Economy of France
The economy of France is highly developed and free-market-oriented. It is the world's 7th largest economy by 2019 nominal figures and the 10th largest economy by PPP figures. It is the 2nd largest economy in the European Union after Germany.
France has a diversified economy. The chemical industry is a key sector for France, helping to develop other manufacturing activities and contributing to economic growth. France's tourism industry is a major component of the economy, as France is the most visited destination in the world. Sophia Antipolis is the major technology hub for the economy of France. Paris is ranked as the most elegant city in the world, which propels the agglomeration of the fashion industry. According to the IMF, in 2018, France was the world's 19th country by GDP per capita with $42,878 per inhabitant. In 2018, France was listed on the United Nations's Human Development Index with a value of 0.891 and 21st on the Corruption Perceptions Index in 2018. The OECD is headquartered in Paris, the nation's financial capital.
France's economy entered the recession of the late 2000s later and appeared to leave it earlier than most affected economies, only enduring four-quarters of contraction. However, France experienced stagnant growth between 2012 and 2014, with the economy expanding by 0% in 2012, 0.8% in 2013 and 0.2% in 2014, though growth picked up in 2015 with a growth of 0.8% and a growth of 1.1% for 2016, to a growth of 2.2% for 2017 and to later reach 2.1% for 2018. According to the OFCE, the expected 2019 growth rate is 1.3%.
Corporations
With 28 of the 500 biggest companies of the world in 2018, France ranks 5th in the Fortune Global 500, behind the USA, China, Japan and GermanySeveral French corporations rank amongst the largest in their industries such as AXA in insurance and Air France in air transportation. Luxury and consumer good are particularly relevant, with L'Oreal being the world's largest cosmetic company while LVMH and Kering are the world's two largest luxury product companies. In energy and utilities, GDF-Suez and EDF are amongst the largest energy companies in the world, and Areva is a large nuclear-energy company; Veolia Environnement is the world's largest environmental services and water management company; Vinci SA, Bouygues and Eiffage are large construction companies; Michelin ranks in the top 3 tire manufacturers; JCDecaux is the world's largest outdoor advertising corporation; BNP Paribas, Credit Agricole and Société Générale rank amongst the largest in the world by assets.
Carrefour is the world's second largest retail group in terms of revenue; Total is the world's fourth largest private oil company; Danone is the world's fifth largest food company and the world's largest supplier of mineral water; Sanofi Aventis is the world's fifth largest pharmaceutical company; Publicis is the world's third largest advertising company; PSA is the world's 6th and Europe's 2nd largest automaker; Accor is the leading European hotel group; Alstom is one of the world's leading conglomerates in rail transport.
Rise and decline of dirigisme
France embarked on an ambitious and very successful program of modernization under state coordination. This programm of dirigisme, mostly implemented by governments between 1944 and 1983, involved the state control of certain industries such as transportation, energy and telecommunications as well as various incentives for private corporations to merge or engage in certain projects.The 1981 election of president François Mitterrand saw a short-lived increase in governmental control of the economy, nationalizing many industries and private banks. This form of increased dirigisme, was criticized as early as 1982. By 1983, the government decided to renounce dirigisme and start an era of rigueur or corporation. As a result, the government largely retreated from economic intervention; dirigisme has now essentially receded, though some of its traits remain. The French economy grew and changed under government direction and planning much more than in other European countries.
Despite being a widely liberalized economy, the government continues to play a significant role in the economy: government spending, at 56% of GDP in 2014, is the second highest in the European Union. Labor conditions and wages are highly regulated. The government continues to own shares in corporations in several sectors, including energy production and distribution, automobiles, transportation, and telecommunications. However these shareholdings are being rapidly sold, the state keeping mostly symbolic stakes in those companies.
Government finance
In April and May 2012, France held a presidential election in which the winner François Hollande had opposed austerity measures, promising to eliminate France's budget deficit by 2017. The new government stated that it aimed to cancel recently enacted tax cuts and exemptions for the wealthy, raising the top tax bracket rate to 75% on incomes over a million euros, restoring the retirement age to 60 with a full pension for those who have worked 42 years, restoring 60,000 jobs recently cut from public education, regulating rent increases; and building additional public housing for the poor.In June 2012, Hollande's Socialist Party won an overall majority in the legislative elections, giving it the capability to amend the French Constitution and allowing immediate enactment of the promised reforms. French government bond interest rates fell 30% to record lows, less than 50 basis points above German government bond rates.
