Dublin has moved up to third place in a ranking of Europe’s most attractive cities for inward investment, behind London and Paris. Galway has also been recognised as Europe’s most business friendly small city.

In a survey of 294 cities by fDi Magazine, a Financial Times publication, Dublin moved up the rankings from fifth in 2015 to third place in a list of “European Cities and Regions of the Future 2016/17”.

“The city is becoming a hotbed for investment in software and IT,” the report said, adding that the sector attracted more than 45 per cent of all Dublin’s inward FDI between 2010 and 2014.

Top of the list was London, “a beacon to investors”, which has held the top spot since 2006. It was followed by Paris.

When it comes to regions, North RhineWestphalia in Germany, home to Cologne, won the accolade of “region of the future”, followed by south-east England, while the broader Dublin region was placed fifth. It attracted the highest number of FDI projects per 100,000 people of all European regions, the report found, helping it finish first in the “economic potential” category for small regions.

Other Irish locations highlighted in the report include Galway, which ranked first of all micro cities in “business friendliness”, and had the highest level of growth in FDI job creation of any Irish or micro city, and the second highest level of all cities analysed for the ranking.

Shannon attracted the highest number of FDI jobs per 100,000 people of all European cities analysed.

The Spanish city of Barcelona came first in Europe for FDI strategy. Its policies for attracting investors top fDi’s ranking for major cities, ahead of London and Stockholm.