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France, European champion for foreign investments

09 Junio 2022 Negocios
Vista 370 veces

The firm EY published its new barometer on attractiveness and confirmed that France is the first destination for foreign investments in Europe before the UK and Germany for the third consecutive year.

Every year, EY firm, a world leader of audit and counsel, published a barometer which is part of an “Attractiveness programme” designed to “define the prospects derived from the analysis of growth from the perspective of Foreign Direct Investments (FDI) in countries and regions of the world”. This annual study relies on two essential sources: a listing of foreign direct investment projects and international implementations in France and Europe, and two successive studies (before and after the start of the war in Ukraine) directed to 700 business managers with foreign capital implemented in France and Europe.

 

Promising European regulation

 

“France is the most attractive country in Europe” says EY. With 1,222 implementations or extensions announced in 2021, France keeps the leadership of the European ranking and grows sharply (+24% compared to 2020). According to EY, three reasons explain this rebound:

  • the impact of the health crisis that was “deeper [in France] than anywhere else in Europe”;
  • the many reforms (tax, labour market, simplification) taken in recent years which “continue to produce their effects”;
  • a “rebound momentum” after the poor performance recorded during the 2005-2015 period.

This increase comes in a general context which sees foreign investors making a comeback in Europe. Europe has welcomed 5,877 foreign investors in 44 countries, a number that will increase by 5% between 2020 and 2021. Despite this increase, “Europe is not yet back to the level it was at before the health crisis” (down 12% from the record level of 2017).

 

 

 

A gap with other European leaders

 

If Europe is a buoyant framework, as EY points out, France is widening “the gap with its historical competitors”. The top podium of the attractiveness barometer certainly remains the same, but the other two leaders, with weaker results, are “marking time”:

  • The United Kingdom first, where the number of projects increased by only 2% (993 in all), because according to EY, “British attractiveness is suffering from Brexit” with “persistent concerns about trade restrictions and labour shortages”;
  • Germany, which registered a 10% drop in implementation projects in 2021 (841 in all), which highlights “the difficulty for foreign investors to penetrate industrial chains in the automotive, chemical or pharmaceutical sectors”.

 

Promising prospects despite the context

 

According to one of EY’s surveys of business leaders, which was carried out before the outbreak of the war in Ukraine, “the desire to invest in France is strong”. According to this survey, 56% of investors would intend to establish or expand their operations in France, “a significant increase from 44% in 2021 and 16% in 2020”. But a second survey shows that the war in Ukraine has been another shock, after the pandemic, threatening the recovery of foreign investment in Europe.

However, with a confirmed relocation movement, particularly of foreign companies to France given the uncertainty in Eastern Europe, the outlook is encouraging: 63% of managers believe that France and Europe will improve their attractiveness within three years.

 

Spearheading industries and others

 

And it’s in the category of industrial and logistics projects (respectively +18% and +37% compared to 2019) that France is the most attractive. However, according to EY, digital services companies and main tertiary platform of services to companies seem to have dropped “due to remote work and the digitalisation of back-office processes”.

Similarly, investments in decision and Research and Development centres are picking up, even though competition is still sharp with most North Europe countries. Finally, says EY, the industries most impacted by the health crisis such as automobile, aeronautics, chemistry, plastics proceedings and construction, are nearing their investment level close to 2019.

 

Progresses in all regions

 

No upheaval for geographic implementation. As for the previous year, four French regions lead foreign investments: Ile-de-France, Auvergne Rhône-Alpes, Grand Est and Hauts-de-France. But as EY says, “there are sharp progresses in all the other regions”, and especially in Occitanie. And in 2021, about one industrial project out of two was localised in a territory with less than 50,000 inhabitants.

As such, regarding the image of French cities, Bordeaux keeps its first place, before Strasbourg, Marseille and Montpellier, while Lyon “keeps losing ground”.

And as for Paris, 28% of foreign managers rank it as an attractive city (18% in 2021), a sharp progress that leaves the first place to London despite a certain a drop: in 2022, 34% of managers rank London as most attractive city down from 43% in 2021.

 

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Photo credit: © scaliger.adobe-stock.com




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