Ireland last year attracted the highest level of foreign direct investment (FDI) since the halcyon days of 2000 with 80 new projects, up from 74 in 2006.
In 2000, when the Celtic Tiger was at its zenith, some 113 projects were secured.
Despite the decline in the level of investment from the US – which is down 9pc from 47pc – and the UK – down 9pc to 12pc – the two economies represent the top two FDI investors in Ireland.
Canada, Germany and Bermuda all increased their levels of investment to 7.5pc, 5pc and 5pc respectively.
The majority of the projects – 34 of them – were in the Dublin areas, with 11 in Cork, followed by Clare with seven and both Galway and Limerick attracting four.
The software sector attracted the highest level of FDI in Ireland for the second year running, accounting for 24pc of the investment.
Pharmaceuticals increased 2pc to 14pc in second place, followed by financial intermediation at 11pc and business services at 10pc.
The electronics sector, which was ranked fifth, showed an increase from 6pc in 2006 to 9pc in 2007.
Some 64pc of the projects were new and 29pc were the result of an expansion of existing companies.
Across Europe, a record number of foreign direct investments (FDI) took place for the fourth year in succession, with a total of 3,712 FDI projects recorded – a 5pc increase on 2006. This upward trend is unlikely to continue in 2008.
In Europe, software was also the leading sector in generating investment with 474 projects attracted in 2007, followed by business services (467 or 30pc), financial services (235 or 15pc), machinery and equipment (205 or 13pc), and electronics (203 or 13pc).
Transaction Advisory Service director, Garry O’Rourke, at Ernst & Young Ireland said: “Along with the rest of Europe, Ireland benefited from overall growth in the software sector in 2007. The jobs created here are also high-value R&D positions. However, the impact of the US economic downturn will not filter through until this year or next year, as many companies rethink their growth and investment plans.”
Ernst & Young’s Nigel Wilcock said the credit crunch will cause investors to rethink their investment plans in 2008 and 2009, “or most likely, delay their plans to invest.”
Between 2000 and 2002, FDI into Europe declined by 15pc, fuelled by a US economic downturn. The effect was particularly felt in the UK and Ireland, which were (and are) disproportionately reliant on US service sector investment, with a reduction of 36pc in FDI projects recorded over the two-year period in UK and 55pc reduction in Ireland.
The UK retained its position as the most attractive destination for inward investment in Europe in 2007, a position it has held since EIM was launched 10 years ago in 1997. The UK held a 19pc market share of the number of projects announced in Europe in 2007, ahead of France in second place with 15pc, Germany (8pc), Spain (7pc) and Belgium (5pc).
By John Kennedy