France has consolidated its position as the most attractive country in Europe for foreign investors in 2021, but the projects it attracts are on average smaller in size, according to the latest annual barometer from the EY firm published on Monday 30 May.
France recorded 1,222 site extensions or new establishments last year, compared to 993 in the United Kingdom and 841 in Germany, far ahead of Spain (361), Turkey (264), Belgium (245) and Germany. Italy (207).
According to EY, France is benefiting from the “extension of a Macron effect” of labor market liberalization and lower corporate taxation, while the United Kingdom remains penalized by a “Brexit effect” and Germany by a ” full employment effect” which complicates recruitment. “France had suffered a lot from the pandemic in 2020”, more than its competitors, and “there is therefore a catch-up effect, a rebound effect which is quite significant”, explained to AFP Marc Lhermitte, head of the attractiveness program at EY.
Another French particularity noted by EY, France had 69% of extensions of existing sites against 23% across the Channel and 19% across the Rhine, and therefore has “more difficulty in attracting greenfield projects” (new). The government agency responsible for attracting foreign investors, Business France, for its part reported in March a record number of 1,605 new sites, taken over or extended in 2021, exceeding the previous record before the pandemic, in 2019.
Business France also takes into account investments in hotels and restaurants, unlike EY. The consulting firm does not calculate the amount of capital invested, but the number of jobs planned: it counts a total of 45,000 in France for the projects announced last year, against 60,000 in the United Kingdom and 21,000 in Germany.
The projects hosted by France are on average smaller, with 38 jobs created, compared to 45 in Germany and 68 in the United Kingdom. In the manufacturing sector, the difference is even more accentuated: 33 jobs on average in France, against 82 in Germany and 122 in the United Kingdom.
The projects won by France are often in the sectors concerned by the recovery plan and the France 2030 plan, welcomes the managing director of Business France. “We attract them because there is a vision, investors know that there will be favorable treatment, there is also aid that can make a difference,” Christophe Lecourtier told AFP. The EY ranking has often been cited by the government in recent years, especially during receptions of major foreign bosses at the Palace of Versailles called “Choose France” organized by Emmanuel Macron.
But other indicators give a less favorable balance to France. According to the latest figures from the United Nations Conference on Development (Unctad), which date from 2020, it ranks 18th in the world and sixth in Europe for the flow of foreign direct investment (FDI), according to Unctad ( United Nations Conference on Trade and Development).
This measure has a broader scope, which also includes financial activities, real estate or purchases of production units without the creation or extension of a site. For all the years from 2015 to 2020, outward FDI flows leaving France are greater than inward flows, according to Cnuced, which means that French companies continue to invest massively abroad. According to the EY barometer, London will retain its place as the most attractive European city for investors in 2021, ahead of Paris, but the gap between the two metropolises is narrowing.
Finally, the confidence of foreign investors should last this year, but the war in Ukraine could slow it down. Of 203 foreign-invested business leaders interviewed by the firm between February 21 and March 25, 79% of those who responded before March 1 planned to invest in Europe in the next year, “a proportion that drops to 48% for those questioned after March 1,” notes EY.
