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Due to the impact of the coronavirus pandemic, foreign direct investment (FDI) volumes will decline significantly, even if the global economy begins to recover in the second half of the year. This is stated in a report recently released by the Organization for Economic Cooperation and Development. This process is also influenced by changes in FDI regulation in Germany, the UK and other European countries, as these governments urgently introduce additional mechanisms to protect important sectors of the economy from being acquired by foreign buyers.

If you are planning to start investing in Europe, you may find this blog post interesting as it reflects recent developments in FDI regulation in a number of European countries.

European response to COVID-19

France, Italy and Spain changed their FDI verification and approval regimes, but stated that these are temporary. But for those who planned to conclude an M&A deal in Germany or Hungary, it should be borne in mind that these countries have made changes to their FDI surveillance policies on an ongoing basis.

Already 14 EU countries use tools to screen foreign investments, but so far they differ in structure and scope. Now all European countries have a common regulation. According to the approved draft, countries will have to establish uniform, "transparent and non-discriminatory" requirements for investors from non-EU countries.

The updated FDI regulation in Britain

The UK has so far taken short-term measures in response to the pandemic, and larger reforms are in the process of implementation but not yet completed.

Brexit has had a limited effect on FDI trends in the UK, as opposed to a pandemic. The country is introducing a new regime for verifying investments in significant industries. The new regime will provide for an alternative approach to screening national security and foreign investment in the UK than has existed to date.

If you intend to register a company in the UK, it is worth noting that the government has made urgent changes to its existing power to intervene in UK M&A deals based on public health emergencies.

For those planning to conduct a merger in the UK, it is important to consider that the country will apply lower thresholds for mergers related to AI and some other tech sectors.


The massive spread of COVID-19 and its impact on the global economy has prompted many European countries to revise their FDI control rules. 

Europeans feel uncomfortable when, among other things, Chinese companies are buying up assets in strategic industries.

It is obvious that now it will be more difficult for businesses to direct investments in European assets.

If you are planning to start investment activities in the EU, it is advisable to first consult with IQ Decision UK specialists. Reach out to us by filling out the short form below and sign up for a consultation on foreign investment regulation in Germany, France, and the UK.