Foreign investment: France remains first in Europe, but the pace is slowing

France retained its position as the leading European destination for foreign investment for the sixth consecutive year in 2024, but is suffering from measures taken before Donald Trump's arrival to strengthen the attractiveness of the United States, the consulting firm EY revealed on Wednesday, May 14.

With 1,025 investment projects announced by foreign companies last year, France remains ahead of the United Kingdom, which attracted 853 investment project announcements, and Germany, which recorded 608, details EY in its barometer "France attractiveness barometer 2025" .

The top three countries as a whole show a sharp decline in the number of investments announced, in the order of 13 to 17%, as do the 45 European countries studied by EY.

Despite its sixth gold medal, France has posted its lowest number of projects announced since 2020 and the lowest number of jobs resulting from these projects since 2017 (29,000 jobs).

The barometer "comes within a context of a fairly significant contraction in investment in Europe and an increase in the attractiveness of the United States for international companies," notes Marc Lhermitte, partner at EY.

New investment projects in North America increased by 20% year-on-year, writes EY, based on data from UNCTAD (United Nations Conference on Trade and Development), mainly due to the American breakthrough, while they fell by 5% in Europe.

According to EY, the American evolution is due more to the presidency of Joe Biden than that of Donald Trump, the former American president having put in place significant incentives for manufacturers planning to develop future projects in the United States, notably through the Inflation Reduction Act (IRA), which Donald Trump challenged.

The latter is also leading a battle to attract international companies to its soil with the weapon of customs duties, believing that these will be encouraged to come and produce in the United States in order to avoid having to pay customs surcharges .

At the same time, American companies are investing less in Europe, and this is reflected in jobs: "in 2021, American companies in Europe generated 113,000 jobs, in 2024 it will be 58,000" highlights Marc Lhermitte, a reduction by half.

The EY barometer comes ahead of the Choose France summit , organized on Monday by the Élysée Palace at the Palace of Versailles, during which many invited foreign companies are expected to announce new investment projects.

The French government, which is holding the eighth summit this year, regularly uses the EY barometer to justify its position as a land of investment, which it believes is aided by reforms undertaken, particularly in taxation and labor law.

However, this ranking only shows part of the reality of attractiveness, by focusing on the number of investment decisions announced and not on the amounts invested or the projects actually completed.

The barometer also shows mixed success in terms of job creation: France is third with 29,000 jobs, compared to 38,196 in the United Kingdom and 34,603 in Spain. France also stands out in Europe for the vast majority of announcements that concern extensions of existing sites rather than new development projects.

"We are turning the lights back on in a number of factories rather than setting up spectacular new installations as has been done in Spain, Poland or Germany in recent years," summarizes Marc Lhermitte.

For industrial projects, a key focus of Western countries in recent years as they attempt to regain control of long-neglected jobs and expertise, new locations represent only 15% of total investment in industry. And industrial projects generate an average of only 33 jobs per site, the barometer shows, ranking them tenth in Europe.

Despite its reforms, France still suffers from labor costs and political instability, according to an EY survey of 200 international investors conducted in March. However, it benefits from its level of innovation and the quality of its workforce.

"One in five investment projects heading towards Europe ends up in France," the office of the Minister Delegate for Foreign Trade, Laurent Saint-Martin, nevertheless congratulated itself on Wednesday, judging that "the reindustrialization strategy (...) is working."