5 minute read 2 May 2024
Man on forklift in factory hall

Main insights of the Belgian Attractiveness Survey 2024

Authors
Tristan Dhondt

EY Belgium Strategy and Transactions Leader; Infrastructure Advisory lead

Out-of-the-box thinker. Focused on financing,deal making, and quantification of decision processes. Take macro-economic views. Challenge existing strategies and the status quo.

Marie-Laure Moreau

EY Belgium Assurance Partner and Regional Managing Partner Wallonia

Passionate about entrepreneurship and growth. Dedicated wife and mother. Loves ski and golf and supporter of Standard de Liege.

5 minute read 2 May 2024

In 2023, Belgium held up rather well in a context of declining foreign investments in Europe, however, job creation got a firm hit.

In brief

  • In a context of an overall decline in foreign direct investment (FDI) in Europe, Belgium managed to attract a total of 215 investments in 2023, down 8% compared to 2022.
  • Belgium moves up from 9th to 8th place in the European rankings, where there are declines almost everywhere.
  • The drop in investments, however, hides a notable drop in related employment, which fell 39%.

Belgian Attractiveness Survey 2024

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Foreign direct investment (FDI) in Europe in 2023 did not get straightened out after the COVID-19 pandemic. This emerges from the EY Belgian Attractiveness Survey 2024, an annual study conducted by EY that gauges the attractiveness of Belgium as a location for investment. The explanation once again must be sought in international investment decelerating due to disappointing economic growth, high inflation, rising geopolitical tension globally, and persistently high energy prices.

These tensions are being felt all over Europe. The top ten countries with the most investments almost all recorded a decline. Only Turkey (+17%), the Netherlands (+7%) and the UK (+6%) were able to grow. The notably negative outliers are Germany and Italy, where foreign direct investment fell 12% each. Because Belgium’s decline was relatively limited to 8%, it moved up one place within that top ten.

When examining the sectoral breakdown and activities of FDI, Belgium aligns with broader European trends. Although Europe saw declines in its largest investment sectors - software and IT services, as well as business and professional services - by 19% and 27% respectively, Belgium experienced a mixed response. Here, only the software and IT services sector saw a decline, while the business and professional services sector actually saw an increase, leading all sectors with 40 projects. It is followed by transportation and logistics, and pharmaceuticals.

Manufacturing proved resilient, both at European and at Belgian level

Investment in manufacturing activities proved resilient all over Europe, declining only 1%. In Belgium however, manufacturing has emerged as the primary driver of FDI with 63 projects, a strong increase from last year and in contrast to other activities that experienced declines. Meanwhile, logistics, previously comparable to manufacturing in terms of project numbers, has fallen to 41 projects, now surpassed by business services, which attracted 46 projects. Both at European and Belgian level, manufacturing investments have most likely been sustained to meet expected rises in consumer demand. Efforts to restructure supply chains and shift production bases to Europe also helped maintain these investment levels.

Employment figures, however, are worse. The number of jobs associated with the 215 investments clocked in at 4,918, representing a substantial drop of 39% compared to a year earlier. Job creation also fell more sharply than the number of investments in the rest of Europe, 5% and 9% respectively. The service sector in particular saw the number of new jobs fall, while job creation in manufacturing managed to hold steady. 

Job creation

4,918

jobs created by FDI in Belgium in 2023

It will be crucial in the coming years to address Belgium’s decline in employment linked to foreign investments and support labor-intensive sectors and innovation.
Tristan Dhondt
EY Belgium Strategy and Transactions Leader; Infrastructure Advisory lead

France dethroned the US as biggest investor in Belgium

The origin of foreign direct investments in Belgium remains in continual evolution. Last year, France dethroned the US as the main source of investment in Belgium. It accounted for a total of 38 projects, while the US registered 29. An explanation for this decrease can be found in the success of the US Inflation Reduction Act (IRA), which may have diverted some investment from Europe to the US. Accordingly, the number of projects announced by US companies in Europe fell by 15% in 2023. In addition, we see confirmation of some other trends. For instance, investment from the UK continues to go downhill, from 27 in 2022 to 18 last year. Japan, on the other hand, continues to advance in the ranking of investors in Belgium, ending 2023 with 14 investment projects.

