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Executive Summary
Frances economy is in a post-recession rut with rising unemployment and weak GDP growth that has
stagnated for more than two years. High unemployment and lack of meaningful reforms has contributed to
President Francois Hollande's low approval rating of 12 percent the lowest rating of any French president
on record.
This presentation provides background on the economic difficulties facing France, regulatory concerns, and
policy proposals being considered by the French government. Key highlights are:
Despite weathering the crisis better than other countries, France's GDP growth has virtually stalled
in 2012 and 2013 and unemployment has increased to nearly 11 percent. In 2014, France's GDP is
projected to grow only 0.9 percent, while the OECD average is forecasted to be 2.2 percent.
Political support for President Hollande has evaporated with an approval rating of 12 percent.
Despite initial efforts towards improving the business climate and the appointment of the more businessfriendly Economic Minister Emmanuel Macron, France has yet to see real reform.
French businesses face a comparatively higher regulatory burden than other global economic
leaders. Tax rates and trade costs for French businesses also show that the cost of conducting business in
France remains comparatively high. Although these alone do not account for its recent economic difficulties,
improving the business climate could improve growth of domestic firms and attract FDI.
However, Frances difficulties are part of a pan-Eurozone slowdown. Since Maastricht, Frances GDP
per capita has grown at similar rates as Germany but below that of the U.K. and the U.S. Overall, France's
contribution to global GDP is now four percent, down from five percent in 1992.
1
GBR
USA
DEU
5
4
3
2
Percent
1
0
-1
2007
2008
2009
2010
2011
2012
2013
France is expected to
achieve only 0.9%
GDP growth in 2014,
compared with 1.9%
projected for Germany
and 2.2% projected
for the OECD average
-2
-3
-4
-5
-6
World Bank Data, GDP Growth (Annual %), 2004-2013
OECD, GDP Growth (Annual %), 2014
Youth Spotlight
11
Frances youth
unemployment was
comparatively high
even before the
recession, at 18.6% in
France and 10.6% in
Germany in 2008
FRA
10
Percent
9
8
7
6
GBR
USA
DEU
4
2009
2010
2011
2012
2013
2014
4.1
2.0
0.2
0.3
0.4
0.5
0.8
2.4
0.9
-0.3
-1.4 -1.4 -1.2 -1.1 -0.8
-3.9
LVA
MLT
LUX
SVK
EST
DEU
AUT
FRA
BEL
IRL
NLD
SVN
ESP
PRT
FIN
GRC
CYP
-6.0
27
GRC
FIN
26
ESP
NLD
16
PRT
LUX
16
CYP
MLT
14
SVK
DEU
13
IRL
AUT
LVA
FRA
11
SVN
EST
10
12
BEL
Unemployment
GDP
Frances greater
economic challenge lies
in its unemployment rate,
which is more closely
aligned with the smaller,
more volatile economies
of the Eurozone.
+108%
53
-14%
+105%
+78%
45
41
39
25
+76%
23
1992
2013
26
22
26
-33%
19
-24%
USA
GBR
FRA
DEU
USA
World Bank Data, GDP Per Capita (Current $US), 1992-2013; GDP (Current $US), 1992-2013
-41%
8
5
GBR
FRA
DEU
5
President Hollande
replaced Frances
Economic Minister Arnaud
Montebourg with the more
center-right Emmanuel
Macron last August.
Low Approval
Sarkozy
(2011)
Gov't Restructuring
12
22
24
30
6
38
FRA
DEU
21
10
GBR
USA
Burden On Businesses:
When ranked on the World Banks Ease
of Doing Business Index, Frances
regulatory environment is ranked behind
other global competitors.
Ease Of Doing Business Index
The Ease of Doing Business Index
measures the efficiency of an economys
regulation by examining 11 topic areas,
including access to credit, ease of
starting a business, permitting, paying
taxes, protecting investors, and others.
49%
46%
34%
28%
36%
52%
23%
22%
FRA
DEU
10%
11%
USA
GBR
World Bank Data, Labor Tax And Contributions (% Of Commercial Profits); Total Tax Rate (% Of Commercial Profits), 2013
FRA
11
DEU
FRA
1,335
GBR
USA
USA
1,090
1,005
FRA
DEU
905
10
9
DEU
GBR
USA
World Bank Data, Cost To Import, Export ($ Per Container), 2014; Time To Import, Export (Days), 2006, 2014
8
6
90
85
80
72
70
64
60
50
40
34
33
30
39
25
24
20
10
5
2013
2012
2011
2010
2009
2008
2007
2006
0
2005
96
100
$ Billions
-95%
2004
10
Description
Payroll tax cut for businesses
Although not Economy Minister at the time,
Macron played a heavy hand in enacting a
30 billion tax cut for businesses in
exchange for hiring pledges
Sunday Trading,
Industry Specific
Deregulation
Unemployment
Benefits, 35 Hour
Work Week
Our Take
Macrons arrival has brought
with it little in the way of real
policy change and more rhetoric
on whats needed to turn around
Frances economy.
His strong language has served
primarily thus far as a signal to
Germany and EU leaders that
real reform is on the way.
That being said, there is more
political opportunity for reforms
than in years past. Macrons
challenge lies in balancing
French ideals of a strong welfare
state while working to improve
Frances business climate.