Belgium Holds Steady Amid Europe’s FDI Slowdown, But Challenges Loom
Brussels, The Gulf Observer: Foreign direct investment (FDI) across Europe has slumped to its lowest level in nearly a decade, yet Belgium has managed to weather the storm better than many, according to EY’s Europe Attractiveness Survey 2025. While total FDI projects in Belgium fell slightly by 2% to 210 in 2024, job creation rose 10%, highlighting signs of resilience in an otherwise turbulent investment climate.
Europe-wide, the picture was more grim. FDI project numbers fell 5%, while job creation plummeted 16% for the third year in a row. High energy costs, political instability, and sluggish economic growth have all weighed on investor sentiment.
Despite these headwinds, Belgium retained a top-10 position in European FDI rankings, bolstered by strategic port infrastructure, a multilingual and skilled workforce, and an agile SME sector.
“This 8th place is okay and stable,” said Tristan Dhondt, EY-Parthenon Belgium Leader. “Compared to Europe, we’re not doing badly.”
Job Creation Rebounds, but Investment Quality Varies
In 2024, Belgium created 5,392 jobs from FDI projects, a partial recovery after a steep 39% drop the year prior. However, investment quality remains mixed. With an average of just 25.7 jobs per project, Belgium trails the European average of 64, highlighting the nature of smaller-scale investments, such as admin offices and headquarters with minimal staffing.
“Yes, some big logistics investments create hundreds of jobs. But then you have headquarters… sometimes it’s just one guy,” Dhondt explained.
Strategic Strengths and Sector Performance
Key sectors remained strong:
- Manufacturing led with 55 projects
- Logistics followed closely with 53
- Business services slipped to 35
Flanders dominated regionally with 137 projects, while Brussels was the only region to register growth, increasing to 44 projects — though often with very low job creation.
Brussels still faces challenges in attracting large-scale FDI due to space constraints, tax burdens, and budgetary limitations.
“Projects in Brussels typically create very few jobs — around 1.5 per project,” Dhondt noted.
Rising Concerns: High Labour Costs and Policy Fragmentation
Belgium’s high labour costs — €48.20/hour — remain a major barrier to attracting investment. The country’s automatic wage indexation, while supporting quality of life, further deters industrial investors.
“It’s too high. Simple as that,” said Dhondt. “We have to be more efficient than countries with lower costs.”
Policy fragmentation within the EU also complicates the picture. Investors can “shop around” among member states, leading to internal competition rather than coordinated growth.
“We’re not harmonised on taxes or policy,” Dhondt said. “That’s what makes the crisis more difficult to handle.”
US Investment Rebounds
The United States returned as Belgium’s largest investor, contributing 43 projects — a bounce-back from 2023. France (28), the Netherlands (18), and the UK (13) followed.
Still, long-term prospects face uncertainty. The Eurozone grew just 0.7% in 2024, compared to 2.8% in the US and 5% in China. Investment interest in Europe declined — only 59% of companies plan to invest here in 2025, down from 72%.
“The fact that 33% of companies cancelled projects with no alternative location is particularly worrying,” Dhondt added.
Looking Forward: Opportunity vs Caution
While sectors like logistics, transport, and tech continue to attract interest, Belgium’s FDI outlook hinges on addressing structural issues. These include labour reforms, fiscal incentives, and a clear national strategy to boost its high-tech manufacturing sector.
“We need to stop being complacent. The world is moving, and we must move with it,” Dhondt emphasized.
In a challenging European FDI landscape, Belgium’s stability is both a strength and a warning — a reminder that resilience today must be backed by reform tomorrow.
