France is the most attractive country for FDI in Europe

2019, best year for Nordic & Danish investments in France

Jun 8, 2020 | Focus, Invest in France

The 2019 annual report on foreign investment in France published by Business France confirms the attractiveness of France and corroborates the latest EY survey: in 2019, France was the leading European recipient of job-creating investment and thus has become the most attractive country in Europe. There is no exception for the Nordics, as illustrated by the historical progression of Danish investment, the steady growth from the Swedish ones, and the stable investment level from both Finland and Norway. Despite the COVID-19 crisis, France is determined to keep its leadership by maintaining the course of its pro-business policy and support its strategic industries.

2019, a historic year for foreign investment in France

France registered 1,468 foreign investment projects in 2019. An increase of 11% compared to 2018, creating or saving 39,542 jobs (up to 30% compared with last year). Those investment projects, an average of 28 investment decisions per week, confirm France’s attractiveness and the relevance of the reforms engaged in the last three years. Industry and R&D functions are the primary beneficiaries of foreign investments, reflecting the Nordic trend in France. As the figures show, there were 83 investment projects from Nordic companies recorded in 2019, creating 1,940 jobs. It is a 30% increase compared to 2018, and the best year ever for Nordic investment in France.

2019 was the best year recorded for Nordic investment in France
(Source: Business France Nordic)

Danish investment has reached an all-time high

The August 2018 State visit from Emmanuel Macron to Denmark, followed in November 2019 by Prince Frederik of Denmark to France, strongly deepened the economic relations between our two countries. These two majors momentum were strengthened by the numerous initiatives achieved by Dansk Industri, the Danish Trade Council, the French Embassy and Business France to make France event more attractive for Danish companies.

Indeed, 2019 was a historic year for Danish investment in France with 28 job-creating investment projects in France, an impressive 75% record increase compared to 2018. Those investments resulted in 700 job creations and savings, which is about 500 more than 2018. Both numbers are the highest ever since we started to track international job-creating investments in 1993.

Read more: The Danish Royal visit to France

Sweden remains the biggest Nordic investor in France

On the other hand, Sweden keeps on consolidating its position as the leading Nordic investor in France. With 35 investment projects in 2019, that created 775 jobs, Sweden registered its third-best year since 1993. Reflecting on the global trend, Swedish investments in France are, in large part, focused on R&D and production sites. A symbol of those high added-value activities is the new Ericsson R&D center that will focus on 5G and security, using the French talent pool and expertise to comfort its competitiveness in 5G.

Read more: French-Swedish strategic partnership for innovation, digitalization and green solutions

Finland and Norway also see the potential of France for innovation

Finish companies also see the strong potential of France for innovation. As an example, Konecranes achieved an investment in a new data science center in France. The world-leading group of lifting businesses chose Lyon for its excellent combination of advanced data research capabilities and an industrial focus. In total no less than ten direct investments were recorded by Finnish companies last year in France an increase with 40% compared to last year.

Finally, Norway saw a 50% increase in the number of investments in France with nine projects creating or saving 131 jobs.

Read more: Overview of the 2019 Annual report on foreign investment in France

Explaining the French renaissance

The success of France’s attractiveness in recent years comes from a variety of factors. Some of them are conjectural, like the Brexit process that made some companies choose to resettle in the EU. However, the foremost reason is the resolute pro-business reform agenda that was implemented since 2017, that France is determined to pursue despite the situation provoked by the COVID-19. The Prime Minister organized a special conference with some of the main foreign investors on June 2nd, to reassure them that the Government will maintain its pro-business agenda to support economic recovery.

As a reminder, here are the main measures are taken to strengthen France’s competitiveness:

Some tax reductions were implemented to foster investment and employment, such as the corporate tax decrease from 33% to 25% by 2022, and the creation of targeted tax credits. Among them, the Research Tax Credit and the Competitiveness and Employment Tax Credits are the most appreciated. On the other hand, the decrease of taxation for individuals aims at improving purchasing power, through the end of the housing tax and the 5 billion reductions of the income tax. The capital gain tax was also set at a flat rate of 30% since 2018.
The labor market is now more flexible thanks to a series of reforms launched since 2017. Apprenticeships have been overhauled to be more attractive for students and companies alike. Still ongoing are the unemployment and retirement systems reforms, implementing more fairness for employees, and a reduction in the unemployment rate.

Read more: Choose France – A program of pro-business reforms

Navigating the Covid-19 crisis, France will maintain its competitiveness

Economic uncertainty remains high due to the events surrounding the Covid-19 pandemic. The French Government has taken a range of measures to support the restart of the economy. For example, during March and April, support packages were announced for start-ups and SMEs. Since May and the gradual path back to normality, the Government has announced some specific packages for economic sectors hardly affected by the crisis:

A massive 18 billion euros “Marshall plan” for tourism was announced on May 14th. For SMEs and mid-cap companies, loans up to 2 million euros are available to help treasury issues. A 1,7 billion euros fund is also set up and will be invested in selected companies. Finally, rents will be deferred for three more months for tourism professionals, and regional funds have been created to support the local ecosystems.
For the automotive industry, a 8 billion euros plan was announced on May 26th and is crafted around three axes. Firstly, to support the renewal of the French vehicle fleet, a new bonus was created for the purchase of hydrogen/hybrid vehicles, with a conversion bonus for old thermal vehicles. Then, a 1 billion euros fund has been set up to support the shift towards the “car of the future” that will go towards R&D investments, equity investments in innovative companies, and the decarbonization of production tools. Lastly, a large part of the plan comes in support of the automotive industry workers, through a massive skill upgrading program.
On June 5th, the French Government announced an additional 1.2 billion euros plan to support the French Tech, pending structural measures via the stimulus package planned for this fall. This plan is notably composed of an investment fund of 500 million euros to maintain France’s technological sovereignty. 150 million euros will be available from this summer, through a mechanism operated by Bpifrance to protect startups working on health, quantum, artificial intelligence, or cybersecurity. Another set of measures aimed at strengthening the cash flow of startups boosts this plan with 495 million euros, including the doubling of the French Tech Bridge, and the creation of a loan envelope of 100 million euros to help companies that cannot benefit from the State Guaranteed Loan (PGE).

More announcements will come from the Government to support the aeronautics sector in the coming weeks, and a structured stimulus plan should be unveiled after summer.