in the United Kingdom and Germany.

Spain's share of projects is 5%, significantly lower than the three first positions, which are around 15% and 17%. By autonomous regions, Catalonia, Madrid and Andalusia attracted the greatest number of FDI projects, with 108, 82 and 30 respectively. They were followed by the Region of Valencia, Castile-León, Aragon and the Basque Country.

Madrid increasingly appears among the most attractive cities
The survey of international company directors also focuses on future investment projects. Here, Madrid and Barcelona have switched places since the previous edition. While the Spanish capital rose to seventh place, and is considered the most attractive European city for investment by 8% of respondents, Barcelona fell to ninth place, with a figure of 6%.

The favorite was Paris, with 34% of the vote, whereas London, in the midst of the Brexit mayhem, barely retained half the votes of five years ago, with a drop of 25%. Madrid also overtook the Catalan capital as the city considered most likely to host the new technology giant. Among the 33 candidates, Madrid is in 21st place and Barcelona in 30th.

In regard to the potential risks that could affect FDI projects in the next three years, 38% of the respondents directly cited Brexit, whereas 33% choose political instability and 22% were concerned by the rise in populism and protectionism. Nonetheless, 56% of respondents consider Western Europe to be one of the three main destinations for investment, compared to 53% in 2018.