COUNTRY REPORT FRANCE
Competitiveness and social partnership President Hollande’s broad reform agenda
July 2015
France’s economic situation is gradually improving. So far, however, the pace of recovery has been slow. We expect growth of about one percent in 2015 and further strengthening in 2016.
Since early 2014 the government has provided a clearer direction on reforms. It has increasingly geared many areas of economic policymaking towards growth and competitiveness. For over a decade, French companies in a number of industries have lost their competitiveness. The programme of reforms is wide-ranging; it will likely take time before positive results are seen.
Greater cooperation with social partners is key. It is a prerequisite for creating a consensus for reforms in broader society. Wage policy changes are also necessary.
French fiscal policy still faces major challenges. Thanks to a new extension, France is currently complying with EU set of rules. Going forward, the country needs to maintain a stable tax policy, conduct a review of state spending and carefully plan budgetary expenditures. If it fails to put growth factors on a sustainable footing, the consolidation policy will be difficult to manage.
The close economic relations of France and Germany are becoming more and more intertwined. The countries are at the centre of European value creation chains. The reason for this goes beyond the countries’ geographical proximity and the size of their economies.