Paris has overtaken London to become 'most attractive European capital for investors' for first time in more than a decade, according to Ernst & Young report. Le Parisien newspaper headline says 'We can say thank you Brexit' pic.twitter.com/YfkMER3j9h
— David Chazan (@davidchazan) June 11, 2018
A new study by accounting firm Ernst and Young (EY) shows that the number of foreign investment projects in France has jumped by 31 percent in the past 12 months, with Paris knocking London of its top spot in terms of attractiveness to investors for the first time since the report began in 2003.
“The European foreign investment map is changing,” reads the report.
“France enjoyed surging project numbers (+31%) and has now become a direct competitor to Germany and the UK across the project spectrum.
“The UK is feeling the effects of Brexit. It remains the top destination for FDI in 2017, attracting 1,205 projects. That was only 6% more than it attracted in 2016, a slowdown after very strong growth in earlier year,” the report said.
EY's Marc Lhermitte said: “The progression is spectacular. We are witnessing a real tightening of the leading pack, with France catching up to Germany and the United Kingdom at high speed.”
And the main reasons for France's success: the election of Emmanuel Macron and the impact of Brexit in the UK.
Pascal Cagni, France's Ambassdor to International Investment said: “After a year rich in changes following the presidential election in France, but also in Europe with the Brexit negotiations, and the new political landscape in Italy and Germany, France is recognized for its dynamism and its economic, political and regulatory stability.
“France and the Eurozone now show strong economic performances, with growth rates of 2% and 2.4% respectively for 2017. These European dynamics, combined with reforms to the labor market and corporate tax cuts already enacted by the new French Government, create renewed confidence on the part of foreign investors. It is now judged less severely on its traditional weaknesses – the cost of labor and the taxation of companies.”
And while it was good news for France as a whole, the report was very positive for Paris.
Foreign investors voted the French capital the top choice for foreign direct investment in Europe, with Brexit and the election of French President Emmanuel Macron among the main reasons for the shift, according to the report.
Le Parisien newspaper headlined the story with the words: “We can say thank you to Brexit”.
“For the first time since our investor survey began in 2003 Paris overtakes London to become Europe’s most attractive destination for foreign investors. From its 54% peak in 2014, London’s attractiveness has declined to 34% in 2018,” read the report.
The French capital was followed by London, Berlin and Frankfurt.
One of the key knock-on effects of Brexit was a decrease in the number of companies setting up or relocating their headquarters to the UK in 2017.
In 2016, 51 percent of new headquarters in Europe were placed in Britain, while in 2017 this tumbled to 26 percent.
The reports lists Brexit as one of the four main risks affecting 2017 investor sentiment in Europe, according to the report, alongside geopolitical instability, such as the recent U.S. steel and aluminum tariffs on the region, as well as talent shortages and technological changes, and superpower rivalry.
However overall the UK still came top for foreign direct investment in 2017, accounting for 1,205 out of 6,653 new foreign direct investment projects in Europe with Germany coming second.
France was third followed by the Netherlands, Russia and Spain.
Together, the UK, Germany and France account for nearly 50 percent of all foreign projects in Europe, according to the report.
In total, the amount of foreign direct investment taking place in Europe in 2017 grew by ten percent, which represents the lowest growth since 2013.