The claim
“Our commercial relationship is deep and growing with exports increasing and French investment sustaining almost 10,000 jobs in the UK.”
Prime Minister David Cameron, commenting on the UK-France relationship, 17 February 2012
The background
It was all smiles and boundless bonhomie in Paris today from the PM and his French equivalent Nicolas Sarkozy.
The UK’s failure to sign up to the European fiscal pact was quietly brushed under the carpet as the pair hailed strong ties between the UK and France after agreeing a deal on military operations and nuclear power.
The PM claimed that commercial ties were “deep and growing”. Yet just before Christmas, FactCheck recalls France’s finance minister showing a somewhat less than deep and growing enthusiasm for our economy – and British banks were seen whipping billions out of French bonds.
FactCheck takes a look at Britain’s commerce with her old ally.
The analysis
As far as exports to France go, the PM is right – exports are on the up with total goods exported to France valued at £23,056m in 2011. That’s almost £3bn more than in 2010 and £5bn than in 2009.
The US was the top importer of British goods last year, followed by Germany and France.
Trade between Britain and France is largely balanced with imports from the latter valued at £23,089m.
Très bien. But the verdict on French investment isn’t so rosy. A quick look at who’s investing in the UK shows that overall, net Foreign Direct Investment (FDI) slumped 33 per cent in 2010 to £32.8bn.
That’s the smallest net investment inflow into the UK since 2004, latest figures from the Office for National Statistics (ONS) show.
The biggest drop in investment was from Europe – where the gravy train plunged from £32.1bn in 2009 to £1.8bn in 2010. It’s the lowest value since comparable records began in 1988.
This huge drop can be blamed mainly on a relatively low level of equity deals – and some significant sell offs including Axa SA’s £2.8bn disposal of Axa Sun Life Holdings.
France in particular invested £4.7bn in 2010, compared with £19bn in 2009 – though the ONS says this was largely down to inter-company debt.
The worst hit sectors were electricity, gas, water and waste – which fell to a “disinvestment” of £1.5bn, compared with an investment of £19.3bn in 2009; and financial services which saw investment slide to £7.9bn from £20.8bn in 2009.
France’s level of investment in the UK might be among the highest – it is in third place behind the US and the Netherlands. But it’s dropping.
In 2010 France’s stake in the UK was running at £67.8bn, down from £73.5bn in the previous year.
Given that France’s corporate stake in the UK is apparently shrinking, FactCheck might assume perhaps that the number of jobs French companies sustain has also shrunk.
Unfortunately neither Number 10 nor UK Trade and Industry could provide FactCheck with a source for the 10,000 jobs Mr Cameron mentioned.
Perhaps that’s because it doesn’t exist. The ONS told FactCheck it doesn’t possess such figures. All we can tell you then, is that in the 2010/11 financial year, French companies created or safeguarded 5,902 jobs in the UK and invested in 69 projects.
That’s down from 99 new projects in 2009-10, and 101 new projects in 2008-09. The number of jobs however is up – from 3,729 in 2009-10.
To put that all into context, foreign investment overall created or safeguarded almost 95,000 jobs last year and invested in 1,434 new projects.
The verdict
Mr Cameron is right to claim that exports to France are on the up. And there’s no doubt that at number 3, France is one of our most important trade partners.
But as for the number of jobs that France sustains in the UK, no one seems to be quite sure where he plucked the number 10,000 from. We can tell you that French companies created or saved 5,902 jobs last year – but that’s 40 per cent less than Mr Cameron’s 10,000.
Plus, it’s worth noting that direct investment from France into the UK fell by 75 per cent to £4.7bn in 2010. And France’s overall investment stake in the UK dropped by 8 per cent to £67.8bn.
So while Cameron and Sarkozy might keep the flags flying, the enthusiasm from corporate France for investing in the UK is on the wane.
By Emma Thelwell
