France - Overview
To make a call from: 0
To make a call to: +33
In 2013, the vagueness of political decisions was criticized, foreign investors were not confident. With a public debt approaching 90% of GDP and a high bank exposure to the struggling Euro-zone countries, France remains particularly vulnerable. In early 2012, the rating agency Standard and Poor's downgraded the country's sovereign debt. The government's priority is given to restoring public finances through a policy of fiscal restraint. However, during the summer of 2013, the government created again several new taxes. Among the key measures, the government had planned an exceptional solidarity contribution of 75% on the income bracket exceeding one million euros, which was rejected, and the creation of an income bracket taxed at 45%. In 2013, the CICE (Pact for Growth, Competitiveness and Employment) plan was announced with the purpose of improving the competitiveness of French companies. For 2014, the government has announced its plan to reduce public expenditure, expecting to save EUR 15 billion. Lastly, France must bring down its public deficit to 3.6% of GDP by the end of 2014, as stipulated by the regulations of the European Union. The retirement plan reform was considered too reticent by the labor management. France must also deal with a loss of competitiveness on its economy and its process of de-industrialization. Lastly, the influx of FDI into the country clearly decreased in 2013.
The rate of unemployment has been affected by the crisis, estimated at 11% in 2013, it has reached its highest level in 12 years but it should become stable in 2014. The municipal elections in March 2014 and the European elections in May 2014 could slowdown the rhythm of the reforms.
France is the largest agricultural power in the European Union, accounting for one-fourth of its total agricultural production, and the second agricultural power in the world after the United States. Nevertheless, the agricultural sector only represents a very small part of the country's GDP. The French agricultural activities receive significant subsidies, especially from the European Union. Wheat, corn, meats and wine are France's main agricultural products.
France's manufacturing industry is varied; however, the country is currently undergoing a de-industrialization process which translates into numerous relocations. The key industrial sectors in France are telecommunications, electronics, automobile, aerospace and weapons.
The tertiary sector represents nearly 80% of the French GDP and employs almost 75% of the active workforce. France is the leading-tourist destination in the world with more than 75 million foreign visitors every year.
Foreign trade overview
However, the country registers a strong structural trade deficit. Imports are developing quickly, as the French population buys a lot of imported goods which are sold at less expensive prices on the local markets in comparison to products "Made in France". Energy imports and their net increase in prices also affect the balance of the accounts. In addition to this, despite the government's efforts to favor innovation, French exports have a relatively low added value. France's trade experienced a slowdown in 2013; exports decreased mainly in the automobile sector. In return, the agricultural exports, mainly cereals, increased while the energy imports decreased. Subsequently, the trade deficit was 9% lower than the results of 2012.
France's main trade partners are the European Union, the United States and China.
According to the World Investment Report for 2013 published by the UNCTAD, France is the 16th largest recipient of FDI in the world, it went down five places in relation to 2012. Paris is the world's second largest city, after Tokyo, in terms of location of the headquarters of multinationals; currently, the city hosts nearly 500 of them. The country recorded a decline in foreign investment due to the deteriorating international economic situation in 2009/2010, but since then, the flows have been slowly recovering. However, according to the records provided by the UNCTAD, FDI were reduced by 77% in 2013 while they were increasing in other developed countries. France went down three places in the classification Doing Business 2014 issued by the World Bank (it ranks 38 out of 189 countries).
The country's strengths include: its position as the fifth world's largest power, its highly-skilled workforce, its large industrial base, its agricultural resources and its geographic location in the center of Europe.