Against a backdrop of macroeconomic uncertainty, France continues to attract foreign investment. This is the conclusion of the ” Baromètre de l’attractivité de la France 2023 ” (France 2023 Attractiveness Index) published by the consulting firm EY. Experts from AURIS Finance, a consultancy specialising in mergers and acquisitions, take a closer look.
The current economic climate remains difficult and foreign investment is suffering as a result. The 2023 edition of EY’s Baromètre de l’attractivité de la France (France’s attractiveness index) notes that the number of companies setting up and expanding in Europe rose by just 1% in 2022, while the number of jobs created by these companies fell by 16%.
France’s appeal remains strong
The war on Europe’s doorstep, the energy crisis and the difficult recovery from the Covid health crisis are all factors weighing on business leaders’ ability to launch new international developments. France, however, seems to be holding up well. For the fourth year in a row, France has topped the European ranking of destinations for foreign direct investment. In 2022, 1,259 new projects were identified, up 3% on the previous year. With the UK registering 927 new projects (down 6%) and Germany 832 new projects (down 1%) in 2022, France is widening the gap with its two historical competitors. The attractiveness of France remains strong, with 61% of international business leaders in the survey planning to establish a presence in the country in 2023. This is an increase of five points in one year.
Manufacturing and R&D are leading the way
With 547 manufacturing investment projects, France remains the top destination for relocation and expansion, well ahead of the next two countries, Turkey (256 projects) and the UK (175 projects). For managers, the main factor in France’s attractiveness as a manufacturing location remains the availability of low-carbon energy, which is seen as a major advantage in times of price pressures. France also remains the top destination for R&D investment, with 144 projects planned by 2022. This is largely owing to the research tax credit, which was implemented in France at the end of the 1980s as part of an incentive-based innovation policy. Foreign companies play an important role in the French economy. There are currently 16,800 of them in France, accounting for 25% of private R&D and 35% of industrial activities.
A small number of new businesses
Almost half of all foreign direct investment in France is concentrated in five sectors: business services, software and IT services, automotive, aerospace, industrial equipment and agri-food. However, the vast majority of projects are developments on existing sites. In other words, once they are here, foreign investors do not hesitate to increase their presence. On the other hand, they are more reluctant to set up in France for the first time. As a result, 65% of projects are developments on existing sites, while in Germany and the UK two-thirds of projects are initiated by newcomers.
Get the support you need
At the same time as foreign companies are setting up in France, French companies are also attracting foreign investment. In the M&A market, French companies continue to draw in investors, particularly from English-speaking countries. At AURIS Finance, our experts are specialised by sector. Experienced in international issues, they will assist you throughout your acquisition or sale process.
