France is grappling with a decline in its global appeal for foreign investors, resulting in a second consecutive year of deterioration, according to the latest barometer from the French Foreign Trade Council.
The country’s image, once peaking in 2020, has now plummeted to its lowest level in seven years, with “personal safety” experiencing the sharpest decline, in the latest disaster for Emmanuel Macron and the French economy.
The French Foreign Trade Council annually surveys 1,600 business leaders and international experts based abroad to evaluate France’s attractiveness across 12 criteria. The results this year yielded an overall attractiveness index of 60 out of 100, reverting to its 2017 level after reaching 65 in 2020.
It’s the latest in a string of economic humiliations for the French President, as last year saw French bank BNP Paribas – one of the biggest banks in Europe – tell customers to “move money to the UK” instead of investing in France.
In 2023, the energy crisis played a significant role in the decline, with a notable fall in the ‘energy supply and cost’ criterion. While government measures have somewhat mitigated this concern, other indicators such as cultural environment, quality of life, taxation, and personal safety continue to trend downwards.
Protests, riots, and the threat of terrorism have contributed to the steepest drop in the ‘personal safety’ criterion, reaching its lowest score since the index’s inception in 2015. The French Foreign Trade Council highlights a general concern, especially with the approaching Olympic and Paralympic Games, where personal safety and security are anticipated to be focal points.
Regionally, the Asia-Pacific region remains the most critical, with a 30-point drop in personal safety compared to 2023. North America and Eurasia also witness substantial declines, while Latin America and the Africa-Indian Ocean region maintain relatively higher attractiveness levels.
While concerns about personal safety may not pose a direct threat to foreign investment, there are warnings about France’s appeal as a tourist destination and its ability to attract executives with the ‘French way of life.’
Despite the overall decline, positive aspects include higher levels in traditionally scrutinised investment criteria such as taxation, administrative and regulatory burden, labour costs, flexibility, and social climate. Respondents expressed approval for the government’s efforts to simplify administrative procedures, reduce production taxes, and promote innovation and industry support.
The French Foreign Trade Council notes that France is comparatively more attractive than Italy, Belgium, and the Netherlands for attracting foreign investment – but less so than Spain and Germany, although the gap with Germany has narrowed considerably.
Addressing the economic challenges, the French government aims to boost exports, targeting 200,000 exporting companies by 2030, up from the current 150,000. Initiatives like the “Dare to Export” plan and efforts by Team France Export demonstrate a commitment to supporting companies in international endeavours. However, France’s trade deficit, expected to be around 100 billion euros in 2023, remains a significant concern.
