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EU FDI expands by 38% in 2006

The total flow of foreign direct investment (FDI) both out of and into the European Union increased by 38% in 2006, the EU statistics bureau Eurostat said on Thursday.

Last year, EU member states\' direct investment to third countries amounted to €183, an increase of 35% compared to €136 billion in 2005. Meanwhile, EU countries attracted €135 billion from the rest of the world, representing a 42% increase in the inflow of FDI from €95 billion in 2005. Thus, the 27-nation bloc was a net investor last year, with outflows higher than inflows by €48 billion. In 2005, outflows were €40 billion higher than inflows.

The increase in bi-directional investments with the rest of the world was strongly supported by the growth in EU\'s FDI flows with North America, the Eurostat said. In 2006, the EU invested €71 billion in the United States and €22 billion in Canada, compared to the €37 billion and €13 billion respectively in 2005. The U.S. invested €48 billion, and Canada five billion, in the EU in 2006, compared to the €19 billion and €7 billion respectively in 2005.

Among EU member states, France was the biggest investor to the outside world. With an outflow of €39 billion, France accounted for 21% of the EU\'s total outflow of FDI, followed by Germany, which invested €31 billion to non-EU countries last year. On the inflow side, Britain was the main recipient of foreign direct investment. €56 billion went to Britain, a 42% share of the EU total. Luxembourg ranked the second highest, with an inflow of €20 billion from non-EU countries.

Luxembourg was also the third largest investor to non-EU countries, tailing after France and Germany, two of the biggest economies within the bloc. The small western European country\'s outstanding position in EU foreign direct investment is mainly explained by the importance of its financial intermediation activity, the Eurostat said. In 2006, FDI between EU member states fell by 8% compared to 2005. (