‘Second best year in a decade’ – France remains popular to foreign investors despite Covid

'Second best year in a decade' - France remains popular to foreign investors despite Covid
Paris' business district La Défense. Photo by STEPHANE DE SAKUTIN / AFP
French ministers are celebrating more than 1,000 new foreign investment projects in 2020, only a small fall on 2019's investment despite the pandemic and two lockdowns.

France recorded 1,215 new foreign direct investment projects in 2020, according to a report published last week by Business France, the government agency in charge of promoting French attractiveness on the world stage.

While this was 17 percent less than the 1,468 new projects the year before, the drop was smaller than feared after the Covid-19 health crisis forced the economy into a near standstill last spring.

“2020 is the second best year in ten years,” Christophe Lecourtier, Director General of the public agency Business France, told French newspaper Le Figaro, referring to the number of jobs created or preserved as a direct result of these investments: 34,567 in total, of which 29,809 were new jobs.

The number of jobs created or preserved was 13 percent less than in 2019, but represented a 14 percent rise compared to 2018.

The difference between 2019 and 2020 was also relatively small compared to the world on average, which saw investments plunge by 42 percent in total over the same period, according to the United Nations Conference on Trade and Development (UNCTAD).

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President Emmanuel Macron ran on a promise to make France more attractive to foreign investors by loosening up the country’s rigid labour laws and boosting the tech sector. His government celebrated the new numbers as proof that their policies were bearing fruits.

“Our reforms were convincing,” Minister for Foreign Trade and Economic Attractiveness Franck Riester said when the report came out, referring in particular to the government’s tax reduction for production companies, “of €20 billion in the period 2020-2022.”

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In 2019, France was the top country in Europe for foreign direct investments, beating both the United Kingdom and Germany (see the graphic below). This was an upgrade from the second place in 2018 and third place in 2017, the year Macron came to power.

“We were very worried about how this dynamic would behave with the crisis,” Business France’s Lecourtier told Le Monde.

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Of all the foreign investment, a quarter went into directly into production site development, 12 percent went into research projects while 13 percent went into business services.

Investment into the health and biotechnology sector soared by 40 percent compared to the year before. Renewable energy also saw a popularity spike (+13 percent) while investment into the aeronautics sector plunged (-56 percent) along with the tourism sector (-57 percent).

The EU was by far the number one investor, generating nearly two thirds of all the projects. On a unique country basis the United States came out on top with 17 percent of the projects, followed by Germany (16.5 percent) and the UK (10 percent).

Source: French government

While this was overall good news for France on the world stage, 2020 also saw poverty levels rise along with unemployment rates, especially among young people. It remains to be seen whether the trickle-down effect Macron promised during his campaign will manifest with the crisis. The government is banking on that its €100 billion rescue plan will help the country’s overall reeling economy.

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