National debt
The Government of France has run a budget deficit each year since the early 1970s. As of 2019, French government debt reached €2,331 billion an equivalent of 99.2% of French GDP.Under European Union rules, member states are supposed to limit their debt to 60% of output or be reducing the ratio structurally towards this ceiling, and run public deficits of no more than 3.0% of GDP.
In late 2012, credit-rating agencies warned that growing French government debt levels risked France's AAA credit rating, raising the possibility of a future credit downgrade and subsequent higher borrowing costs for the French government. In 2012 France was downgraded by ratings agencies Moody's, Standard&Poor's, and Fitch to the AA+ credit rating.
In December 2014 France's credit rating was further downgraded by Fitch to the AA credit rating.
Data
The following table shows the main economic indicators in 1980–2018.Inflation below 2% is in green.| Year | GDP | GDP per capita | GDP growth | Inflation rate | Unemployment | Budget balance |
| 1980 | 453.2 | 8,435 | 1.8 % | 13.1 % | 6.2 % | −0.4 % |
| 1981 | 511.7 | 9,470 | 1.1 % | 13.3 % | 7.4 % | −2.4 % |
| 1982 | 587.9 | 10.821 | 2.5 % | 12.0 % | 8.1 % | −2.8 % |
| 1983 | 652.8 | 11,945 | 1.2 % | 9.5 % | 7.4 % | −2.5 % |
| 1984 | 709.6 | 12,927 | 1.5 % | 7.7 % | 8.5 % | −2.7 % |
| 1985 | 760.5 | 13,788 | 1.6 % | 5.8 % | 8.7 % | −2.9 % |
| 1986 | 817.8 | 14,759 | 2.4 % | 2.5 % | 8.9 % | −3.2 % |
| 1987 | 859.8 | 15,442 | 2.6 % | 3.3 % | 9.2 % | −2.0 % |
| 1988 | 929.4 | 16,607 | 4.7 % | 2.7 % | 8.8 % | −2.5 % |
| 1989 | 1,001.8 | 17,805 | 4.4 % | 6.6 % | 8.7 % | −1.8 % |
| 1990 | 1,058.6 | 18,711 | 2.9 % | 0.3 % | 8.4 % | −2.4 % |
| 1991 | 1,097.1 | 19,304 | 1.0 % | 3.4 % | 8.6 % | −2.8 % |
| 1992 | 1,136.8 | 19,906 | 1.6 % | 2.5 % | 9.4 % | −4.6 % |
| 1993 | 1,148.4 | 20,018 | −0.6 % | 2.2 % | 10.3 % | −6.3 % |
| 1994 | 1,186.3 | 20,609 | 2.3 % | 1.7 % | 10.7 % | −5.4 % |
| 1995 | 1,225.0 | 21,211 | 2.1 % | 1.8 % | 10.5 % | −5.1 % |
| 1996 | 1,259.0 | 21,730 | 1.4 % | 2.1 % | 10.8 % | −3.9 % |
| 1997 | 1,299.7 | 22,365 | 2.3 % | 1.3 % | 10.9 % | −3.6 % |
| 1998 | 1,358.8 | 23.307 | 3.6 % | 0.7 % | 10.7 % | −2.4 % |
| 1999 | 1,408.1 | 24,072 | 3.4 % | 0.6 % | 10.4 % | −1.6 % |
| 2000 | 1,485.3 | 25,235 | 3.9 % | 1.8 % | 9.2 % | −1.3 % |
| 2001 | 1,544.6 | 26,026 | 2.0 % | 1.8 % | 8.5 % | −1.4 % |
| 2002 | 1,594.3 | 26,711 | 1.1 % | 1.9 % | 8.3 % | −3.1 % |
| 2003 | 1,637.4 | 27,244 | 0.8 % | 2.2 % | 8.5 % | −3.9 % |
| 2004 | 1,710.7 | 28,274 | 2.8 % | 2.3 % | 8.8 % | −3.5 % |
| 2005 | 1,772.0 | 29,066 | 1.7 % | 1.9 % | 8.9 % | −3.2 % |
| 2006 | 1,853.2 | 30,184 | 2.4 % | 1.9 % | 8.8 % | −2.3 % |
| 2007 | 1,945.7 | 31,486 | 2.4 % | 1.6 % | 8.0 % | −2.5 % |
| 2008 | 1,995.8 | 32,121 | 0.3 % | 3.2 % | 7.5 % | −3.2 % |
| 2009 | 1,939.0 | 31,041 | −2.9 % | 0.1 % | 9.1 % | −7.2 % |
| 2010 | 1,998.4 | 31,841 | 1.9 % | 1.7 % | 9.3 % | −6.8 % |
| 2011 | 2,059.3 | 32,651 | 2.2 % | 2.3 % | 9.2 % | −5.1 % |
| 2012 | 2,086.9 | 32,929 | 0.3 % | 2.2 % | 9.8 % | −4.8 % |
| 2013 | 2,115.3 | 33,208 | 0.6 % | 1.0 % | 10.3 % | −4.0 % |
| 2014 | 2,149.8 | 33,575 | 1.0 % | 0.6 % | 10.3 % | −3.9 % |
| 2015 | 2,198.4 | 34,190 | 1.1 % | 0.1 % | 10.4 % | −3.6 % |
| 2016 | 2,234.1 | 34,654 | 1.1 % | 0.3 % | 10.0 % | −3.5 % |
| 2017 | 2,295.1 | 35,309 | 2.3 % | 1.2 % | 9.4 % | −2.8 % |
| 2018 | 2,353.1 | 36,355 | 1.8 % | 2.1 % | 9.1 % | −2.5 % |
Economic sectors
Industry
The leading industrial sectors in France are telecommunications, aerospace and defense, ship building, pharmaceuticals, construction and civil engineering, chemicals, textiles, and automobile production.Research and development spending is also high in France at 2.26% of GDP, the fourth-highest in the OECD.
Energy
