2024-11-18 22:34:00
According to a special edition of the EY Attractiveness Barometer, almost half of foreign investors have reduced or postponed their investment plans due to the dissolution.
Nearly half of foreign investors in France (49%) say they have reduced or postponed their investment projects following the dissolution, even if no company has canceled their plans, according to an EY study published this Monday .
The 200 decision-makers surveyed in 25 countries in October for this special edition of the EY Attractiveness Barometer seem particularly worried (59%) about current legislative and regulatory uncertainties and the difficulty of building reliable “business plans”.
They also fear (47%) the slowdown of reforms and 40% the questioning of public decisions in key sectors. Between 20 and 30% also cite concerns about the country’s budgetary and economic situation and the cost of labor. The EY firm has ranked France five times in a row in recent years as the preferred European country for foreign investors. Now, 42% of the managers surveyed believe that the attractiveness of the United Kingdom has improved compared to that of France, despite increased tax pressure. On the other hand, they find Germany’s attractiveness worrying.
“International leaders always count on France”
Concerning investments not made in 2024, 84% of business leaders surveyed say they have postponed their investment decisions until 2025, at least. More than 60% plan to develop R&D or service activities in France by 2027. But only 49% plan to set up or expand factories there within three years. And only 15% develop decision-making centers there.
These business leaders, however, call for France to capitalize on its “differentiating assets”, such as the wealth of skills (37%), the capacity for innovation and research (29%) and the reliability of infrastructure (25% ).
For Marc Lhermitte, EY partner, “despite the impact of the economic and political situation, international leaders are still counting on France”, since “faced with Germany and the United Kingdom, they have reinvested there thanks to the efforts of competitiveness and stability undertaken for ten years”. They now expect “an optimization of public spending, continued support for industry, decarbonization and R&D”, analyzes Marc Lhermitte.
“To remain attractive, financing of businesses, innovation and decarbonization must be inspired by the recommendations of the Draghi report” on European competitiveness, recommends the president of EY France Jean-Roch Varon. He suggests “emphasizing our energy advantage and prioritizing support for SMEs and ETIs” in their various transformations.
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What are the main concerns of foreign investors regarding investment in France as highlighted in the EY Attractiveness Barometer?
**Interview with Jean Dupont, Senior Analyst at EY**
**Editor:** Thank you for joining us today, Jean. The recent EY Attractiveness Barometer highlights significant concerns among foreign investors in France. Can you summarize the main findings of this special edition?
**Jean Dupont:** Absolutely. Our survey revealed that nearly half of the foreign investors in France—specifically 49%—have either reduced or postponed their investment projects due to the recent dissolution. While no companies have outright canceled their plans, the hesitancy is quite palpable. There’s a pressing concern around legislative and regulatory uncertainties, which 59% of decision-makers cited as a major issue. This uncertainty makes it challenging to formulate reliable business plans, creating a pause in investment decisions.
**Editor:** That’s quite concerning for the French economy. What other factors are influencing these investors’ decisions?
**Jean Dupont:** Several key issues are at play. About 47% of the investors expressed worries over a slowdown of reforms, and 40% are concerned about the potential questioning of public decisions in critical sectors. Additionally, economic factors such as budgetary concerns and the rising cost of labor also weigh heavily on their minds. Interestingly, while the attractiveness of France has been historically strong—holding the top spot for foreign investment in Europe—it seems that sentiment is shifting, as 42% of managers feel the UK has become more attractive despite facing tax pressures.
**Editor:** Given these concerns, what are foreign investors looking for in France going forward?
**Jean Dupont:** The investment landscape is shifting, but there remains some optimism. 84% of the business leaders surveyed have postponed their investment decisions until at least 2025. However, over 60% still plan to develop research and development or service activities in France by 2027. It’s crucial for France to leverage its differentiating assets—like its skilled workforce, innovation capacity, and reliable infrastructure—which are still seen as strong points by decision-makers.
**Editor:** It sounds like there’s still hope for revitalizing foreign investment in France. What steps can be taken to enhance this attractiveness?
**Jean Dupont:** To enhance its attractiveness, France needs to address the current concerns surrounding regulatory uncertainties and reform momentum. Ensuring stability in public decision-making and promoting a business-friendly environment will be paramount. Moreover, capitalizing on strengths like innovation and skilled labor could make France more appealing again. Investors want to feel confident that their investments will yield returns, and creating that climate of trust and reliability is essential.
**Editor:** Thank you for those insights, Jean. It seems that while challenges exist, there are still significant opportunities for growth and investment in France. We appreciate your time today.
**Jean Dupont:** Thank you for having me. It is indeed a pivotal time for France, and I hope to see proactive measures that restore investor confidence in the near future.
