How France is leading the EU towards the next economy

At the Choose France Summit in May, President Macron and the French Government announced a whopping €13bn of foreign direct investment in the country. The announcement seemed to confirm prevailing investor sentiment that France is creating the most favorable conditions in Europe for the next generation of green industries.

Take the industrial renewal of Northern France, once a major industrial center for mining and steel industry, then the automotive industry, which took drastic measures to lead the country's economic and sustainable innovation after decades of decline. The region was devastated by a vast movement of factories offshoring starting as early as the 1970s and consequently suffered from massive unemployment and precarity. It took six years and the steadfast commitment of local governments, the national government, the President and even European authorities to turn it into the new beating heart of electrical batteries in Europe. ProLogium, the Taiwanese prodigy whose technology is eyed and envied by the entire world, chose France for its first plant abroad. The joint-venture ACC, formed by Stellantis, Mercedes-Benz and TotalEnergies, also built its battery gigafactory in Northern France. So did the French start-up Verkor, supported by Renault, or Envision. Such projects raked-in appx. €10bn in investments, enabling France to produce approximately 2 million electrical vehicles a year by 2030 and will generate more jobs than the ones lost due to offshoring and the end of thermic vehicles.

What is behind the success of this undertaking? A proactive, probusiness policy with continuous tax cuts for businesses and massive subsidies to fuel green industries; a decarbonized and reliable energy mix with relatively cheap electricity; the highly vaunted quality of French workers in the field of mobility; French engineers and research centers of the finest reputation; disposable property…and a concerted, discreet and sustained campaign to reassure foreign investors.

This success in batteries must be seen in a broader, yet already very encouraging industrial context. France is relocating other key assets, such as critical active substances the country that were lacking during the Covid crisis. French and international pharma leaders, such as Seqens and GSK, recently announced significant investments to produce amoxicillin and paracetamol in France, while the French Health Innovation Plan 2030 has a €7,5bn budget focused on making the country the most innovative and sovereign European nation in health, and a country able to compete globally.

However, as the dynamic circular economy reminds us every day: old is the new cool. This is why France not only bet on new sectors, but wants to retain heavy industries such as steel, concrete, chemicals and glass…with a refit. President Macron recently announced a €10bn envelope to help the 50 most polluted industrial sites decarbonize, whether they are operated by a French or a foreign company. Macron hopes this will prevent more relocations from happening.

But France can also attract entire industries in other ways – and with less cash. Take the crypto assets. The US and China took a hard stance on this industry, which will surely revolutionize not only banking and finance, but multiple other sectors. France bucked that trend by launching a pro-crypto policy years ago when President Macron was elected in 2017. The country was the first in Europe to create a regulatory framework for crypto assets in 2019, which largely inspired the European regulation MiCA, officially published in June 2023. Finding a sensitive balance between regulation and innovation, France quickly became the flagship of crypto assets in Europe, with world leaders choosing to localize regional headquarters in Paris (Binance) and thriving national champions (Ledger, Coinhouse).

The last example of this pioneer mentality is the upcoming regulatory framework on digital. EU authorities recently published the Digital Services & Digital Markets Acts, hoping to end the digital Far West where online cowboys do not steal from banks but instead mine data, harass and swindle consumers, and spread fake news. France will be the first European country to enshrine DSA and DMA in its national law, with the objective to be the first country where digital players can benefit from a virtuous growth, while users can enjoy safe digital services.

In such a thriving environment, acknowledged by some of the biggest corporations in the world, foreign investors will miss a significant opportunity if they overlook France, a critical business crossroad perfectly located between Northern and Southern Europe. Falling behind, or worse, not being at the table where the regulatory frameworks of tomorrow are being created would be risky. Especially when they are often replicated on the European market, the most advanced free trade area in the world with 400 million residents.

For questions or to arrange a follow-up conversation please contact Florence Maisel, [email protected] .