After finally emerging from a near 10 years slump, France is now opened for business more than ever as all lights seem to have turned green. Unemployment figures are improving slowly, although remaining stubbornly too close to the 10% mark. Growth is back, at a level achieved last in 2011, with good signs going forward particularly when looking at the labour temping sector, up in the region of 12% in 2017, always the first sign of better times coming. And deficits have reached a peak and should start decreasing, always a good measure for the long term credibility in any plan.
The change is there, in a country traditionally slow to accept reform to its social and economic model. Very difficult labour law reforms have gone through relatively unchallenged by the far left political opposition and the normally strong power of the streets. France economy is liberalizing, flexibility is no longer a bad word, entrepreneurship is encouraged, not vilified. Notwithstanding several reforms on the social, political and educational front. France looks like entering into the 21st century, in a relatively unified fashion.
Big question is, will it last in this conservative country?
Confidence and competitiveness are key in France, confidence more so. It always was. Indigenous consumption represents 2/3 of GDP. And without that pillar, the French economy is engineless, particularly when investment and exports, the two other economic legs, have been so underperforming for years due to outside factors at first (economic and financial crisis) but, more structurally, to a lack of competitiveness or, said differently, a lack of structural reforms.
So, that confidence, gone missing in the face of globalisation, undermined by years of austerity -although quite relative in comparison with what we’ve seen in Ireland- as been found again. A continuing employment improvement and rising standard of living are the two main interlinked drivers for it. If the demand for employment is strong, wages will rise. More employment coupled with better wages equals higher consumption, meaning economic growth, meaning employment ect… The virtuous cycle. So, it is safe to say that France is on the right track, and that better times are ahead, and that this cycle is there to stay, for as long as the results are there to substantiate the radical turn taken. They will justify the reforms, and confidence in the path taken will strengthen.
An opportunity for Ireland
These back winds represent great opportunities for all Irish economic sectors. France is a strong trade partner in Ireland as is. Increased consumption and investment will drive the need for goods and services. And in the face of Brexit, this is good news for all Irish exporters.
Timely enough, Taoiseach Leo Varadkar met with French president Emmanuel Macron for the first time recently. Two newly appointed political leaders, among the youngest in the world, sharing a common agenda and ambition on many fronts. Of course, not all is perfect, there is the long standing taxation stance disagreement. The 12.5% rate on one side, Macron’s EU convergence agenda on the other. This being exacerbated in recent month by the debate over the so called GAFAs, the giant internet corporations, and the Apple situation as a prime example. But even on that contentious front, the two countries share the common vision for a fairer tax system, at least officially, even if Ireland favours a global solution to this, and France a European one. Aside this issue, the common interest is there, personified by two leaders with chemistry obvious enough for everybody to see:
-A shared liberal economic approach.
-A shared pro European vision, with a common agenda for reform and citizens and civic society engagement on its future.
-A strong agreement on protecting their agricultural sectors within the EU. It has long been the case that the two farming communities, and the respective politicians, stand shoulder to shoulder in Brussels for many decades.
-A renewed support from France for Irish concerns in the Brexit context as it recognizes Ireland to be the country most affected.
Irish and French friendship is very strong. Always was, over centuries. Following Brexit, France will become Ireland’s closest ally in the EU.
“And not just geographically,” Mr Macron said it was reported.