Black clouds are gathering above France. After the euphoria of the Olympic Games, businesses and households have entered a zone of strong turbulence. The appointment of a new government in September reassured economic circles after several months of political fog. But the budgetary confusion in Parliament is causing serious concern. As a result, half of the managers of companies with foreign capital, surveyed by the latest EY barometer, believe that the attractiveness of France has deteriorated over the past six months. HAS The opposite, 49% judge that the image of France has improved.
« The scale of the leadership's reaction is no surprise, in light of what happened following the Brexit referendum », nuance Marc Lhermitte, globally responsible for consulting on activities linked to competitiveness and attractiveness.
« Wait-and-see attitude » et « uncertainty »
“Uncertainty causes a wait-and-see approach to investment decisions. The new rules of the game in terms of taxation, here is the first area of concern. It is still difficult to measure the real impact of this uncertainty on foreign investment in 2024 and 2025. Companies claim that there will be an effect of the dissolution, but we do not yet know how to measure it and it can still be content,” he adds.
Spearhead of Emmanuel Macron's economic policy, France's attractiveness has been on the decline since the surprise dissolution of the Assembly last June. Promising “a moment of clarification », the rhetoric of the head of state questioned in financial circles during the summer.
As a result, 49% of companies have scaled back their investment projects in France after the dissolution last June. None mention outright cancellation. On the other hand, 12% report a significant decrease and 37% a slight reduction. Today, ” it is difficult to know whether France will maintain its first place in terms of attractiveness in Europe », warns Marc Lhermitte.
Foreign investments: France remains European champion in economic attractiveness
Concerns about instability
Asked about the factors which could explain this deterioration, entrepreneurs (61%) first cite the political uncertainty arising from the dissolution of the National Assembly. The splitting of the Bourbon palace into three blocks did not make it possible to create a comfortable majority during the summer. And, internal divisions within the government coalition (common base) contribute to this uncertainty. Second factor mentioned by managers: corporate taxation.
After several years of continuous decline in capital levies, business leaders are wondering about France's tax orientation. Stuck in a budgetary slump, the Barnier government announced around 20 billion euros in tax increases out of 60 billion euros in efforts. But many questions remain about the companies targeted by the exceptional contribution and the future of the research tax credit in particular. The last reason given by business leaders (37%), the deterioration of public finances also contributes to this decline.
The French deficit reaches 6.1% in 2024
SMEs and industry on the front line
When it comes to categories, small and medium-sized enterprises (SMEs) are the most worried in proportion (55%). Coming just behind the leaders of large companies (50%). Finally, mid-sized companies seem more confident about France's ability to attract foreign investors (42%). By sector, it is industrialists who express the most fears (53%). Hit hard by soaring energy prices and supply difficulties, “Made in France” is still struggling since the outbreak of war in Ukraine and the shock wave of the pandemic . Several large French industrial groups such as Michelin have announced severe cuts in their workforce. A sign of growing unease, business failures recorded by the Banque de France reached a peak last September (64,000). Faced with a possible wall of bankruptcies, the Barnier government risks once again facing a rise in social anger.
The sad record of business failures is reached
Method: the perceptions and expectations of international decision-makers were collected through an online survey of 200 international decision-makers from October 3 to 21, 2024
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