"We've lifted our pen." This manager of an investment fund in Paris, who wished to remain anonymous, summed up the mood in business circles in the current political climate. The risk of major instability following the second round of snap parliamentary elections on Sunday, July 7, is generating both concern and a wait-and-see attitude among French and foreign investors alike. This feeling is reinforced by President Emmanuel Macron's own statements, before the first round, fearing a "civil war" in the country should the far-right Rassemblement National (RN) or the left-wing alliance Nouveau Front Populaire (NFP) come to power.

To our knowledge, no investment or industrial development projects have been canceled or postponed so far, but many businesses are watching the future with apprehension. "Many of the investors we've spoken to over the past few days are both worried and attentive to what's happening or could happen in France. We're in a complete 'wait and see' mode," said Pascal Cagni, head of the C4 Industries investment fund.

Yet less than two months ago, foreign investment was pouring into the country, a record announced at the Choose France summit held in Versailles on May 13. Nearly €15 billion in investment was hailed by Macron himself, with 28 projects in all, including some by American giants Microsoft, Amazon, Pfizer and others.

Concern grows among small businesses

None of these groups gave comments since the announcement of the dissolution of the Assemblée Nationale. But uncertainty is not a good counselor in this universe. "Political instability can disrupt financing and business continuity, making France less attractive. Investors prefer predictable, stable conditions," said Antoine Moyroud, partner at Lightspeed Venture Partners, a Silicon Valley fund that has invested in several French start-ups such as Mistral AI.

Small business bosses are also worried. A survey by their professional organization, carried out before the first round of legislative elections and published in financial daily Les Echos on June 27, showed that 35% of the 1,066 small business managers questioned consider political stability a "priority." And 47% fear a drop in business over the coming months. This climate is even more tense given that, according to the barometer, published by L'Usine Nouvelle on June 27, French reindustrialization is "struggling." Since the start of the year, plant closures or threatened closures (37 in total, according to the monthly magazine) have outnumbered openings (23), the first time this has happened since the Covid-19 crisis in 2020.

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