The pandemic and the economic crisis are reshuffling the cards. According to a study by the company EY, around 65% of the 1,200 foreign investment projects announced in 2019 in France could be maintained, but 25% would be postponed or sharply revised downwards and 10% would be canceled. In the future, competition between states is likely to be even stronger to attract foreign capital.


In two months, everything has changed. In 2019, France had become the first destination in Europe for foreign investment, capping the United Kingdom stuck in Brexit, and Germany. But the Covid-19 has been there and is reshuffling the cards. From now on, the challenge for France is to defend its position and not fall back into the European ranking. And the game is not going to be easy.

According to the company EY, around 65% of the 1,200 projects announced in 2019 in France could be maintained, 25% postponed or sharply reduced and 10% would be canceled. Three hundred projects are therefore at risk and around 120 are purely and simply forgotten. With fewer jobs at stake.

Multinationals wait-and-see attitude

“If all the investments will not be called into question with the Covid, some projects remaining valid in the long term, clearly the large groups have pressed the” pause “button, except for files with a strong technological content”, says Marc Lhermitte, partner at EY. Multinationals are in the process of waiting. “Companies are very careful not to consume too much cash and are therefore encouraged to slow down their investments”, explains Eric Fourel, president of EY in France.

And there is the big unknown in consumer behavior. Will they start consuming again or, on the contrary, constitute precautionary savings? “This is one of the essential questions: what will become of the French outlet? Because if international companies are setting up in France, it is also because they want to take advantage of a large market ”, emphasizes Eric Fourel. While waiting to see more clearly, companies prefer to freeze their projects.

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There is also the issue of value chains. “If in a pre-Covid-19 world, their productive, commercial or scientific organization was adapted, there is no reason to think that it will be in the future, the debate on the relocation of certain strategic activities being revived by the epidemic “, according to Eric Fourel. The vast majority of executives surveyed by EY – 83% exactly – expect a regionalization of value chains, with a merger of certain production sites on the borders of the EU but also in Africa.

Questions about recovery plans

Finally, “The impact of stimulus plans on public finances will not be neutral”, warns Eric Fourel. “Certain States could be tempted to respond to this crisis by increasing taxes on companies, to pursue a less” business friendly ”policy. And this is what will have to be avoided in the coming years. The competition to attract foreign capital will not be reduced, quite the contrary ”, argues the boss of the network in France.

“Within six months, we will therefore have to reassure international investors and secure them or attract them to the French job pools that will really need them”, insists Marc Lhermitte. Moreover, 80% of executives questioned at the end of April by EY believe that the nature and scope of the stimulus plans will weigh in during arbitrations concerning the location of their future investments.

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If competition intensifies with Asia and the United States in a context of weak growth, it will be difficult to return to the path of lower corporate taxes and postpone the reduction in production taxes until tomorrow. . “If France gave the feeling in the post-crisis period of wanting to return to heavier taxation on investments, then the country would not only have difficulty attracting new projects but even defending those which are committed. Because with the Covid, a new competition has just opened ”, warns Eric Fourel.