Foreign investors see France as a good bet

International development agency Business France's report was welcome

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France is basking in the renewed confidence of foreign investors, with 1,298 companies opening offices or other facilities in the country last year.

The boom helped create or maintain 33,489 jobs with many in the prized manufacturing and research and development categories. One of the largest is a €300million investment by Japan’s Toyota in its Yaris factory at Onnaing near Valenciennes.

International development agency Business France says its research found the improved business environment, growing economy, highly trained workforce and an awareness of company law changes by the Macron government have all added to the attractiveness factor.

The report was welcome after first quarter statistics in 2018 set off alarm bells as France’s rate of economic growth slowed while unemployment rose.

National statistics agency, Insee found jobless numbers up 0.2% to 2.6m, or 8.9% of the active population after a 0.7% drop in the previous quarter.

At the same time growth figures showed just a 0.2% rise in gross domestic product, lower than forecast and way below the 0.7% growth at the end of 2017.

“It’s too early to be alarmed but it’s fair to say that a lot of the excitement about economic growth in France and the Eurozone as a whole has fizzled out as quickly as it appeared,” Chris Williamson, economist at IHS Markit data, told Connexion.

Many felt solid numbers from the Purchasing Manager Index, (PMI) gave a better picture of what was happening compared to GDP figures.

“The rate of growth being signalled in the PMI surveys in the second quarter remains reasonably solid, just not as exciting in the way it was late last year. If this rate of growth persists then the economy will continue to grow at roughly its trend rate.”

Ludovic Martin, economist at Crédit Agricole, remained positive about France’s economy.

“There were additional one-off charges in the first quarter especially with taxes, broadly green taxes and tobacco, which were an additional slow down, compared to other countries.

“They will not be repeated so I am confident the first quarter was a blip and am confident the EU and France will continue recovery in the coming years.”

On the jobless figures, he said the exceptionally high fall in the last quarter of 2017, meant there had to be a “correction” in the first quarter of this year.

“The trend is still for a gradual and slow fall in the unemployment rate and I do not see that this will change.”

Employment Minister Muriel Pénicaud said the results were a warning light, but added that she saw the overall picture as looking good, with a “dynamic” picture for new job creation.

Foreign firms rate France as second only to Germany as the most attractive European business destination. It is rated 33% with Germany on 45% and the UK on 29%. In 2016 France was rated just 23%.

Other than Toyota, other projects include a €120m wind turbine blade plant in Normandy by US firm General Electric and Dutch company Plukon’s €20m for the Duc poultry business.

Research and development investments include US firm Zen­Desk recruiting 50 software engineers in Montpellier and the German pharmaceutical company Sartorius employing 200 new workers in France.