Attractiveness: France reclaims its global appeal
Competitiveness, innovation, startups … France has more than one string to her bow and has reclaimed its appeal to global business leaders.
“For the first time, France is enjoying a positive and high-potential image when it comes to how international investors perceive it,” appreciates Brice Teinturier, Director General of the IPSOS polling service. Seven months after Emmanuel Macron’s inauguration, the optimism expressed by foreign business leaders is virtually unheard of. After years of “French bashing”, it is clear that the rhetoric is changing: 60% of investors now see France as attractive for business against only 36% in 2016.
That positive conclusion has been put forward by the “tableau de bord de l’attractivité de la France” (France’s attractiveness dashboard).
Rejoice! France, the sixth biggest economy in the world is a nation of entrepreneurs, a land of innovation that attracts global talent and international investors alike.
High levels of public investment
Put together for the eight year in a row, this dashboard takes stock of France’s attractiveness by comparing it to 13 OECD countries (see note below). The report, which relies on nine key indicators of attractiveness, underlines that France’s positive reputation is due to multiple indicators.
“The first lesson: France’s structural assets have remained, if not increased in their excellence”, points out Pascal Cagni, President of Business France’s board. As a result of a proactive policy by the French government, France stands out with its high level of public investment, coming in at 3.4% of GDP, higher than that of the USA (3.2% in 2015), the United Kingdom (2.6% in 2016) and of Germany (2.1%). France also has other assets worth mentioning: high quality infrastructure, is ranked 7th globally in productivity, one of the lowest electricity costs in Europe, good high speed internet coverage… And the list goes on!
A nation of entrepreneurs
As opposed to a common misconception, France is a country of entrepreneurs. France is second, behind the United Kingdom and Germany, in business creation (+2.3%). This growth is maintained by measures adopted to make life easier for entrepreneurs in France. It now takes only 3.5 days to create a company in France, against 4.5 in the UK and 10.5 in Germany. “France has become the place of choice to launch a startup, thanks to simplified business creation procedures and a rich network of incubators and accelerators.” adds Pascal Cagni. The report also highlights the “solid growth” of corporate loans since 2014. In a volatile financial climate, France is the number one country for the growth in loans to non-financial companies.
A land of research
Another strong suit for France is its capacity for innovation. The dashboard proposes two main reasons for this: the first is that France’s R&D investment is one of the highest in the world. Second, it offers an advantageous tax benefit in the Crédit Impôt Recherche (Research Tax Credit) which allows companies that invest in research to reduce their tax burden. As a result of all of this, France became the top host nation for R&D activities as of 2016, it hosts 17% of all foreign R&D projects in Europe.
An open economy
This dynamism has not gone unnoticed with foreign investors and has had a profound and widespread impact. “In 2016, France was a European leader for industrial set up,” reminds Christophe Lecourtier, Director General of Business France. One of France’s less well known aspects is that it has long been a host for companies from all over the globe. Today, foreign companies settled in France employ 13% of the country’s workers and represent a third of all exports. In all fields, France is the second highest host nation for job creating foreign investment in Europe. Between 2014 and 2016, it hosted 2.650 new Foreign Direct Investments (FDI). These investments have a real impact on employment. The total number of jobs created, or maintained, thanks to FDIs is 81 400.
But France is not resting on her laurels. The country needs to continue in its effort to become a real paradise for foreign companies: the cost of labour is still considered too high for business leaders and the tax burden remains too heavy. These are two hurdles that the new French government is taking on by reforming France’s labour law, as well as replacing the wealth tax by a real estate wealth tax to ease fiscal pressures on investors. “The possibility expressed of reducing corporation tax from 34.4% to 25% in 2022 should also reinforce the country’s attractiveness,” adds Christophe Lecourtier. These efforts have been hailed as positive change by the executives of multinational companies based in France, with 95% of them saying that they believe the new government’s direction of travel is the right one.
Note :Germany, Austria, Belgium, Spain, Finland, Ireland, Italy, Netherlands, Poland, United Kingdom, Sweden, United States, Japan.
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