The last edition of the Choose France summit, in May, resulted in a record amount of nearly 15 billion euros in promised investments, particularly in new factories, according to the Élysée count. Reproducing the feat may be more difficult next year. Because in the meantime, the honeymoon of foreign investors with France has ended. According to the survey conducted by the EY firm in October among 200 international decision-makers – after the appointment of Michel Barnier to Matignon -, 49% of foreign investors in France have revised their investments downwards.
No canceled project
The only reassuring point from the survey: no investor has yet canceled their investment plans in France, as was the case following the Brexit referendum in the United Kingdom. The shock of leaving the European Union then caused a 15% decline in British foreign direct investment.
The overwhelming majority of foreign investors also plan to resume paused projects from 2025, 84% of them. The political uncertainties surrounding the budgetary debate, which had not yet started when the survey was carried out, contributed to this chill on French attractiveness. “Companies anticipate additional tax pressure”points out Marc Lhermitte, partner at EY. The debates around the next budget could confirm some of his fears, while senators plan to table amendments to reduce the research tax credit. The exceptional increase in levies for large groups and the planned reduction in contribution reductions for businesses also go in this direction.
Uncertainties linked to the European economic context
In the debate on public finances, the concerns of foreign investors about France are mainly linked to the European economic context. And the big slowdown observed since the summer by companies on demand. “There is a particular concern about the industry»underlines Marc Lhermitte. Only 49% of foreign investors plan to set up factories in France in the coming years. Projects to establish R&D centers are holding up better, with 61% intending to do so in three years to come, which once again speaks in favor of the research tax credit. However, in recent years, foreign investors have undeniably contributed to the timid reindustrialization movement, with 530 production site projects last year decided by foreign groups, representing nearly 20,000 jobs.
This caution on investments is not specific to foreign investors. According to the latest Bpifrance barometer, the share of SMEs having made investments this year has fallen by 9 points since the start of the year. Several large flagship industrial projects announced in recent years have been suspended indefinitely in battery recycling, with the projects put on hold by Eramet and Stellantis or in plastic recycling with Loop.
The image of France has not completely changed, however. In the gloomy European context, German attractiveness appears even more degraded in the eyes of foreign investors than that of France. Since 2018, Germany has fallen back to third place for the number of foreign investments attracted each year, with 733 projects identified in 2023 compared to 1,127 in 2017. The United Kingdom, on the other hand, is now seen as more attractive than the France by international groups. In mid-October, Labor Prime Minister Keir Starmer organized a major summit bringing together major foreign bosses. An event directly inspired by “Choose France” imagined by Emmanuel Macron.
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