Economy of France

Economy of France

La Défense is the largest business district in Europe
Currency	1 euro (€1) = 100-cent
Fiscal year	Calendar year
Trade organisations	EU, WTO and OECD
Statistics
GDP	$2.5 trillion (nominal; 2016)[1]
GDP rank	6th (Nominal) / 9th (PPP)
GDP growth	1.2% for 2015 0.2% in Q3 (Q2 2016)[2]
GDP per capita	$38,000 (nominal; 2016)[1]
GDP by sector	agriculture (1.9%), industry (18.3%), services (79.8%) (2012 est)
Inflation (CPI)	0.7%[3]
Population below poverty line	7.7% (2013)
Gini coefficient	30.1 (2013)
Labour force	~30 million (2015)
Labour force by occupation	services (71.8%), industry (24.3%), agriculture (3.8%) (2009)
Unemployment	9.9% (9.6% for metropolitan France) [Q2 2016][4]
Average gross salary	€2,900 / $3,300 month (2015)
Average net salary	€2,200 / $2,500 month (2015)
Main industries	machinery, chemicals, automobiles, metallurgy, aircraft, electronics; textiles, food processing; tourism
Ease-of-doing-business rank	34th[5]
External
Exports	$0.51 trillion (2015) [6]
Export goods	machinery and equipment, aircraft, plastics, chemicals, pharmaceutical products, iron and steel, beverages
Main export partners	Germany 16.7%,  Belgium 7.5%,  Italy 7.5%,  Spain 6.9%,  United Kingdom 6.9%,  United States 5.6%,  Netherlands 4.3%, (2012 est.)[7]
Imports	$0.66 trillion (2012 est.)
Import goods	machinery and equipment, vehicles, crude oil, aircraft, plastics, chemicals
Main import partners	Germany 19.5%,  Belgium 11.3%,  Italy 7.6%,  Netherlands 7.4%,  Spain 6.6%,  United Kingdom 5.1%,  China 4.9%, (2012 est.)[8]
FDI stock	$1.1 trillion (31 December 2012 est.)
Gross external debt	$5.6 trillion (30 June 2011)
Public finances
Public debt	90% of GDP (2012 est.)
Revenues	$1.3 trillion (2012 est.)
Expenses	$1.5 trillion (2012 est.)
Economic aid	donor: ODA $10.1 billion (2006)
Credit rating	AA (Domestic) AA (Foreign) AAA (T&C Assessment) (Standard & Poor's)[9]
Foreign reserves	US$172 billion (31 December 2012 est.)
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars.

France has the world's fifth-largest economy by nominal figures and the ninth largest economy by PPP figures. It has the third-largest economy in Europe with Germany in 1st .^[10] The OECD is headquartered in Paris, the nation's financial capital.

The chemical industry is a key sector for France, helping to develop other manufacturing activities and contributing to economic growth.^[11] France's tourism industry is a major component of the economy, as France is the most visited destination in the world.^[12][13] Sophia Antipolis is the major technology hub for the economy of France. According to the IMF, in 2013, France was the world's 20th country by GDP per capita with $44,099 per inhabitant. In 2013, France was listed on the United Nations's Human Development Index with 0.884 (very high human development) and 25th on the Corruption Perceptions Index.

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.^[14] 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 1.2% and a forecasted growth of 1.5% for 2016, and 1.7% for 2017.The highest since 2011 (2.1%).^[15]

Corporations

With 31 of the 500 biggest companies of the world in 2015, France ranks 4th in the Fortune Global 500, behind the USA, China and Japan.

Several French corporations rank amongst the largest in their industries such as AXA in insurance and Air France in air transportation.^[16] Luxury and consumer good are particularly relevant, with L'Oreal being the world's largest cosmetic company while LVMH and PPR 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 Societe Generale 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 programme of modernization under state coordination. This programme 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, nationalising many industries and private banks. This form of increased dirigisme, was criticised as early as 1982. By 1983, the government decided to renounce dirigisme and start an era of rigueur ("rigour") or corporatization. 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. Labour conditions and wages are highly regulated. The government continues to own shares in corporations in a range of sectors, including banking, energy production and distribution, automobiles, transportation, and telecommunications. These differ from countries such as the US or UK where most of these companies have been privatized.

