“The French economy suffers from four serious weaknesses”

Lhe economic situation in France is worrying, with the sharp rise in energy prices. But upon closer examination, the French economy reveals worrying weaknesses, demonstrating the extent of the ongoing structural deterioration.

A superficial analysis could lead to an optimistic view and make believe in the solidity of our economy. The main macroeconomic indicators do not reveal any major weakness. Gross domestic product (GDP) grew by 2.5% at the beginning of 2022 in France, exactly the same as in Germany. The unemployment rate is today at its lowest level for twenty years (7.2%), with the exception of the beginning of 2008 (7.1%), when it was still 10.5% in 2016.

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Despite the succession of crises, employment has progressed in the recent period: it is, at 1Ahem quarter of 2022, 2.9% above its level at the beginning of 2019, and the labor force is 1.3% above its level at the beginning of 2019, with strong growth in employment and participation ( proportion of the working-age population entering the labor market). market) since the end of the Covid-19 crisis.

The current account (the trade balance of goods, services and income with the rest of the world) has been balanced on average since the second half of 2020, after having been in deficit from 2005 to 2020. The interest rate differential with Germany, even if it has risen since the spring election, it is still low, around 60 basis points. Finally, the number of company bankruptcies is very low, around 32,000 per year in the spring of 2022, compared to 45,000 to 65,000 in the period 2002-2019, despite the strong growth in credit (loans guaranteed by the ) during the crisis. derived from Covid-19.

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If we stopped there, we would conclude that France has no growth deficit, has created a lot of employment, has rebalanced its foreign trade, has no problems with its public debt and has very solid companies. . But unfortunately this is not the case, because the French economy suffers from four serious weaknesses.

Decreased quality of work

The first is the industry. The recent period has highlighted its inability to meet demand. Twenty years ago, France’s trade balance for industrial products had a surplus of 25 billion euros per year; Before the Covid crisis, it had a deficit of 35,000 million euros per year; at the beginning of 2022, the annualized trade deficit of industrial products exceeds 100,000 million euros. The rebound in demand (computer, home equipment, etc.) that occurs after the Covid crisis is satisfied by more than 60% with imports. Industrial production falls with each crisis: it is now 10% lower than in 2002. The balance of the global current account is due to the trade surplus in services, in particular tourism, and the repatriation of profits by French multinationals.

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