FOREIGN companies cut back sharply on new investments in the euro zone’s two largest economies in the first six months, deterred by the currency area’s fiscal and banking crises, according to figures released by a United Nations agency Tuesday.

    The decline in new investments in Germany and France was part of a broader pull-back from developed economies in favor of their developing counterparts, which have grown much more rapidly since the onset of the financial crisis in 2008.

    According to a report by the United Nations Conference on Trade and Development, foreign direct investment (FDI) in the U.S. fell by 49 percent from the final six months of last year to US$74 billion, while inflows to China rose 12 percent to US$61 billion. Not long ago, China was a distant second to the U.S. as the world’s leading destination for foreign investment, but it is fast closing the gap.

    The main exceptions to the global trend were the U.K. and Ireland. The former attracted US$82 billion in new investment in the six months to June, up a massive 250 percent from the second half of last year, while the latter attracted US$30 billion, up 66 percent from the previous period.

    Investment in Ireland exceeded the combined total for Germany and France by almost US$10 billion. The euro zone’s largest economies have been pressuring Ireland to raise its corporate tax rate, which stands at 12.5 percent.

    Foreign businesses invested just US$6.6 billion in Germany during the first six months of the year, down 73 percent from the second half of last year, and just US$14 billion in France, down 17 percent. FDI in developed economies fell by 3.9 percent to US$353.1 billion, FDI to developing economies rose 7.3 percent to US$326.5 billion.

(SD-Agencies)