In 2023, France was recognized as the most attractive country in Europe for foreign investors for the fifth consecutive year, surpassing both the United Kingdom and Germany (EY, May 1st, 2024). Despite a slight decline in the number of foreign investment projects, down 5% from the previous year to 1,194, the investment levels remained robust, similar to those observed in 2019, before the global health crisis. These investments resulted in the creation of 39,773 jobs throughout the country.
The enduring attractiveness of France is largely attributed to substantial reforms implemented over the past decade, including changes to the labor code, reductions in corporate and capital taxes, and significant decreases in production taxes. These measures, complemented by strategic investment plans such as France Relance and France 2030, have markedly improved France’s business environment. According to a study, these reforms have made France’s economic model more competitive and attractive than it was prior to 2017.
Despite these positives, the study revealed several areas of concern. One significant issue is France’s struggle to attract new greenfield investments, with existing site expansions making up a large proportion of the investment projects. In contrast, new site investments are more common in the UK and Germany. Moreover, the average number of jobs created per investment project in France is considerably lower than in neighboring countries, pointing to potential inefficiencies or different economic focuses.
Investor concerns extend to the financing of enterprises, cost competitiveness, and taxation, with the high cost of energy emerging as a new significant disadvantage. The previous year’s extensive strikes related to pension reforms also tarnished France’s image regarding social stability.
The study suggests that while France has made significant advancements, its future attractiveness may hinge on addressing these emerging and persistent challenges. The country is at a pivotal moment, needing to sustain momentum from post-pandemic recovery efforts and to continue adapting to maintain its lead in an increasingly competitive global environment.