Foreign investors still prefer France to UK or Germany, study finds

A new study has found that France is the most attractive European country to foreign investors, ahead of the UK and Germany.

France is also number one in 11 of 15 sectors, including electronics, pharmaceuticals, automobile, logistics, and industrial equipment, shows the 2024 barometer compiled by auditors EY, released today (May 2).

France has long been ahead; it has now been ranked the most attractive country for foreign investors for five years’ running.

And while there was a drop (5%) year-on-year in foreign investment projects in France in 2023 (a total of 1,194), there was a 4% rise in the number of new jobs created by foreign companies (40,000).

In France, 1% of companies are foreign (17,500 companies), but they contribute 16% of GDP and employ 2.2 million people, figures from national statistics bureau Insee show.

Infrastructure and workforce

France is considered to have significant competence and skills, along with strong infrastructure and a thriving market. A quarter (25%) of investors surveyed believe that the quality and availability of the French workforce is a major asset. The same percentage also believe that “the legal and regulatory environment” makes it attractive.

The country’s popularity looks set to last, with 76% of the investors surveyed believing that “France will improve over the next three years”.

‘Validates our efforts’

The government has particularly welcomed the new barometer, as it comes just a few days before the seventh annual Choose France summit, which will take place on Monday, May 13. 

In a statement, the Elysée said: “This extremely important news validates all the efforts and reforms that have been carried out since 2017.” It referred to reforms to the labour code, the reduction in corporation and capital tax, and the new Pacte law (the business growth plan le Plan d’action pour la croissance et la transformation des entreprises) and the new initiatives of France Relance, and France 2030.

‘A tense context’

In contrast, the managing director of investment public body Business France, Laurent Saint-Martin, told Le Monde that it was currently a “tense context” for international investment.

Figures from the United Nations Conference on Trade and Development suggested that foreign direct investment projects in Europe fell by 20% in 2023, in contrast to rises of 2% in the United States, 8% in China, and 17% in Asia as a whole.

Similarly, other figures suggest that international investment in France may not be as promising as the barometer initially shows.

For example, while 44% of investments made in France in 2024 were in industrial projects, this was stable (rather than a sharp rise) compared to 2022 (43%). 

Similarly, the average number of jobs created or maintained per project in France is lower in comparison to other European countries. In France, the number is 35, fewer than in Germany (49), the UK (61), and far fewer than in Spain (299).

In real terms, while 40,000 jobs were created in France in 2023, this was fewer than in the UK (52,000) and in Spain (42,000).

Has France won the ‘Brexit battle’?

“When people say that France has won the Brexit battle, that's not entirely true,” said Marc Lhermitte, partner at EY, to Le Monde. 

The report shows that the UK appears to be recovering from the impact of Brexit. After some years of a downturn, in 2023 the UK was the only country to record an increase in international investment sites.

“There are still 500,000 finance-related jobs in Greater London, and [the country is] also very strong in the digital industry and the service sector,” said Mr Lhermitte.

As a result, the French government is working to make Paris more attractive as a financial centre. France is also leading in the field of Artificial Intelligence (AI), with 17 such projects in 2023, and more set for 2024. 

France is also looking to attract investment away from Paris and Ile-de-France, including in Auvergne-Rhône-Alpes, Grand Est, and Hauts-de-France. 

Full European ranking

By the number of new projects by foreign investors in 2023, the full EY 2024 European ranking was:

• France: 1,194 (down 5%)

• UK: 985 (up 6%)

• Germany: 733 (down 12%)

• Türkiye: 375

• Spain: 304

• Poland: 229

• Portugal: 221

• Belgium: 215

• Italy: 214

• Netherlands: 157

• Others combined: 645

Of the ‘Others combined’, some countries have seen a spectacular rise; Hungary (up 70%), Czechia (up 70%), and Serbia (up 30%). 

Plus, these countries - as well as some others in the ranking, including Poland - have far lower expenses than other European nations. For example, in Poland, the hourly rate for the average industrial worker is just €15, compared to €45 in France.