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Foreign investment down in Europe, Germany hit hard

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Foreign direct investment (FDI) in Europe fell 4% last year, while Germany saw a sharp 12% drop in projects due to the economic slowdown and concerns over energy security, according to a study by professional services group EY.

This was the first annual decline in the number of European FDI projects recorded since the COVID-19 pandemic, following increases in both 2021 and 2022, Reuters reported. Foreign investment in the region is 14% lower than at its peak in 2017.

Companies surveyed cited volatile energy prices, turbulent domestic politics and a constant barrage of new European regulations in areas such as artificial intelligence, sustainability and data protection among their concerns.

Julie Teigland, EY EMEIA managing partner, said the pace of regulations coming into force was creating “daunting compliance challenges”, particularly for smaller businesses.

“The last 12 months will probably go down as the biggest period of regulation in EU history,” she said. “We are not saying regulation is bad … but it will be important to give SMEs time to cope,” Teigland added.

European Union leaders agreed in principle this month on a wide-ranging set of reforms aimed at reviving the bloc’s economy, but differences have emerged over how to free up the money needed to pay for them.

They ranged from deepening the EU’s single market to boosting research and creating a single energy market.

In the EY survey, France topped the foreign investment list despite a 5 per cent drop in investment projects, but these projects still created 4 per cent more jobs than the previous year.

The UK overtook Germany into second place with a 6 per cent increase in FDI projects in 2023. This follows a decline in the previous year, partly due to concerns over Brexit-related trade disruption and labour shortages.

The war between Russia and Ukraine hit FDI in neighbouring countries hard: Romania fell by 13 per cent, Finland by 32 per cent, Latvia by 31 per cent and Lithuania by 40 per cent.

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Netherlands to introduce border controls starting December 9

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The Dutch Ministry of Migration has announced that border controls will be introduced along land borders with other EU Schengen area countries and on certain flights within the Schengen zone starting December 9.

These six-month border controls are part of a broader immigration policy shift proposed by the right-wing coalition led by Geert Wilders’ Freedom Party (PVV), known for its anti-immigration stance.

Migration Minister Marjolein Faber introduced the policy through an official press release following its approval by the Council of Ministers. Faber, representing the PVV, stated, “It is time to take concrete action against irregular migration and people smuggling. That is why we will reintroduce border controls in the Netherlands starting in December.”

The border control measures will officially take effect on December 9. The Netherlands asserts that this decision complies with EU law, which requires member states to notify Brussels at least four weeks in advance when intending to restrict freedom of movement.

Earlier this year, Faber indicated to Brussels that the Netherlands also sought to opt-out of EU refugee obligations.

Geert Wilders, who led the PVV to victory in last year’s elections, celebrated this move on social media, emphasizing that the PVV has kept its promise. Wilders has long advocated for closing the Dutch borders to curb migration and strengthen national security.

Faber did not disclose specific details on how these border controls will be implemented. The plan does not allocate additional funding to the national police for these duties; instead, the six-month controls will rely on existing resources. Faber noted that the border checks should be conducted in a way that minimizes traffic disruption.

The Netherlands shares extensive land borders with Germany and Belgium, where police currently conduct spot checks. Last month, Germany implemented similar border checks with France, Belgium, Luxembourg, Denmark, and the Netherlands, citing concerns over extremist threats.

Both Germany and the Netherlands are part of the Schengen area, a border-free travel zone that includes most EU states along with Iceland, Liechtenstein, Norway, and Switzerland.

Under EU law, member states are permitted to temporarily reintroduce border controls in cases of serious security threats. However, the EU guidelines specify that such measures should be a last resort and strictly time-limited.

Following recent incidents involving Israeli football hooligans and Arab and Muslim communities in Amsterdam, the PVV and Wilders called for the deportation of migrants involved, asserting that irregular migration contributes to increased anti-Semitism.

‘Pogrom’ or ‘Zionist provocation’: What happened in Amsterdam?

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Agreement reached in Germany: Early elections scheduled for 23 February

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German Chancellor Olaf Scholz’s party, the Social Democratic Party (SPD), along with opposition Members of Parliament (MPs), have agreed to hold early federal elections on 23 February.

To initiate the election process, Chancellor Scholz must first call for a vote of no confidence in the lower house of parliament. This vote is expected to take place in early December. If the chancellor loses the vote, he can request that the German president dissolve parliament and schedule elections within 60 days.

Germany, Europe’s largest economy, was thrown into political uncertainty last week after Scholz dismissed Finance Minister Christian Lindner of the Free Democratic Party (FDP). This decision led to the collapse of the ruling coalition following a dispute over borrowing to bolster military support for Ukraine.

Initially, Scholz had proposed a no-confidence vote in January, with elections to follow “at the end of March.” However, representatives from the business community and members of the main opposition party, the Christian Democratic Union (CDU), pushed for an earlier date. They argued that elections in March would prolong the nation’s uncertainty and that a February vote would help restore political stability.

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Scholz negotiates early elections

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German Chancellor Olaf Scholz has indicated his willingness to negotiate an earlier election date in exchange for opposition support on key legislation that could enable elections sooner than anticipated.

This represents a notable departure from Scholz’s previous statement on Wednesday, 6 November, when he announced plans to call a no-confidence vote on 15 January to ensure elections “by the end of March” after the coalition government dissolved.

On Friday, 8 November, Scholz emphasized that the democratic parties in the Bundestag should collaborate to determine which laws could be enacted by the end of the year.

“In light of a potential early election date, this agreement could clarify when it would be appropriate to initiate a vote of no confidence in the Bundestag,” Scholz stated at an informal EU summit in Budapest.

The Chancellor also stressed the need for a measured, calm approach to setting an election date. However, CDU leader Friedrich Merz reported that Scholz had resisted calls for an immediate vote of confidence during their Thursday meeting.

While constitutional law does not compel Scholz to call a vote of no confidence before the scheduled election date of 28 September 2025, the minority government’s ability to pass critical legislation is contingent on opposition votes.

Scholz declined to specify whether there are particular legislative priorities that would prompt him to advocate for early elections.

Following Scholz’s statement, Germany’s Federal Electoral Office issued a caution against early elections. Its head, Ruth Brand, warned that setting “dates and deadlines” around Christmas or New Year’s Eve would make essential election preparations “nearly impossible.”

By law, any snap election must occur within 60 days of the dissolution of parliament or 21 days after a vote of no confidence.

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