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,^[17] less than 50 basis points above German government bond rates.^[18]

French government debt

The French government has run a budget deficit each year since the early 1970s. In mid-2012, French government debt levels reached €1,833 billion.^[19] This debt level was the equivalent of 91% of French GDP.^[19]

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.^[19]

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.^[20]

In 2012 France was downgraded by ratings agencies Moody's, Standard&Poor's, and Fitch to the AA+ credit rating.^[21][22]

In December 2014 France's credit rating was further downgraded by Fitch (and S&P) to the AA credit rating.^[23]

Economic sectors

Industry

The leading industrial sectors in France are telecommunications (including communication satellites), aerospace and defense, ship building (naval and specialist ships), 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.^[24]

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.^[25]

In 2006 electricity generated in France amounted to 548.8 TWh, of which:^[26]

• 428.7 TWh (78.1%) were produced by nuclear power generation
• 60.9 TWh (11.1%) were produced by hydroelectric power generation
• 52.4 TWh (9.5%) were produced by fossil-fuel power generation
  • 21.6 TWh (3.9%) by coal power
  • 20.9 TWh (3.8%) by natural-gas power
  • 9.9 TWh (1.8%) by other fossil fuel generation (fuel oil and gases by-products of industry such as blast furnace gases)
• 6.9 TWh (1.3%) were produced by other types of power generation (essentially waste-to-energy and wind turbines)
  • 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 (as of 2006).

In November 2004, EDF (which stands for Electricité de France), the world's largest utility company and France's largest electricity provider, was floated with huge success on the French stock market. Notwistanding, the French state still keeps 70% of the capital.

Other electricity providers include Compagnie nationale du Rhône (CNR) and Endesa (through SNET).

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.

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 (CAP) and the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) 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.^[27] The destination of 49% of its exports are other EU members states. France also provide agricultural exports to many poor African countries (including its former colonies) which face serious food shortage. 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 most popular tourist destination with more than 83.7 million foreign tourists in 2014, ahead of Spain (58.5 million in 2006) and the United States (51.1 million in 2006). 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 (Paris being the foremost), 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 (in visitors per year):^[28] Eiffel Tower (6.2 million), Louvre Museum (5.7 million), Palace of Versailles (2.8 million), Musée d'Orsay (2.1 million), Arc de Triomphe (1.2 million), Centre Pompidou (1.2 million), Mont-Saint-Michel (1 million), Château de Chambord (711,000), Sainte-Chapelle (683,000), Château du Haut-Kœnigsbourg (549,000), Puy de Dôme (500,000), Musée Picasso (441,000), Carcassonne (362,000).

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 (currently at €35 billion), which was considerably increased under the government of Prime Minister Jean-Pierre Raffarin, goes largely to the French arms industries.

France is also the fourth largest weapons exporter in the world.^[29]

French manufacturers export great quantities of weaponry to the United Arab Emirates, Brazil, Greece, India, Pakistan, Taiwan, Singapore and many others.

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.^[30] 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 478 airports in France (1999 est.) 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 (including Overseas departments and territories of France) across all 6 major continents.

Labour market

According to a 2011 report by the American Bureau of Labor Statistics (BLS), France's GDP per capita at purchasing power parity is similar to that of the UK, with just over US$35,000 per head.^[31] 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".^[32]

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;^[33] the contrat nouvelle embauche and the contrat première embauche (which allowed more flexible contracts) were of particular concern, and both were eventually repealed.^[34] The Sarkozy government used the revenu de solidarité active (in-work benefits) to redress the allegedly negative effect of the revenu minimum d'insertion (unemployment benefits which do not depend on previous contributions, unlike normal unemployment benefits in France) on the incentive to accept even jobs which are insufficient to earn a living.^[35]

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.^[36] 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.^[37] But Krugman states by contrast in his January 2011 Op-Ed that fewer French young people work "in part because of more generous college aid" (the french state university system works without tuition fees), while the overall employment rate is lower than in the US because of the comparatively early retirement age in France (between 60 and 63)—i.e. the difference is partly volitional.^[32]

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.^[38] 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".^[39] In July 2013, the unemployment rate for France was 11%.^[40]

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.^[41]

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.^[42] 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 (after Germany).^[43] Its foreign trade balance for goods had been in surplus from 1992 until 2001, reaching $25.4 billion (25.4 G$) 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 economy

The 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 (the region surrounding Paris), has long profited from the capital city's economic hegemony.

The most important régions are Ile-de-France (world's 4th and Europe 2nd wealthiest and largest regional economy), Rhône-Alpes (Europe's 5th largest regional economy thanks to its services, high-technologies, chemical industries, wines, tourism), Provence-Alpes-Côte d'Azur (services, industry, tourism and wines), Nord-Pas-de-Calais (European transport hub, services, industries) and Pays de la Loire (green technologies, tourism).

Régions like Alsace, which has a rich past in industry (machine tool) 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, and wine production accounts for a significant proportion of the economy in Aquitaine (Bordeaux (or claret)), Burgundy, and champagne produced in Champagne-Ardennes.

