U.S. corporate enthusiasm for France cools, survey shows

February 5, 2019

By Leigh Thomas

PARIS (Reuters) – A dimming economic outlook and massive street protests against President Emmanuel Macron have made France less attractive for U.S. companies with investments in the country, a survey showed.

Firms from the United States are the single biggest source of foreign corporate investment in France and their confidence surged after Macron’s 2017 election on a reform platform.

But the latest annual survey by the American Chamber of Commerce in France and consultants Bain & Company, released on Tuesday, showed that only 30 percent of executives at U.S. companies in France consider the country an attractive market in 2018, down from 72 percent the year before.

The drop was mainly due to the number with a neutral view, which rose to 50 percent from 19 percent, the survey said.

However, 42 percent of the executives at the 127 companies polled planned to hire more people in France, while 41 percent intended to keep headcount stable.

Even though the poll was conducted in December and January, when waves of violent street protests saw cars burnt and windows smashed in central Paris and other cities, 55 percent of those polled said France enjoyed either a good or excellent perception at headquarters in the United States, up from 48 percent.

With Britain facing Brexit, Italy doubts about its budget and German questions about its post-Merkel future, France is proving easier to grasp for U.S. firms, the survey found.

“The situation in our neighboring countries is difficult to read,” Citigroup country head Mathieu Gelis told journalists.

“France as a bet on an industrial or financial project offers more certainty versus our partners in a volatile environment. But I agree that it remains fragile,” he added.

Some 56 percent of those polled considered that the pace of Macron’s reform drive was meeting their expectations, while seven percent indicated that it was surpassing theirs.

Macron launched an overhaul of France’s strict labor laws and scrapped its wealth tax during his first year in office, but planned reforms of corporate law, unemployment insurance and pensions are falling behind schedule.

Following the recent unrest, the social climate was a concern for 84 percent of the executives polled in the survey, with 77 percent concerned about France’s national debt, which is flirting with 100 percent of economic output.

(Reporting by Leigh Thomas; Editing by Alexander SMith)