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ECONOMY

Swedish giant Ikea announced €1 billion investment in France

Ikea plans to invest more than €1 billion in France after announcing a US expansion, and the Swedish furniture giant will cut prices as inflation eases, the head of its holding company told AFP.

Swedish giant Ikea announced €1 billion investment in France
Photo by JOEL SAGET / AFP

The group unveiled last month plans to spend more than two billion euros to expand in the United States, creating 2,000 jobs in its biggest investment in almost four decades in the country.

On Sunday, on the eve of a foreign investment conference organised by the French presidency, Ingka Group, the holding company, announced a €1.2-billion spending plan in the country over the next years.

E-batteries, solar panels and medicines: France announces €13 billion of new foreign investment

“Ikea today is performing really well,” Ingka chief executive Jesper Brodin told AFP.

The group, which controls the majority of Ikea’s stores and accounts for more than 90 percent of its total sales, is aiming to woo new customers after a difficult 2022 marked by the fallout from Russia’s war in Ukraine and high inflation.

Brodin said supply chains, which have been disrupted since countries emerged from Covid pandemic restrictions, are “getting back to normality”.

At the same time, inflation in the United States and Europe is easing after central banks hiked interest rates to cool the economy.

Within a couple of months, the situation is expected to return to “the place we were before the pandemic”, Brodin said.

“We were probably one of the last companies to accept the fact that also we were not immune to inflation so we have to pass on some of the cost to our customers,” Brodin said.

“We know for a fact that some of our costs are coming down. We’re absolutely of the opinion that prices will go down. It’s not only our prediction, but it’s also our mission to do that,” he said.

In France, its third biggest market, the group believes it can “further grow our business”, Brodin said.

The 2023-2026 spending plan includes €906 million in new investment and €377 million still to be deployed from a previous announcement.

The money covers the acquisition of a sprawling shopping centre in Paris that was announced in April and where another store will relocate.

It will also open a new distribution centre in the southern city of Toulouse next year and another near Paris in 2026.

Ikea France chief executive Johan Laurell said the aim is to make the brand “even more accessible”, and new jobs will likely be created.

The company said the investment will accelerate its “omnichannel transformation” – a business that offers both choices of online and physical shopping.

The spending will also go into stepping up efforts to reduce the company’s carbon footprint, Ikea said.

Ikea has invested in a solar park in Langeron, central France, and delivering its products via the Seine river for Parisian customers.

It is also investing in Dutch startup RetourMatras, which recycles mattresses.

The aim is to increase recycling capacity in France by 500,000 mattresses, the company said in a statement.

The group wants in return for France to stop subsidising the incineration of mattresses, Brodin said.

He praised the European Union’s Green Deal, which aims to make the 27-nation bloc carbon neutral by 2050 as a “revolution” in terms of “supporting and incentivising the transition to a carbon free economy”.

But the $370 billion US Inflation Reduction Act, which promotes clean tech investments, has raised “fears” that it is “favouring” domestic companies, he said.

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ECONOMY

French bosses fear far right’s vague economic plans

French business leaders have been pitched into fresh uncertainty by snap elections called by President Emmanuel Macron that risk strengthening the far right.

French bosses fear far right's vague economic plans

Federations are treading lightly with their public comments, aware that they could be sitting across the table from National Rally (RN) ministers if the party scores a major breakthrough in the June 30 and July 7 ballots.

Local business group U2P would “respect the people’s choice, but the RN has to say more precisely what it proposes on questions with a tax, social and economic effect on small firms,” its chief Michel Picon told AFP.

At the last presidential election in 2022, the outfit had warned that RN chief Marine Le Pen’s manifesto promises “would have bad consequences for business,” he recalled.

At stake are issues such as returning to an official retirement age of 60 — raised to 64 in a wildly unpopular Macron reform last year — and a still harsher crackdown on immigration.

“What does this mean for people working for us today?” Picon asked.

“We’re business players who don’t get involved in politics,” said Thierry Cotillard, head of the Mousquetaires/Intermarche supermarket chain.

But “whoever the politicians are, we will fiercely defend our positions,” he warned.

‘Stick your neck out’

Centrist Macron’s time in office has been marked by reforms aimed at making life easier for businesses and high-profile courting of foreign investment.

By contrast, “we know nothing” about the RN’s plans, said the head of one major European industrial firm’s French subsidiary on condition of anonymity.

“We’ve just seen the beginnings of a reindustrialisation for 10 years, with supply-side policies bearing fruit. Will all that be kept up?” he asked.

Macron’s Finance Minister Bruno Le Maire on Tuesday urged business to “stick their neck out” against the far right.

Groups including the big companies’ federation MEDEF should “clearly say what they think of the different parties’ economic programmes” and warn about “the cost of Marine Le Pen’s Marxist plans”, he added.

Without naming any party, MEDEF told AFP in a statement that “a new campaign is starting in which we do not share certain political visions, which are incompatible with business competitiveness and prosperity for our country and fellow citizens”.

The CPME small-business group called for supply-side policy, greenhouse emissions reduction and welfare state reforms to continue.

It also warned about France’s staggering €3 trillion debt pile, which ratings agency Moody’s said Monday risked a downgrade due to the “potential political instability” from the upcoming election.

“Anyone taking on costly reforms without taking this element into account would be exposing France to a major risk,” the CPME said.

The head of a firm on France’s heavyweight CAC 40 stock market index, also speaking on condition of anonymity, said there was no reason to panic as the RN winning was “not a done deal”.

Even if they did, they said, “everyone wants to upend things, but once in power, being responsible for things will make you responsible.”

‘Low-carbon electricity essential’

One sector with particular fears for a far-right victory is renewable energy, which has already been waiting for months on a government roadmap stretching to 2035 and including items like sites for massive offshore wind parks.

“What’s going on is serious,” said Jules Nyssen, president of the Renewable Energies Union (SER).

“We’re in a state of total instability, just when we need legal guarantees and clarity,” he added, saying “it’s going to cost us heavily”.

“We have a clear roadmap that we need to eliminate carbon emissions,” said Nicolas de Warren, president of the UNIDEN association of big industrial energy users.

“What’s essential for us is access to low-carbon electricity at competitive prices, whether it’s nuclear or renewable”.

In 2022, Le Pen promised a fleet of around 20 new nuclear reactors — although her 2031 timetable for delivering half of those was seen as unrealistic.

But she is also a committed opponent of wind energy, vowing a moratorium on new construction and the gradual dismantling of existing parks — plans incompatible with France’s climate commitments.

“The laws of economics and energy will catch up” with the RN if it comes to power, one electricity provider said on condition of anonymity.

“We need more cheap energy. Building nuclear takes 10-15 years. What do we do while we wait? And how do we attract battery factories if we don’t want any more electric cars?” he added, citing another of Le Pen’s bugbears.

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