New markets, optimize supply chains and new technologies are main reasons to invest in Belgium

Like every year, EY also surveyed international decision-makers about their investment intentions for the year ahead. That perception study shows that despite the unchanged tense geopolitical context, investor confidence in Europe has improved considerably. Around 72% of surveyed companies plan to start or expand operations in Europe by 2024. Last year, the figure was 65% of respondents. However, in Belgium, there was a slight decline in the percentage of companies planning to establish or expand operations. While last year 61% of surveyed companies had such plans, this year the figure has decreased to 59%. The primary motivations for starting or expanding in Belgium include accessing new markets and customers (38%), optimizing supply chains and logistics (37%), and seizing opportunities presented by new technologies (31%).

Executives expect Belgium to improve its attractiveness to investments over the mid-term

As many as 75% of respondents expect Europe’s attractiveness to improve over the next three years. In the same survey last year, the figure was 67%. This puts investor optimism significantly higher than before the pandemic. Similarly, optimism prevails in Belgium regarding its attractiveness over the next three years. This year, 66% of respondents anticipate improvements in Belgium’s investment environment, up from 58% last year. However, they also highlight several risks: high levels of public debt impacting taxes, a tight labor market in specific regions, and challenges related to supply chains and sourcing difficulties.

While long-term prospects for Belgium’s attractiveness remain positive, immediate actions are required to address the concerns of high public debt and a tight labor market, which are impacting our competitive stance.
Marie-Laure Moreau
EY Belgium Assurance Partner and Regional Managing Partner Wallonia

Recommendations

These are the policy measures EY Belgium suggests to ensure the attractiveness of Belgium for foreign investors in the long term.

  • Unlock next-generation FDI

    • Embrace our current strong clusters around logistics to effectively respond to the current trend toward re- and nearshoring.

    • Encourage greater cooperation among Belgium’s three regions – Brussels, Flanders, Wallonia – to ensure that the success of one region reinforces another and that their individual advantages are combined to maximize overall attractiveness for Belgium.

    • Developing a dynamic, high-tech and innovative environment is essential to maintain our competitive position, as well as pulling out all the stops by putting essential skills at the forefront.

    • Establish Belgium as the leading destination for future-oriented businesses that will create value in a highly digital and low-carbon economy.
       
  • Sustainable development

    • Leverage the current momentum in adopting transparent and rigorous sustainability reporting aligned with EU regulations, to foster the creation of long-term value in Belgium.

    • Develop comprehensive climate change adaptation strategies that integrate resilient infrastructure planning, risk assessment, and community engagement.

    • Implement policies and initiatives that aim to reduce social inequalities and promote social inclusion.

    • Promote reindustrialization by incentivizing advanced manufacturing sectors, fostering innovation, research collaborations, and creating a favorable environment for economic growth and job creation.
       
  • A stable and reliable tax system

    • Decrease the labor cost and overall personal income taxation to a level comparable to neighboring European countries.

    • Considering the continuous increase of the compliance burden for taxpayers, a simplification of both corporate and personal income tax regulations is much needed.

    • Create a stable tax climate that ensures certainty over tax issues combined with an open and transparent dialogue toward taxpayers.

    • Maintain, bolster and market existing R&D-related tax measures.

    • Maintain and simplify the existing ruling procedures, trust and empower the ruling commission.
       
  • About the Belgian Attractiveness Survey 2024

    1. Our evaluation of FDI in Europe is based on the EY European Investment Monitor (EIM). This EY proprietary database enables us to track projects announced in 2023 across 44 countries. The database tracks the FDI projects that have resulted in the creation of new facilities and jobs.

    2. We explore Belgium’s and Europe’s perceived attractiveness via an online survey of international decision-makers. For Belgium, field research was conducted by Longitude in February and March 2024, based on a representative panel of 200 respondents. For Europe, field research was conducted by Longitude in February and March 2024, based on a representative panel of 500 respondents.
       

Belgian Attractiveness Survey 2024

Read our full report for more results, insights and recommendations.

Download the report

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Summary

Amidst a broader downturn in foreign direct investment (FDI) across Europe, Belgium secured 215 investments in 2023, down 8% compared to 2022. Despite this dip, Belgium moves up from 9th to 8th place in the European rankings, where there are declines almost everywhere. The drop in investments, however, hides a notable drop in related employment, which fell 39%. Executives expect Belgium to improve its attractiveness to investments over the mid-term.

About this article

Authors
Tristan Dhondt

EY Belgium Strategy and Transactions Leader; Infrastructure Advisory lead

Out-of-the-box thinker. Focused on financing,deal making, and quantification of decision processes. Take macro-economic views. Challenge existing strategies and the status quo.

Marie-Laure Moreau

EY Belgium Assurance Partner and Regional Managing Partner Wallonia

Passionate about entrepreneurship and growth. Dedicated wife and mother. Loves ski and golf and supporter of Standard de Liege.