France is the world-leading country in nuclear energy, home of global energy giants Areva, EDF and GDF Suez: nuclear power now accounts for about 78% of the country's electricity production, up from only 8% in 1973, 24% in 1980, and 75% in 1990. Nuclear waste is stored on site at reprocessing facilities.Due to its heavy investment in nuclear power, France is the smallest emitter of carbon dioxide among the seven most industrialized countries in the world.
In 2006 electricity generated in France amounted to 548.8 TWh, of which:
- 428.7 TWh were produced by nuclear power generation
- 60.9 TWh were produced by hydroelectric power generation
- 52.4 TWh were produced by fossil-fuel power generation
- *21.6 TWh by coal power
- *20.9 TWh by natural-gas power
- *9.9 TWh by other fossil fuel generation
- 6.9 TWh were produced by other types of power generation
- *The electricity produced by wind turbines increased from 0.596 TWh in 2004, to 0.963 TWh in 2005, and 2.15 TWh in 2006, but this still accounts only for 0.4% of the total production of electricity.
Other electricity providers include Compagnie nationale du Rhône and Endesa.
Agriculture
France is the world's sixth largest agricultural producer and EU's leading agricultural power, accounting for about one-third of all agricultural land within the EU. In the early 1980's, France was the leading producer of the three principal grains of wheat, barley, and maize. Back in 1983, France produced around 24.8 million tonnes, which was a long way ahead of the United Kingdom and West Germany, the next two largest wheat producers.Northern France is characterized by large wheat farms. Dairy products, pork, poultry, and apple production are concentrated in the western region. Beef production is located in central France, while the production of fruits, vegetables, and wine ranges from central to southern France. France is a large producer of many agricultural products and is currently expanding its forestry and fishery industries. The implementation of the Common Agricultural Policy and the Uruguay Round of the General Agreement on Tariffs and Trade have resulted in reforms in the agricultural sector of the economy.
As the world's second-largest agricultural exporter, France ranks just after the United States. The destination of 49% of its exports is other EU members states. France also provides agricultural exports to many poor African countries which face serious food shortages. Wheat, beef, pork, poultry, and dairy products are the principal exports.
Exports from the United States face stiff competition from domestic production, other EU member states, and third-world countries in France. US agricultural exports to France, totaling some $600 million annually, consist primarily of soybeans and soybean products, feeds and fodders, seafood, and consumer products, especially snack foods and nuts. French exports to the United States are much more high-value products such as its cheese, processed products and its wine.
The French agricultural sector receives almost €11 billion in EU subsidies. France's competitive advantage is mostly linked to the high quality and global renown of its produce, such as cheese and wine.
Tourism
France is the world's most popular tourist destination with more than 83.7 million foreign tourists in 2014, ahead of Spain and the United States. This figure excludes people staying less than 24 hours in France, such as northern Europeans crossing France on their way to Spain or Italy during the summer.France is home to cities of much cultural interest, beaches and seaside resorts, ski resorts, and rural regions that many enjoy for their beauty and tranquillity. France also attracts many religious pilgrims to Lourdes, a town in the Hautes-Pyrénées département, which hosts several million visitors a year.
