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27 January, 2022updated 03 Mar 2022 07:24

How has Covid-19 impacted the FDI relationship between the UK and France?

Covid-19 caused FDI levels to plummet in 2020 before a recovery in 2021, but did the relationship between the UK and France follow this pattern?

By Glenn Barklie

In 2020, the UK received a total of 804 greenfield FDI projects, while there were 624 projects recorded into France, according to GlobalData. That represented a sharp fall in the number of projects into the UK, decreasing by 23% from 2019. During the same period, the number of greenfield FDI projects into France actually grew by 18%. 

UK outbound FDI into France

UK-based companies created 62 projects in France in 2020. This represented a 10.7% increase compared with 2019. 

Nominally, UK-based companies primarily invest in business and professional services, financial services and tourism sectors when engaging in activity in France. Combined, these three sectors accounted for 37% of total UK outbound FDI projects destined for France in 2020. 

Proportionally, France received a larger share of UK outbound FDI in the 'other transport equipment' (50% of total UK outbound FDI in the sector), consumer goods (36%) and pharmaceuticals (26%) sectors. 

Top UK-based investors in France included InterContinental Hotels Group, 3i Group and Ineos. Combined, these companies accounted for 18% of total project flows. 

In terms of total UK outbound FDI projects, France ranked as the third-largest recipient country in 2020. It was the eighth-largest recipient in 2019. 

UK-based companies primarily established operations in the Ile-de-France region, which includes the capital city Paris. In fact, 59% of projects into France by UK companies were located there in 2020. Occitanie and Hauts-de-France were the next most popular subnational destinations. 

French outbound FDI into the UK

France-based companies created 58 projects in the UK in 2020. The number of projects fell by 6.5% compared with 2019. 

Software and IT services, business and professional services, and communications and media were the top sectors in which French companies invested in the UK. Combined, these three sectors accounted for 52% of total French outbound FDI projects destined for the UK. 

In terms of sector market share, the UK attracted a larger market share of French outbound FDI in paper, printing and packaging. The UK accounted for 100% of total French paper, printing and packaging outbound FDI projects. The UK also accounted for significant shares in the healthcare (50%) and construction materials (20%) sectors. 

Top French-based investors in the UK included Accor, Lagardere and Agence des Participations de l’Etat. Combined, these companies accounted for 53% of the total number of French-headquartered projects established in the UK in 2020. 

The UK ranked as the third-largest recipient country of French outbound FDI in 2020. It was the fourth-largest recipient in 2019. 

French-based companies primarily established operations in Greater London. In 2020, 36% of all French outbound projects destined for the UK were created in Greater London. Scotland and the North West were the next most popular subnational destinations. 

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