In a climate of political uncertainty, will foreign companies and investors shy away from France?

“Bordeaux, baguettes and brie have their limits when it comes to trying to retain businessmen,” the Wall Street Journal ironically said a few days ago.

The dissolution of the National Assembly in June 2024 and the multiple political episodes that followed are weighing on the French economy, with INSEE expecting GDP growth this year of just 0.8%. And in September no less than 6,800 company bankruptcies were recorded in France, the worst “back to school period” since 2009, according to a recent study by the Altares group.

Basics

The lawyer sees several causes, among them the fact that “French institutions are solid: in general no one thinks that France is unreliable. We are observed with curiosity but there is no problem of confidence in the country for investors.”

Furthermore, the listings of French companies – through capital investments – “are interesting for American clients, especially in the technology sector, in which France is very attractive,” underlines the lawyer, who explains that he currently sees projects worth several hundred million euros in his office, carried out in particular by Americans.

Without forgetting that, in times of trade war, an investment in France “will allow them, in the event of a response from the European Union, to be on both sides of the system.”

“If this visibility is restored, France has all the assets to remain an important investment center for American and international companies,” he adds.

“Opportunities”

At the Franco-British Chamber of Commerce and Industry in Paris, it is indicated that “everything remains the same. By coming to Paris, British companies have a gateway to the European market,” its general director, Catherine Le Yaouanc, explains to AFP.

“Our French and British economies are quite equivalent, the trade flow between France and the United Kingdom continues to progress,” he says: “We receive calls every day from British companies.”

In any case, until the end of last year, several reports underlined the persistent attractiveness of France, despite the turbulence.

According to the EY company barometer published in May, with 1,025 investment projects last year, France remained in 2024 “for the sixth consecutive year the most attractive European country in terms of number of projects”, particularly in certain strategic sectors such as AI or defense.

This barometer, however, notes a drop in the number of projects (-14% in one year) and confirms that “foreign projects create on average fewer jobs than in the rest of Europe.”

For Nicolas Lioliakis, partner at Kearney, investors “recognize that France has many assets that are sometimes deprived of financing in many sectors.” He also believes that the reindustrialization strategy promoted by the Executive is a signal for investors, “regardless of the options of the different governments to date.”

However, he adds, the French economy presents several worrying signs, including “the reduction of almost 30% in private investment.”

“Today, rapid developments at the political and institutional level are fueling some questions among investors, concerned about the visibility and continuity of their long-term decisions,” acknowledges Eglé de Richemont.