France Doing Business

Country facts

Economic climate

For the new key economic indicators and statistics, please see the Department of Foreign Affairs and Trade country economic fact sheet.

The French economy is exceptionally diversified and attractive thanks not only to its geographical location and the size of its domestic market, but as well because it boasts significant assets in the area of education, and research and development.

Due to some significant structural reforms that have taken place in the 1990s the government continues towards privatisation, decentralisation and deregulation that has contributed to an economic expansion in recent years.

Like a lot of other developed economies, the French economy has suffered from the economic turmoil, leveraged by the mortgage crisis in the US. While the price of the euro and the strength of the Eurozone are improving, French consumers remain pessimistic about the economy.

Poor performances and a negative trade balance have strained the public finances. In an effort to reduce budget deficit, the current government has lowered income taxes and introduced measures to boost employment. The government is focusing on the problems of the high cost of labour and labour market inflexibility resulting from the 35-hour work week and restrictions on lay-offs.

The government is as well pushing for pension reforms and simplification of administrative procedures. The deteriorating condition of government finances and lack of popular support, however, has restricted it from undertaking any major reforms that could boost investments. The tax burden remains of the highest in Europe.

(Source: Datamonitor)

Political climate

France is a parliamentary democracy with a President elected by universal suffrage for a-year term. The President nominates the Prime Minister, presides over the Council of Ministers, proclaims laws, and guarantees the independence of the judiciary. Parliament comprises chambers:

* The Senate, which is elected by an electoral college. On 30 July 2003, a reform was passed reducing the duration of a term from nine to years and changing the proportion of restored senators from-third to-half each three years. The number of seats is gradually increasing from 321 (in 1994) to 348 (in 2011).
* The National Assembly, of which deputies are elected by universal suffrage and serve for a-year term. There are 577 seats.

Nicolas Sarkozy was elected as the seventh President of the Fifth Republic in May 2007 and received 53 % of the votes, defeating Ségolène Royal of the Socialist Party.

Parliamentary elections were held in June 2007. The President’s party, the Union for a Popular Movement (UMP) and its allies took 59.8 of the seats, against 39.3 % for the Socialist Party and allies. The 0.9 % remaining were scattered part several minor parties.

By electing Nicolas Sarkozy to the chief of the National, French voters endorsed the wide-ranging program of reforms that were the focal point of Sarkozy’s campaign, including market-oriented social and economic reforms such as the reform of the 35-hour work week. As it embarks on social and industrial reforms including an overhaul of the healthcare system, and further privatisation of national-owned enterprises, the current government is confronted with a tense social climate.

Trade relations and statistics

France is a powerful member of the European Union (EU) and has strong ties with its EU partners. Its size, location and robust economy contribute to its position as a leader in western Europe. France as well plays a significant role in Africa, through its former colonies, by providing extensive aid programs, fostering commercial activities and military agreements, and by virtue of its historic, cultural presence in the region. (Source: World Trade Atlas)