France Infrastructure Report

France's infrastructure sector remains positive, and we expect the industry to statement annual increase of around 5.5% between 2011 and 2016, rising from increase of slightly additional than 5% in 2010.Spending on transport infrastructure to account for 79% in 2011, rising to 87.2% by the end of our estimate period in 2021. Meanwhile, investment in energy and utilities infrastructure in 2011 is estimated to have reached EUR7.4bn in 2011 - 21% of the country's total infrastructure spending, though this figure should fall to 16.8% by 2016.

• Despite our generally positive outlook, a number of risks which could affect France's infrastructure industry. These are primarily related to public-private partnerships (PPPs), austerity measures and the proximity of the country's banking sector to Greek sovereign debt. As such, we expect key players within the construction sector, such as Vinci, to fall back on their operations in the world's emerging markets.
• The recent quarter has seen further evolution made in the development of high-speed rail links within France. Most recently, in October 2011, RFF received final bids for the Paris- Montpellier line from Bouygues and VINCI. There are as well discussions over the possibility of extending cross-border rail links within Europe.
• In addition, the government has seen a positive response to its offshore wind farm project, after opening the first round of bidding in July 2011. In particular, French firms have been keen to participate in the project, with a number of firms, including GDF Suez, Areva and VINCI, announcing plans to form partnerships in order to strengthen their positions. Once complete, 23% of France's energy will be generated by renewable sources. France has as well announced plans to develop its solar energy infrastructure In addition, preparation for France's hosting of the UEFA Euro 2016 Football Championship will create new contracts and new jobs in the construction sector, albeit not at a level comparable to that seen in Poland and Ukraine, where the 2012 games are being held. In general, the sector should continue to statement increase over our estimate period until 2021. Private investment in construction is likely to increase, as austerity measures reach the infrastructure segment, and French firms are likely to look to their overseas clients in order to fasten new contracts. Nonetheless, business ties between France and other nations, particularly Russia, should benefit French firms looking to boost their presence overseas.