Contents | Executive summary | How to obtain this publication
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The next Economic Survey of France will be prepared for 2011.
An Economic Survey is published every 1½-2 years for each OECD country. Read more about how Surveys are prepared.
The OECD assessment and recommendations on the main economic challenges faced by France are available by clicking on each chapter heading below.
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Chapter 1. Coping with recession and preserving fiscal sustainability
The financial crisis did not spare the French economy, which is facing a deep recession in 2009, even if the situation is less severe than elsewhere. After a clear drop in the fourth quarter of 2008, economic activity will most likely continue to contract throughout this year. Both the timing and the strength of recovery remain uncertain, primarily because of the risks surrounding the balance sheets of financial institutions. While French banks have been weakened by the crisis, they are not as shaky as their counterparts in many other countries. Moreover, the risk that the real estate market correction now underway will accentuate the decline in economic activity is attenuated to some extent by the low rate of household indebtedness and the weakness of the wealth effect on consumption. The crisis will leave public finances in poor shape, and once the recovery begins, a priority will be to phase out the general government budget deficit. Given the already very heavy burden of taxes and compulsory contributions, public finance consolidation will require strict control over expenditures. This chapter reviews the latest macroeconomic developments, including those on the fiscal policy front, and discusses priorities for restoring health to public finances.
Chapter 2. Progress in labour market and other reforms
The authorities have undertaken numerous structural reforms since the last OECD Economic Survey was published in June 2007. Many of those reforms go in the direction of the recommendations offered at that time, while other reforms conducive to social dialogue have been put in place. This chapter reviews the progress that has also been made in improving the functioning of the labour market, addressing the problem of demographic ageing and making the education system more effective. These efforts will have to be pursued and the momentum of reform maintained, pressing ahead even further in some fields while perhaps changing course in others. The greatest challenge is to raise the employment rate in order to restore the health of public finances and sustain rising living standards.
Chapter 3. The challenge of restoring French competitiveness
Since the beginning of the decade, France has seen a marked decline in its export performance. The poor foreign trade performance of recent years is related to a series of factors, rather than to any single cause. It is not so much the loss of market share itself that is of concern (many countries have experienced this), but rather the extent of that loss, which reflects problems in responding to the acceleration in global demand earlier this decade, before the apparition of the current crisis. An analysis of the deterioration in competitiveness points to supply side factors such as the relative inability of French firms to service foreign markets, and the pursuit of industrial strategies of offshoring the entire production process. Restoring competitiveness will require steps to strengthen the country’s growth potential and to address the main long term determinants of that potential, such as fostering research and development, promoting innovation, reducing the tax burden, boosting competition and creating favourable conditions for businesses to grow rapidly. The lack of competitiveness is more often a symptom than the cause of one or more underlying economic weaknesses. What is called for, then, is a comprehensive policy response that addresses the sources of the competitiveness problem, rather than targeted interventions designed directly to remedy the growing trade deficit.
Chapter 4. Strengthening competition to boost efficiency and employment
Despite the great progress France has made in opening its markets for goods and services, and in strengthening the overall framework for competition, there are still regulatory barriers to entry in many sectors, particularly in retail trade and various professional services. In terms of the competition framework, an important step was taken with the creation of a new Competition Authority. In the retail trade sector, the amendments to the Economic Modernisation Act have moved further along the path of reform that began some years ago, without lifting the prohibition on resale below cost (RBC), but easing the conditions of negotiation between suppliers and retailers. Additionally, it would be necessary to repeal the Royer Raffarin laws on commercial zoning to encourage the development of large retail outlets while ensuring greater competition in the many areas where large scale retailers are concentrated. Moreover, there are relatively high regulatory barriers to entry in many professional services, including legal services and healthcare. OECD indicators show that the restrictive nature of regulation in certain professions varies greatly from country to country and suggest that French entry barriers and restrictions on practice in many cases exceed what is necessary for adequate consumer protection. In the case of telecommunications, one of the main challenges for government is to promote broader access to high speed Internet service through prompt deployment of a fibre optics network. Finally, the emergence of real competition in the retail market for gas and electricity is constrained by several obstacles, the most important of which is the presence of regulated prices along with market prices.
How to obtain this publication
The complete edition of the Economic Survey of France is available from:
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.
For further information please contact the French Desk at the OECD Economics Department at email@example.com.
The OECD Secretariat's report was prepared by Alain de Serres and Rafal Kierzenkowski under the supervision of Peter Jarrett. Research assistance was provided by Patrizio Sicari.