According to figures from 2003, some popular tourist sites include : Eiffel Tower, Louvre Museum, Palace of Versailles, Cité des Sciences et de l'Industrie, Musée d'Orsay, Arc de Triomphe, Centre Pompidou, Mont-Saint-Michel, Château de Chambord, Sainte-Chapelle, Château du Haut-Kœnigsbourg, Puy de Dôme, Musée Picasso, Carcassonne. However, the most popular site in France is Disneyland Paris, with 9.7 million visitors in 2017
Arms industry
The French arms industry's main customer, for whom they mainly build warships, guns, nuclear weapons and equipment, is the French government.Record high defence expenditure, which was considerably increased under the government of Prime Minister Jean-Pierre Raffarin, goes largely to the French arms industries.
During the 2000–2015 period, France was the fourth largest weapons exporter in the world
French manufacturers export great quantities of weaponry to Saudi Arabia, the United Arab Emirates, Brazil, Greece, India, Pakistan, Taiwan, Singapore and many others.
It was reported that in 2015, French arms sales internationally amounted to 17.4 billion U.S. dollars, more than double the figure of 2014. Vice News explained that "While the United Kingdom has lapsed somewhat in this regard, France has maintained a high-level of production of military equipment for land, air, and sea defense – an expensive approach that relies on the export of arms and technology."
Transport
Transportation in France relies on one of the densest networks in the world with 146 km of road and 6.2 km of rail lines per 100 km2. It is built as a web with Paris at its center. The highly subsidised rail transport network makes up a relatively small portion of travel, most of which is done by car. However the high-speed TGV trains make up a large proportion of long-distance travel, partially because intercity buses were prevented from operating until 2015.France also boasts a number of seaports and harbours, including Bayonne, Bordeaux, Boulogne-sur-Mer, Brest, Calais, Cherbourg-Octeville, Dunkerque, Fos-sur-Mer, La Pallice, Le Havre, Lorient, Marseille, Nantes, Nice, Paris, Port-la-Nouvelle, Port-Vendres, Roscoff, Rouen, Saint-Nazaire, Saint-Malo, Sète, Strasbourg and Toulon. There are approximately 470 airports in France and by a 2005 estimate, there are three heliports. 288 of the airports have paved runways, with the remaining 199 being unpaved. The national carrier of France is Air France, a full service global airline which flies to 20 domestic destinations and 150 international destinations in 83 countries across all 6 major continents.
Labour market
According to a 2011 report by the American Bureau of Labor Statistics, France's GDP per capita at purchasing power parity is similar to that of the UK, with just over US$35,000 per head. To explain why French per capita GDP is lower than that of the United States, the economist Paul Krugman stated that "French workers are roughly as productive as US workers", but that the French have allegedly a lower workforce participation rate and "when they work, they work fewer hours". According to Krugman, the difference is due to the French making "different choices about retirement and leisure"., 2015
Keynesian economists sought out different solutions to the unemployment issue in France, and their theories led to the introduction of the 35-hour workweek law in 1999. Between 2004 and 2008, the government attempted to combat unemployment with supply-side reforms, but was met with fierce resistance; the contrat nouvelle embauche and the contrat première embauche were of particular concern, and both were eventually repealed. The Sarkozy government used the revenu de solidarité active to redress the allegedly negative effect of the revenu minimum d'insertion on the incentive to accept even jobs which are insufficient to earn a living.
French employment rates for 15–64 years is one of the lowest of the OECD countries: in 2012, only 71% of the French population aged 15–64 years were in employment, compared to 74% in Japan, 77% in the UK, 73% in the US and 77% in Germany. This gap is due to the low employment rate for 15–24 years old: 38% in 2012, compared to 47% in the OECD. Neoliberal economists attribute the low employment rate, particularly evident among young people, to allegedly high minimum wages that would prevent low productivity workers from easily entering the labour market.
