After the decision on Friday by Fitch and Moody’s to maintain France’s credit rating unchanged and the announcement on Tuesday by INSEE Of economic growth above expectations in the first quarter, the government can today boast of being still the most attractive European country for foreign companies. For the fifth consecutive year, France remains on the first step of the European podium according to the latest EY barometer unveiled this Wednesday, May 1. The French economy is in the lead with 1,194 projects identified, ahead of the United Kingdom (985) and Germany (733).
“In a context of contraction of international investments in Europe, France maintains a desirable place on the Old Continent”explains to The gallery Marc Lhermitte, consultant at the audit firm.
France today receives 21% of foreign investments in Europe.
40,000 jobs created
The performance is all the more remarkable given that Europe is generally less attractive to investors. And that competition is tough with the United States which is deploying the Industrial Reduction Act (IRA) to attract millions of dollars from foreign investors. In total, these projects created nearly 40,000 jobs across the country last year. However, investments in France are down 5% compared to 2022 (1,259).
“ It is a clear contraction but France retains the first step “.
Of all the projects, industry represents more than 40%, or nearly 530 factories established or expanded. HAS This reindustrialization alone has generated 20,545 jobs, with a significant increase in decarbonization and robotization projects, but also additional investments in health and even electric mobility. France remains the European destination of first choice when it comes to establishing Research and Development (R&D) establishments but also artificial intelligence with 17 new projects last year, such as the inauguration of Google’s AI center , from Meta, IBM, Samsung
On the other hand, historic industrial sectors such as chemicals or agri-food are losing momentum. It is also interesting to note that almost one in two foreign projects concerns rural areas and medium-sized towns… The regions which have benefited the most from these establishments are the Ile de France, but also the Hauts de France , or Auvergne-Rhône Alpes.
Reindustrialization: Auvergne-Rhône-Alpes at the top of industrial site openings in 2023
The assets of France
International managers highlight skills: despite labor shortages, they find well-trained workers in France. Infrastructure, such as the train, electricity, telephone network, etc., is perceived as reliable. The way the government has managed the energy crisis remains, for the moment, assets compared to other countries where the price of energy has soared. But, this is an important point of vigilance according to the study.
Finally, the quality of life in France also remains an advantage in the eyes of foreign companies, even if, on a small downside, criticisms which did not exist until now are appearing, in particular on the increasing insecurity in the country.
And our weaknesses are…
The social climate remains a weak point. The long conflict against pension reform has left its mark. Despite the reforms carried out in recent years by the government, tax and regulatory instability, but also the cost of labor, still worry foreign bosses. Also note, SMEs are less inclined than large groups to set up or consider developing their activities in France (58% compared to 77%).
Finally, 76% of managers surveyed by EY believe that France can further improve its attractiveness…
The presidential camp will not fail to congratulate itself on its results after the controversies over the budgetary slippages of 2023 and 2024 and before the note from the Standard and Poor’s agency at the end of May, a dreaded deadline before the European elections.
The government’s renewed efforts
In the meantime, Bruno Le Maire, the Minister of the Economy, underlined “ the solidity of the French economy “. For the tenant of Bercy, the results of this barometer show that “The stability of the supply policy is welcomed by investors. » The minister promises not to deviate from it. And to continue to attract foreign leaders, he is betting on new reforms: the simplification of business life, a labor law 2, the reform of unemployment insurance, or even the strengthening of our financial attractiveness. So many arguments that Bruno the Mayor, but also that Emmanuel Macron will boast during the next edition of Choose France which will be held on May 13 in Versailles.
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In Europe, the United Kingdom is accelerating
On the Old Continent, competition from the United Kingdom is strong. Across the Channel, investments increased by 6% between 2022 and 2023, to 985 investments (compared to 929 the previous year)
“In the UK there has been a recovery in investment in 2023. The UK is very focused on foreign-owned businesses. Brexit has halved the number of industrial investments, but the private sector and the British government have come together to support certain strategic sectors such as digital, industry and energy. declares Marc Lhermitte.
The United Kingdom remains a very robust competitor in the establishment of head offices but also in financial services and digital technology. If we combine these three areas of activity, 245 projects have been identified in France compared to 451 across the Channel. This explains why Greater London has narrowly slipped ahead of Ile de France in the European ranking of regions. With 36% of establishments, France is also struggling a little in “the greenfield” compared to 75% in the United Kingdom, and 77% in Germany.
After the divorce between the European Union and the United Kingdom, fears of an economic plunge in the British economy had resurfaced. But London remained an important place in Europe. “We must underline the resistance of Greater London which still attracts many European headquarters and has retained its place as a major global financial center. The financial industry employs around 400,000 people in Greater London. The UK continues to defend this very important asset,” indicates the firm’s global head of competitiveness and attractiveness.
Germany in free fall
For its part, hit hard by the energy crisis, Germany is struggling to find some color. The number of investment projects fell by 12% between 2022 and 2023, going from 832 to 733. “Germany is collapsing due to the recession which worries German and foreign companies”, indicates the consultant. After a recession in 2023 (-0.3%), the engines of the German economy should restart timidly in 2024 (+0.2%) according to the IMF.
The Fund’s economists have revised their growth forecasts downward for 2024 and 2025 (-0.3 points for both years). Further south in Europe, Spain (-6% in 5th place), Portugal (-11% in 7th place) and Italy (-12% in ninth place) are also losing ground.
Read also For the IMF, the restart of the European economy should be sluggish, the maintenance of high rates slows down activity
Europe hit hard by the fall in American investments
This drop in foreign investments on European soil in 2023 is particularly marked (5,694 compared to 5,962 in 2022). “This decline in Europe is explained by weak growth which prevents many companies from investing, a worrying energy situation and a reduction in American investments in Europe (-15%),” underlines Marc Lhermitte.
In question, Joe Biden’s Inflation Reduction Act (IRA) put in place after the war in Ukraine. “In 2023, the success of the IRA represents approximately 15% less American investment in Europe and France. American investors represent around 15% of the total. Europe has lost 30% of its American customers in four years,” underlines the expert.
Added to this is the growth differential between Europe and the United States and the cost of energy. “In Europe, the current mobilization is not enough. The IRA is a “super device” for American businesses,” judge Marc Lhermitte. It remains to be seen what Europe will propose after the crucial election next June to restart the economic engine.
Reindustrialization: slight decline in 2023 in France
The number of foreign investments in Made in France fell slightly (-3%) between 2022 and 2023. In total, 530 establishment or extension projects were identified by the firm. “We can no longer just talk about an industrial awakening because reindustrialization is real”, believes Marc Lhermitte. “But in certain large cities, there are obstacles or postures which can seem shocking while France still needs jobs, innovation and technologies provided by these international companies”, nuances the expert.
