France and Monaco

Executive Summary

Please see the end of this report for a summary of the investment climate of Monaco.

France welcomes foreign investment and has a stable business climate that attracts investors from around the world. The French government devotes significant resources to attracting foreign investment through policy incentives, marketing, overseas trade promotion offices, and investor support mechanisms. France has an educated population, first-rate universities, and a talented workforce. It has a modern business culture, sophisticated financial markets, strong intellectual property protections, and innovative business leaders. The country is known for its world-class infrastructure, including high-speed passenger rail, maritime ports, extensive roadway networks, public transportation, and efficient intermodal connections. High speed (3G/4G) telephony is nearly ubiquitous.

In 2017, France was the ninth largest global market for foreign direct investment (FDI) inflows with a year-on-year increase of 16 percent. In total, there are more than 28,000 foreign-owned companies doing business in France. It is the home to 29 of the world’s 500 largest companies. The World Economic Forum ranked France 22nd in terms of global competitiveness for 2017. The United States is the seventh largest foreign investor in France. Around 4,600 U.S. companies in France, of all sizes, employ over 460,000 French citizens.

France has already started to benefit from higher growth in Europe, with two percent GDP growth in 2017, and job creation is reaching record levels. France’s budget deficit dropped below the three percent limit to 2.6 percent of GDP in 2017 and the government has pledged to make further cuts in 2018. France’s public debt ratio of 97 percent of GDP remains one of the largest in the Euro-Zone.

Following the election of French President Emmanuel Macron in May 2017, the French government implemented significant labor market and tax reforms. By relaxing the rules on companies to hire and fire employees and by offering investment incentives, Macron has buoyed business confidence in France. According to the 2017 American Chamber of Commerce in France – Bain Barometer Survey on the attitudes of U.S. investors in France, 90 percent of American investors surveyed said Macron’s reforms improved France’s investment prospects and image in the United States. More than half of investors surveyed planned to hire new employees in France over the next two to three years. Investors in technology, in particular, found the climate for development of digital technologies and other innovations to be attractive in France. The metropolitan Paris region supports the largest concentration of technology engineers outside of Silicon Valley. In 2018 and beyond, Macron plans to introduce additional reforms, ranging from vocational training and unemployment insurance, to rail and government services.

The government recently presented a bill on company growth, nicknamed PACTE in French, which will attach requirements to foreign investment in artificial intelligence, data storage, and the space sector, when the direct objective of this investment pertains to national defense, national security, public order and public authority.

Key issues to watch in coming months include: 1) whether President Macron is able to maintain the pace of economic reform, and 2) opportunities and challenges resulting from Brexit.

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