A December 2012 New York Times article reported on an allegedly "floating generation" in France that formed part of the 14 million unemployed young Europeans documented by the Eurofound research agency. In the same article, Anne Sonnet, a senior economist studying unemployment at the OECD claimed that nearly two million young people in France had given up looking for employment at that time, while French labour minister Michel Sapin said that 82 percent of people hired were only on temporary contracts. Sapin further explained that, in his opinion, the challenge at that time was to create a more flexible system, in which greater trust existed between unions and companies, and "partial unemployment" was accommodated during difficult periods. The so-called floating generation was attributed to an allegedly dysfunctional system: "an elitist educational tradition that does not integrate graduates into the work force, a rigid labour market that is hard to enter for newcomers, and a tax system that makes it expensive for companies to hire full-time employees and both difficult and expensive to lay them off". In July 2013, the unemployment rate for France was 11%.
In early April 2014, employers' federations and unions negotiated an agreement with technology and consultancy employers, as employees had been experiencing an extension of their work time through smartphone communication outside of official working hours. Under a new, legally binding labour agreement, around 250,000 employees will avoid handling work-related matters during their leisure time and their employers will, in turn, refrain from engaging with staff during this time.
Everyday, about 80,000 French citizens are commuting to work in neighbouring Luxembourg, making it the biggest cross-border workforce group in the whole of the European Union. They are attracted by much higher wages for the different job groups than in their own country and the lack of skilled labour in the booming Luxembourgish economy.
External trade
France is the second-largest trading nation in Europe. Its foreign trade balance for goods had been in surplus from 1992 until 2001, reaching $25.4 billion in 1998; however, the French balance of trade was hit by the economic downturn, and went into the red in 2000, reaching a US$15bn deficit in 2003. Total trade for 1998 amounted to $730 billion, or 50% of GDP—imports plus exports of goods and services. Trade with European Union countries accounts for 60% of French trade.In 1998, US–France trade stood at about $47 billion – goods only. According to French trade data, US exports accounted for 8.7% – about $25 billion – of France's total imports. US industrial chemicals, aircraft and engines, electronic components, telecommunications, computer software, computers and peripherals, analytical and scientific instrumentation, medical instruments and supplies, broadcasting equipment, and programming and franchising are particularly attractive to French importers.
The principal French exports to the US are aircraft and engines, beverages, electrical equipment, chemicals, cosmetics, luxury products and perfume. France is the ninth-largest trading partner of the US.
''Régions'' economyThe economic disparity between French regions is not as high as that in other European countries such as the UK, Italy or Germany, and higher than in countries like Sweden or Denmark, or even Spain. However, Europe's wealthiest and second largest regional economy, Ile-de-France, has long profited from the capital city's economic hegemony.The most important régions are Île-de-France, Rhône-Alpes, Provence-Alpes-Côte d'Azur, Nord-Pas-de-Calais and Pays de la Loire. Regions like Alsace, which has a rich past in industry and currently stands as a high income service-specialized region, are very wealthy without ranking very high in absolute terms. The rural areas are mainly in Auvergne, Limousin, and Centre-Val de Loire, and wine production accounts for a significant proportion of the economy in Aquitaine, Burgundy, and champagne produced in Champagne-Ardennes. is one of the most popular tourist destinations in France.
Source : INSEE. Source : fxtop.com. Departments economy and citiesDepartmental income inequalitiesIn terms of income, important inequalities can be observed among the French départements.According to the 2008 statistics of the INSEE, the Yvelines is the highest income department of the country with an average income of €4,750 per month. Hauts-de-Seine comes second, Essonne third, Paris fourth, Seine-et Marne fifth. Île-de-France is the wealthiest region in the country with an average income of €4,228 per month compared to €3,081 at the national level. Alsace comes second, Rhône-Alpes third, Picardy fourth, and Upper Normandy fifth. The poorest parts of France are the French overseas departments, French Guiana being the poorest department with an average household income of €1,826. In Metropolitan France it is Creuse in the Limousin region which comes bottom of the list with an average household income of €1,849 per month. Urban income inequalitiesHuge inequalities can also be found among cities.In the Paris metropolitan area, significant differences exist between the higher standard of living of Paris Ouest and lower standard of living in areas in the northern banlieues of Paris such as Seine-Saint-Denis. For cities of over 50,000 inhabitants, Neuilly-sur-Seine, a western suburb of Paris, is the wealthiest city in France with an average household income of €5,939, and 35% earning more than €8,000 per month. But within Paris, four arrondissements surpass wealthy Neuilly-sur-Seine in household income: the 6th, the 7th, the 8th and the 16th; the 8th "arrondissement" being the wealthiest district in France. WealthOverviewIn 2010, the French had an estimated wealth of US$14.0 trillion for a population of 63 million.
The wealthiest man in France is the LVMH CEO and owner Bernard Arnault. |