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02/12/2016

France’s German investors remain positive

Innovation & Industry

France’s German investors remain positive

DHL is one of 2203 German companies operating in France. [Billy Wilt/Flickr]

The 2203 German businesses operating in France are doing well. Despite reporting a downturn in France’s economic situation, German investors remain optimistic about the future. EurActiv France reports

The economic situation in France has worsened since 2012, according to a biennial report from the French-German Chamber of Commerce and Industry (AHK).

The report, entitled “German and French businesses: the economic situation, perceptions and perspectives 2014-2017” is a study of 181 German and French businesses. 73% of these businesses would class the current economic situation in France as “bad”, and 9% as “very bad”, demonstrating an increasing pessimism on the part of German businesses over last two years, according to the AHK.

>> Read: 2014 will test Franco-German alliance, analysts predict

The AHK’s statistics show that Germany is the second largest investor on France in terms of number of projects and jobs created, after the United States. The Invest in France Agency says that German investors recorded 106 projects in France in 2013, creating 3641 jobs. This is slightly down the previous year’s figures of 113 projects and 4000 jobs. The Agency attributes it to a slow-down in investment in the services sector.

According to the French Directorate General of the Treasury, 2203 German businesses are active in France, employing 310,000 people and generating 148.3 billion euro.

France remains a safe bet

German businesses appear less satisfied with their performance in 2014 than in 2012, but 18% of those surveyed by the AHK did deem their 2014 activity to be “good”, and 51% considered it “satisfactory”. According to the AHK, around 60% of German businesses in France recorded a turnover of less than 15 million euros, while 25% recorded more than 50 million.

>> Read: France continues to attract German investors

The businesses that took part in the AHK study are active mainly in the sectors of customer service, price competitiveness, infrastructure and expatriate executive services.

The businesses questioned were critical of the rigidity of France’s labour market and the high cost of tax, salaries and social provision.

Investors want change

Even if they are coping well with the economic situation in France, German investors are remaining cautious about investment spending and job creation. Despite predictions of growth, two thirds of the businesses surveyed had no plans to increase hiring or spending for the time being.

The study shows, however, that German investors are confident about France’s economic future: Only 33% of those questioned predicted a bad year in 2015. The study also reveals that many German businesses would consider investing in France if the government makes the necessary changes to regain their confidence.

“The reforms announced by the government are aimed at improving the competitiveness of French businesses. We hope they will be implemented quickly and efficiently,” Guy Maugis, President of the AHK, wrote in a press release.

>> Read: Excessive deficit fine looms over France

Background

The French-German alliance, so important to the European Union today, goes back to 22 January 1963. On this date, the German Chancellor Konrad Adenauer and the French President Charles de Gaulle agreed to make a clean break from the past and begin a new period of cooperation between the two nations.

The aim of the Elysée treaty was both to reconcile France and Germany, and to lay the foundations for a broader European construction.

The French-German relationship is often cited as the driving force behind the European Union. Between them the two economic powerhouses now account for 33% of the total population of the EU, as well as 36% of the European budget and 37% of the EU's GDP.

Further Reading

French-German Chamber of Commerce and Industry