Foreign investment rises in all of Europe except France

A study on attractiveness across Europe shows that while the continent is generally on the up, France is the only country lagging behind.

Foreign investment rises in all of Europe except France
Photo: Thomas Samson/AFP

The results of an annual survey of attractiveness for foreign investors, published on Tuesday by professional services firm EY (formerly Ernst and Young), are at odds with President Francois Hollande's repeated insistence that France is “doing better” – and are a worrying sign for the economy.

Of the 15 countries included in the survey, France was the only one to see an overall drop in attractiveness this year.

Although France has clung on to third place in the rankings overall, it is stagnating while the rest of the continent thrives, and the gap between it and second place Germany is widening fast.

Some 598 new foreign investment projects were started in France over the past year – but that represented an overall drop of 2 percent from 2014, when the survey produced positive results for France.

Meanwhile, the UK and Germany saw steady rises of 20 percent and 9 percent respectively, with Hungary achieving a 104 percent increase.

Indeed Europe as a whole (or the 15 countries the study looked at) saw foreign investment shoot up by 14 percent. 

So what's gone wrong for France?

While France scored highly in areas such as quality of research and tourist influence, and 80 percent of the 205 company directors interviewed by EY in February 2016 described France's attractiveness as “quite” or “very satisfying”, this positivity did not translate into actual investment.

Fewer than a quarter of investors were planning new projects in France for 2016.

As EY summed it up: “The end of French bashing has not translated into French buying.”

The investments which were made in France over the past year were generally of a small size, creating only a handful of jobs – and 80 percent were extensions rather than new ventures..

The 15 major players in Europe's economy were ranked by the number of new projects and new jobs created.

While France saw an 8 percent rise in the number of jobs created by international projects, the average across Europe was 17 percent.

While 150 new headquarters were set up in the UK last year, just 11 were set up in France, with global companies including the New York Times choosing London as the best location for their European operations.

Potential investors were put off by France's social security payroll charges in particular, which 73 percent described as “only slightly or not at all attractive”, while 72 percent cited the tax system as a negative factor. However, the biggest complaint, cited by 83 percent, was the “inflexibility of the labour market”.

The French government is in the process of trying to reform the labour market to make it more flexible for businesses when it comes to hiring and firing and organising working hours. However the reforms have proved depply unpopular and lead to a series of strikes and protests that most recently have resulted in fuel shortages across the country.

“The decline confirms the inability of [France] to embrace the way of the world,” noted the study, adding that France needed to “urgently take up the challenge of fiscal and social competitiveness” if it was to hold on to its position as an economic power in Europe.


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Timbre fiscal: Everything you need to know about France’s finance stamps

If you're doing a French admin task, you might be asked to provide a 'timbre fiscale' - here's what these are and how to get them.

Timbre fiscal: Everything you need to know about France's finance stamps

In France, you can buy  a very particular kind of stamp to cover the cost of a titre de séjour, or French passport, to pay your taxes, get an ID card if you’re eligible, or pay for your driving licence.

Basically a timbre fiscale is a way of paying a fee to the government, and some online processes – such as the tax offices – now have the more modern method of a bank transfer or card payment.

However there are plenty of official tasks that still demand a timbre fiscale.

In the pre-internet days, this was a way of sending money safely and securely to the government and involved an actual physical stamp – you bought stamps to the value of the money you owned, stuck them onto a card and posted them to government office.

They could be used for anything from paying your taxes to fees for administrative processes like getting a new passport or residency card.

These days the stamps are digital. You will receive, instead, either a pdf document with a QR code that can be scanned from a phone or tablet, or an SMS with a unique 16-digit figure. Both will be accepted by the agency you are dealing with.

Once you have the code you need, you can add this to any online process that requires timbre fiscaux (the plural) and that will complete your dossier.

You can buy them from a properly equipped tabac, at your nearest trésorerie, or online

Paper stamps remain available in France’s overseas départements, but have been gradually phased out in mainland France.