Economy of France

Basic	Economy	Geography
Government	History	Military
People	Tourism	Transportation

France is the fourth-largest Western industrialized economy. It has substantial agricultural resources, a large industrial base, and a highly skilled work force. A dynamic services sector accounts for an increasingly large share of economic activity (71% in 2002) and is responsible for nearly all job creation in recent years. GDP growth was 0.2% in 2003, after two years of steady decline from 4.2% in 2000.

Government economic policy aims to promote investment and domestic growth in a stable fiscal and monetary environment. Creating jobs and reducing the high unemployment rate through recovery-supportive policy has been a top priority. The Government of France successfully reduced an unemployment rate of 12% to 8.7%, in the late 1990s, but has seen unemployment increase to 9.5% in 2003 . France joined 10 other European Union countries in adopting the euro as its currency in January 1999. Since then, monetary policy has beeen set by the European Central Bank in Frankfurt. On January 1, 2002, France, along with the other countries of the Euro zone, dropped its national currency in favor of Euro bills and coins.

Despite significant reform and privatization over the past 15 years, the government continues to control a large share of economic activity: Government spending, at 53.5% of GDP in 2002, is among the highest in the G-7. Regulation of labor and product markets is pervasive. The government continues to own shares in corporations in a range of sectors, including banking, energy production and distribution, automobiles, transportation, and telecommunications.

Legislation passed in 1998 shortened the legal work week from 39 to 35 hours for most employees effective January 1, 2000. Recent assessments of the impact of work week reduction on growth and jobs have generally concluded that the goal of job creation was not met. The current administration is introducing increasing flexibility into the law, returning the country to a de facto (if not de jure) 39-hour work week in the private sector.

France has been very successful in developing dynamic telecommunications, aerospace, and weapons sectors. With virtually no domestic oil production, France has relied heavily on the development of nuclear power, which now accounts for about 80% of the country's electricity production. Nuclear waste is stored on site at reprocessing facilities.

Membership in France's labor unions accounts for less than 10% of the private sector work force and is concentrated in the manufacturing, transportation, and heavy industry sectors. Most unions are affiliated with one of the competing national federations, the largest and most powerful of which are the communist-dominated General Labor Confederation (CGT), the Workers' Force (FO), and the French Democratic Confederation of Labor (CFDT).

France is the most visited country in the world with 89 million foreign tourists in 2017. France's leaders remain committed to a capitalism in which they maintain social equity by means of laws, tax policies, and social spending that mitigate economic inequality.

France's real GDP grew by 1.9% in 2017, up from 1.2% the year before. The unemployment rate (including overseas territories) increased from 7.8% in 2008 to 10.2% in 2015, before falling to 9.0% in 2017. Youth unemployment in metropolitan France decreased from 24.6% in the fourth quarter of 2014 to 20.6% in the fourth quarter of 2017.

France’s public finances have historically been strained by high spending and low growth. In 2017, the budget deficit improved to 2.7% of GDP, bringing it in compliance with the EU-mandated 3% deficit target. Meanwhile, France's public debt rose from 89.5% of GDP in 2012 to 97% in 2017.

Since entering office in May 2017, President Emmanuel MACRON launched a series of economic reforms to improve competitiveness and boost economic growth. President MACRON campaigned on reforming France’s labor code and in late 2017 implemented a range of reforms to increase flexibility in the labor market by making it easier for firms to hire and fire and simplifying negotiations between employers and employees. In addition to labor reforms, President MACRON’s 2018 budget cuts public spending, taxes, and social security contributions to spur private investment and increase purchasing power. The government plans to gradually reduce corporate tax rate for businesses from 33.3% to 25% by 2022.