List of French régions ranked by GDP total and per capita.

Rank	Region	GDP (in million euros, 2009)	GDP per capita (euros, 2009)	GDP (in million US Dollars, 2009)	GDP per capita (US Dollars, 2009)
1	Île-de-France	552,052	51,101	769,705	69,973
2	Rhône-Alpes	181,810	29,420	253,491	41,019
3	Provence-Alpes-Côte d'Azur	138,002	27,855	192,411	38,837
4	Nord-Pas de Calais	96,839	24,025	135,019	33,497
5	Pays de la Loire	94,032	26,481	131,105	36,921
6	Aquitaine	85,693	26,710	119,478	37,241
7	Brittany	81,632	25,739	113,816	35,887
8	Midi-Pyrénées	76,522	26,628	106,692	37,126
9	Centre	65,173	25,571	90,868	35,653
10	Languedoc-Roussillon	60,523	22,984	84,385	32,046
11	Lorraine	55,396	23,653	77,237	32,978
12	Alsace	50,701	27,322	70,690	38,094
13	Upper Normandy	48,555	26,599	67,698	37,086
14	Picardy	43,725	22,894	60,964	31,920
15	Poitou-Charentes	42,379	24,046	59,087	33,526
16	Burgundy	41,805	25,516	58,287	35,576
17	Champagne-Ardenne	35,779	26,768	49,885	37,322
18	Lower Normandy	34,869	23,737	48,617	33,096
19	Auvergne	33,174	24,680	46,253	34,410
20	Franche-Comté	28,083	24,042	39,155	33,521
21	Limousin	17,509	23,637	24,412	32,956
22	Corsica	7,279	23,800	10,149	33,183

Source : INSEE. Source : fxtop.com.

Departements economy and cities

Departemental income inequalities

In 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 département 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.

Ile-de-France is the wealthiest region in the country with an average income of €4,228 per month (and is also the wealthiest region in Europe) 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 départements, French Guiana being the poorest département 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.^[44]

Urban income inequalities

Huge 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.^[45] 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 (the other three following it closely as 2nd, 3rd and 4th wealthiest ones).

Wealth

Overview

In 2010, the French had an estimated wealth of US$14.0 trillion for a population of 63 million.^[46]

• In terms of aggregate wealth, the French are the wealthiest Europeans, accounting for more than a quarter of wealthiest European households.^[47] Globally, the French nation ranks fourth-wealthiest,.^[48][49]
• In 2010, wealth per French adult was a little higher than $290,000, down from a pre-crisis high of $300,000 in 2007. According to this ratio, French are the wealthiest in Europe. The tax on wealth is paid by 1.1M of people in France, the payment of this tax starts when a €1.3M of assets is reached (there is a discount on the principal residence value).
• Almost every French household has at least $1,000 in assets.^[50] Proportionally, there are twice as many French with assets of over $10,000 and four times as many French with assets of over $100,000 than the world average.^[51]
• The French are also among the least indebted populations in the developed world with personal debt accounting for "little more than 10% of household assets".^[52]

Millionaires

France has the second highest number of millionaires in Europe as of 2015. There were 1.8 million millionaire households (measured in terms of US dollars) living in France in 2015, behind the UK (2.4M) and Germany (1.5M).^[53]

The world's wealthiest woman and France's richest person is French L'Oreal cosmetic empire heiress Liliane Bettencourt. The wealthiest man France is the LVMH CEO and owner Bernard Arnault.

See also

• Economy of France in: French Guiana, French Polynesia, Guadeloupe, Martinique, Mayotte, New Caledonia, Réunion, Saint Barthélemy, Saint Martin, Saint Pierre and Miquelon, Wallis and Futuna
• Taxation in France
• Economic history of France
• Economy of Paris
• Poverty in France

General:

• France
• Economy of Europe
• Economy of the European Union

Notes and references

External links

• Official French exporters directory – Firmafrance.com is the Official French exporters B2B directory, powered by Ubifrance and officially endorsed by the Ministry of the Economy, Finance and Industry of France.
• OECD's France country Web site and OECD Economic Survey of France
• French National Institute for Statistics and Economic Studies (INSEE)
• France’s economy and economic policies, on the International Monetary Fund’s (IMF) website
• France’s foreign trade and place in international investment flows, on the French Treasury’s website
• Xerfi ( Xerfi) – French private economic report institute
• Comprehensive current and historical economic data
• World Bank Trade Summary Statistics France 2012
• Useful information about banks in France, including branches and ATMs locations, contacts and SWIFT codes
• Tariffs applied by France as provided by ITC's Market Access Map, an online database of customs tariffs and market requirements