France remained Europe's most attractive destination for foreign direct investment in 2023, an EY survey released on Thursday said, as new projects slowed across Europe.

For the fifth straight year, France beat the U.K. and third-place finisher Germany, but EY warned that Paris' European leadership could be challenged "enduring competitiveness gap, alongside the repercussions of the prevailing social climate and the recent energy crisis."

"Financing, labor costs and taxation — the basic competitiveness tenets — are still considered handicaps," the report said, also underlining a decrease in "quality of life," attributed to the French "social climate." France also saw research and development projects drop 15 percent year-on-year, EY said.

Investment projects dropped 4 percent across Europe — with France and Germany reporting 5 and 12 percent drops respectively. Though it still trailed France, the U.K. bucked the continental trend with a 6 percent increase in foreign direct investments.

In 2023, "investors noticed a certain return to stability on British markets" after 2022 was marred by political instability with three different prime ministers and soaring energy prices, EY France consultant Marc Lhermitte underlined.

Germany remained affected by limited growth, energy costs and uncertainty around the country's capacity to ensure its energy needs. "Low unemployment, complex bureaucracy and high labor costs currently limit Germany's ability to attract more foreign companies," Lhermitte wrote...

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