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The prospect of tariffs on imports into the US and record levels of economic uncertainty 3 added to businesses’ long-term worries about Europe’s competitiveness, feeding investor hesitancy. A string of comments by US officials in early 2025 about their reluctance to engage in Europe’s security is also likely to have spooked investors.
The feared impact of the Trump administration’s new policies on Europe’s prospects cannot be overstated. Some 42% of surveyed businesses think they will decrease Europe’s attractiveness, with just 27% optimistic that they will improve Europe’s appeal.
The survey was conducted during a period when the Trump administration had signaled that tariffs would be imposed on imports of goods from certain countries. However, the research was completed before the official announcement of retaliatory tariffs in early April. These tariffs were higher and imposed on more countries than expected. As a result, the International Monetary Fund (IMF) revised its GDP growth figures between January and April. Eurozone GDP growth is now projected at 0.8% for 2025 and 1.2% for 2026, reflecting a decline of 0.2% for each year compared to the January update.4
If the survey was conducted today — even following the recently announced 90-day postponement — it is likely that the short-term appetite to invest in Europe would be even lower.
Confidence in long-term recovery is diminished, but remains
Rising uncertainty has also damaged investors’ longer-term view of Europe’s attractiveness. The proportion who believe Europe’s attractiveness will increase during the next three years fell 14 percentage points to 61%. More are confident that the attractiveness of China (67%) and the US (74%) will improve. In addition, surveyed investors for the first time flag the US as more alluring than Western Europe when asked which regions are most attractive for foreign investment.