This is a historic first. In 2019, according to the annual barometer on the attractiveness of France conducted by EY and published today, France became the first destination in Europe for foreign investment, beating out the United Kingdom and Germany, competitors, historical.
The Hexagon has saved in the past year 1 197 projects of foreign offices on its territory, a figure which is up 17 % compared to 2018. This number one was a feat that had never been done before, and reward both efforts to transform France into a country “business friendly” for investors.
The crisis of the Covid-19 has spoiled the party
What efforts ? It is the president Macron who comes out the big game at Versailles with the event Choose France, organised for the third consecutive year. Last January, this special day, designed to attract 200 business leaders from more than 40 different nationalities (from Netflix to YouTube, via Snapchat, Lime, BMW, Fedex or General Electric) so that they choose France as a land of investment, had been a great success.
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And then what are most all of the reforms able to convince the aliens that France is transforming, orders work taken during the first year of power, the transformation of the SIEC in a decrease of social security contributions for the employers, the facilities of visa for entrepreneurs, the tech, etc, This cocktail is thus revealed as a winner, France has again become attractive, and this, in spite of the movement of the yellow Vests and strikes related to pension reform… But you don’t see Emmanuel Macron and his teams Bercy break out the champagne these days to celebrate this and launch a major communication campaign to claim high and strong of these successes.
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“Not yet panic, but a huge kick-off”
The economic crisis caused by the Covid-19 has spoiled the party… No luck, but this place number one, yet acquired high-fight, already belongs to the past. And it is the future, in terms of the attractiveness of France, that’s scary… How foreign investors behave in 2020 and 2021 ?
The challenge is immense : the foreign companies in France employ 2 million people, representing 21 % of the expenditures of private R & D and 31 % of our exports. What is at stake here is the ability of the French economy to continue to attract foreign investment in a time of crisis intense. The annual barometer conducted by the firm EY gives indications on the state of mind of foreign investors today. It is based on a survey of 113 european leaders on their own investment projects, their perception of the economic developments, their assessment of the recovery plans, which has been made between the 20th and the 30th of April last, to be in full containment.
According to the analysis of EY, approximately 65% of the investments announced in the year 2019 (which is the number of 1 200) would be maintained, 25 percent would be deferred or heavily revised, and 10 % cancelled. However, according to the study, even the revised draft will not perhaps not their goals, capacity, investment and recruitment in the time originally planned. The investment projects should continue, but be reduced, with some areas “spared” such as health, leisure, online or e-commerce.
The impact on foreign direct investment (FDI) in the industry could however be massive in the aerospace, automotive, industrial equipment, chemistry and plastic industry, especially for subcontractors. “We can’t talk about panic, but a huge kick-off for 2020 “, said Marc Lhermitte, a partner at EY, who traveled to the Élysée to Matignon and Bercy to present the results of its study.
The closures of the warehouses of Amazon and the Renault plant in Sandouville have marked the spirits
But a new form of competition has just started between the different countries, the ” competition recovery “. Which country will manage the better the consequences of the crisis ? The conditions for the reception of foreign investment going to change ? For the moment, the feeling of the investors about the action of France seems to be positive. They feel that France has well-managed the first part of the crisis, with the protective measures and the part-time unemployment, support easily the comparison with the other european countries.
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And after ? The case of Amazon, which closed its warehouse for several weeks following a court decision restricting its activity or that of the Renault plant in Sandouville, in which the court of le Havre has ordered the provisional closure for procedural issues, marked the spirits, and, without doubt, the representatives of the foreign companies based in France. “Attention, France is now under surveillance, continues Marc Lhermitte. The investor does not have that fear, it is that France forgets about the packet competitiveness that it had put in place and to react to the crisis by imposing, for example, counterparties heavy and overbearing on the inevitable backup plans for employment to come, by increasing the taxation of enterprises, by braking on the necessary adaptation of working time, etc, to do so would be a monumental mistake because the investors need the stability. The competition of the stimulus begins now, and if France makes a deviation to less flexibility and returns to these old demons, our country will pay very expensive. “
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