France overtakes UK in foreign investment, despite European slowdown

Despite a Europe-wide decline in new investment projects, France managed to retain its attractiveness for FDI, albeit with a 5% drop in investment projects compared to the previous year. Germany, securing the third position, reported a more significant decline of 12% in investment projects.

EY’s report highlights concerns over France’s enduring competitiveness gap, citing issues such as financing, labor costs, taxation, and the perceived decline in quality of life attributed to the social climate. Additionally, France witnessed a notable 15% decrease in research and development projects.

Conversely, the UK defied the continental trend by registering a 6% increase in foreign direct investments, reflecting a return to stability in British markets following a period of political upheaval and energy price volatility in 2022. However, the report acknowledges that challenges persist in Germany, including limited growth, high energy costs, and uncertainties surrounding energy security.

Marc Lhermitte, a consultant at EY France, emphasized the importance of stability for investor confidence in the UK market. Meanwhile, Germany’s attractiveness for foreign companies continues to be hampered by factors such as low unemployment, bureaucratic complexity, and high labor costs.

As Europe navigates economic challenges and evolving market dynamics, the competition for foreign investment remains fierce, with France and the UK vying for prominence amidst shifting geopolitical and economic landscapes.