Europe's Most Desirable Destination for Global Investors: France
2024: France in Decline as Europe's Favored Investment Destination
For the sixth straight year, France ranked as Europe's most appealing country for foreign investors. However, the EY barometer indicates a 14% drop in foreign investments in 2024 compared to the previous year, casting a shadow on France's appeal.
Here's the lowdown: out of 1,025 foreign company projects, half of the investors believe France's charm has waned since the dissolution of the National Assembly.
Job creation linked to foreign direct investments amounted to 29,000, a mere 10,000 more than the number in 2023. EY attributes this decrease partly to France's upfront costs, which are similar to Germany's but higher than those in Spain, Portugal, or the UK.
The energy and agro-food sectors prospered in 2024, but the chemistry and automotive industries experienced a tough year. The dip was partially due to broader concerns affecting Europe, including slow economic growth, high energy prices, and a tense geopolitical climate.
Now, let's dig a bit deeper: Europe witnessed a 5% drop in foreign direct investment (FDI), marking a nine-year low. Major countries, such as the UK and Germany, also took a hit with declines of 13% and 17%, respectively. Yet, France maintained its position at the top, capturing 19% of European foreign investment projects in 2024.
The industrial sector, especially manufacturing, remained France's forte, accounting for over a quarter of Europe's foreign manufacturing investments. Fast-tracked administrative procedures, a skilled labor force, and strategic sector development helped shield this sector from the overall downturn.
However, the general foreign investment slowdown affected various sectors, highlighting a loss of competitiveness and economic instability in Europe. Still, with France's industrial sector staying strong, the country managed to remain a lead player in European foreign investment despite the overall decline.
In the grand scheme of things, the 14% drop in foreign investment in France in 2024 mirrored a European-wide trend driven by economic and geopolitical uncertainties, high energy costs, and reduced competitiveness. But the industrial sector, particularly manufacturing, continues to be the most alluring segment for foreign investors in France, fortifying the country's position as Europe's top destination for foreign investments.
Despite the 14% decline in foreign investments in France in 2024, the country continues to be a favorite for finance within Europe's business scene, as it captured 19% of European foreign investment projects. However, the slowdown in foreign direct investment (FDI) across Europe, partially due to economic and geopolitical uncertainties, has cast a shadow on France's finance sector, highlighting a need for enhanced competitiveness to maintain its status as Europe's preferred destination.
