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France, the sixth largest economy in the world, and next to Germany, is the most important industrial country in Europe. France is also the sixth largest exporter of goods and the fourth largest exporter of services. It has a broad-based, state-oriented economy. The state remains committed with significant influence on the regional economic and industrial policies to ensure increased investment. This can be seen in the government’s support for industrial development, promotion of innovation efforts, research and development.
The main performers of the French economy and of foreign trade are the large companies of the CAC 40 stock market index that are internationally successful and interesting for foreign investors. More than 50 percent of the CAC 40 company shares are foreign-owned. By contrast, the SME sector is both in terms of total number of enterprises and in terms of international competitiveness a less widespread area.
Particular strengths of the French economy are services / tourism, aviation, energy, agriculture and food, luxury goods, pharmaceuticals, chemicals and electronics.
Agricultural policy has traditionally been of great importance for France and experiences continued interest on the part of the French public. With a 3.9 percent share in the gross domestic product, 515,000 farms and over 800,000 employees worldwide, agriculture is an important economic sector in France. With exports of 60 billion euros and a trade surplus of 8.6 billion euros, the agri-food industry contributed heavily in minimizing current account deficits. In the EU, French agriculture has a production share of 18 percent. Although still the largest producer, the country has lost out to other European countries in important areas such as meat, fruits and vegetables in recent years.
In terms of growth, the economy grew by approximately 0.2 percent in 2014. For 2015, the government expects a growth of 1.0 percent.
On the area of unemployment, the country is steady with a figure of 10 percent (inclusive of overseas territories). An important element of the French labour market regulations is the general minimum wage, SMIC (since January 1, 2015: 9.61 euros gross per hour, i.e. a gross monthly wage of 1457.52 euros, with a weekly maximum working time of 35 hours).
The budget deficit in 2013 amounted to 4.1 percent of gross domestic product (GDP) and fell in 2014 to 3.9 percent. In 2015, the deficit is expected to reduce minimally to 3.8 percent.
The trade deficit in 2014 was 53.8 billion euros (compared with EUR 61.2 billion in 2013). The strongest export sectors are high technology (aerospace), metal-processing, pharmaceuticals, luxury goods (textiles, accessories, cosmetics) and agricultural products. Germany is the most important bilateral trading partner of France. The trading volume for 2014 stood at approximately 170 billion euros. Other important trading partners of France are China, Italy, Belgium, Luxembourg, Spain, the UK and the USA.
Why invest in France?
- France boasts of some of the best tax incentives in Europe. The CICE credit on wages is working to save businesses more than 20 billion euros annually. In addition, in the realm of research and development, the government offers tax breaks of up to 30 percent of the R&D costs.
- The French infrastructure is excellent, in urban areas and industrial centres. France has an extensive, high-quality highway network and a largely privately financed motorway network. The government is also sticking to its very ambitious goal to take France to 2 million operational electric vehicles by 2020. In addition, the French network of high-speed trains is the largest in Europe and is planned to be expanded even further.
- France invests over 6 percent of its GDP in the educational sector which is higher than many countries in Europe. As a result, the French educational system produces some of the most product employees in the world (6th in hourly productivity).
- France also has a remarkable quality of life. It is the leading tourist destination in the world, has the 6th highest life expectancy figure at birth and has the 3rd best healthcare infrastructure among developed countries.