November 15, 2018 / 10:35 AM / a month ago

Foreign investment in French industry booming - EY

PARIS (Reuters) - The number of foreign investment projects in French industry surged 52 percent last year, pulling further ahead of other European countries as foreign businesses take heart at President Emmanuel Macron’s reforms, an annual study said on Thursday.

FILE PHOTO: French President Emmanuel Macron attends a meeting with associations and people who benefits from their help regarding the government plan to fight poverty, in Lens, France November 9, 2018. Etienne Laurent/Pool via REUTERS/File Photo

Consultancy EY counted 323 foreign investments in new industrial projects or extensions of existing plants, far more than Britain in second place in Europe with 216.

The study found foreign investors are increasingly taking note of Macron’s reform drive, which has eased their concerns about high taxes, administrative red tape and high labour costs.

Some 77 percent of foreign business managers are upbeat about French industry, a survey for the study found. That’s up from 65 percent when it was conducted in 2017.

Since taking office in mid 2017, Macron has eased France’s labour laws, trimmed business taxes and is cutting red tape on companies to restore competitiveness and boost jobs.

Over the decades, France’s industrial base has gradually shrunk as firms lost competitiveness internationally, leaving the sector’s share of overall economic output at 14 percent in 2009, among the lowest in advanced economies.

Since then the share has stabilised at that level amid efforts by Macron’s predecessor Francois Hollande to rein in labour costs.

The study said that while in 2008 the hourly wage rate in the industrial sector was on par with that in Germany, it is now slightly lower at 39.60 euros ($45) per hour compared with 41.04 euros in Germany.

EY found that while France is attracting a bigger share of foreign industrial investment, it is not generating as many jobs as other countries, which the study put down to more investments in France being extensions rather than greenfield projects.

Despite far more investments in France, the jobs created amounted to only 10,200 last year compared with 10,800 in Britain and 9,700 in Germany.

Reporting by Myriam Rivet and Leigh Thomas; Editing by Inti Landauro and David Stamp

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