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Foreign investment in France rises but brings few jobs

Prime Minister Manuel Valls visits a PSA car factory in Sochaux
Prime Minister Manuel Valls visits a PSA car factory in Sochaux AFP

France saw a substantial rise in foreign investment last year but the increase did not create many jobs, according to consultants EY. In other eocnomic news, finance ministry experts say there could be higher-than-predicted growth in 2015.

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The 18 per cent rise in investment in 608 new or existing projects put France well above the 10 per cent average of the 43 European countries, including Russia and Turkey, examined in EY's annual study.

Dossier: Eurozone in crisis

But that only led to the creation of 12,577 new jobs - 11 per cent fewer than were created in 2013.

Only Britain and Germany surpassed France in attracting investment but they saw greater job creation - 2.5 times as much in the United Kingdom.

France has been Europe's leading destination for foreign capital invested in industrial sites for the last 15 years.

Last year's rise can be explained by recovery in the European Union and the weak euro.

But foreign companies are put off by the bad press France's economy gets abroad.

Forty four per cent of bosses told EY that labour costs should be reduced and 40 per cent said they were put off by bureaucratic and legal constraints.

In fact, labour costs in industry are now slightly lower than in Germany, EY points out, while, despite the famous 35-hour week, the average German works only 53 hours more per year than the average French citizen.

Local managers know that the prejudices do not reflect reality, EY's Marc Lhermite told the AFP news agency, "but their headquarters and the media still cling to them".

Meanwhile, a leaked finance ministry report shows second-quarter growth is expected to be a higher-than-expected 0.4 per cent, according to the Journal du Dimanche's website.

That could mean 1.2-1.3 per cent growth this year, higher than the one per cent that the government based its budget on.

On the downside the country's top accounting body says that the budget deficit in 2014 was 10.7 billion euros higher than the previous year - 5.5 billion euros when adjusted for exceptional spending - largely due to reduced tax revenue.

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