France Political & Economic Risk Report

Bumpy growth, followed by a Covid-19 induced recession in 2020

AA1

LOW RISK for entreprise

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

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GDP USD 2,778 trillion (World ranking 6, World Bank 2018)
Population 66mn (World ranking 21, World Bank 2018)
Form of state Republic
Head of government Emmanuel Macron (President of the Republic) 
Next elections 2022, Presidential and legislative
  • Dynamic demographics
  • Infrastructures (e.g., transport) and public services are of high quality
  • Many international corporate giants and a growing presence of technological start-ups (‘French tech’)
  • Diversified economy
  • Tourism revenues
  • Quality education system
  • Dual labour market: Insiders vs. outsiders, leading to structurally high unemployment rate
  • Low employment rate among youth and seniors
  • Growing inequalities in spite of costly redistribution
  • Rapid deindustrialisation and low competitiveness of manufacturing firms
  • Lack of large SMEs that can bear the sunk costs associated with innovation and exports
  • Rent-based economy (e.g., retail distribution, taxis)
  • Elevated level of public spending and questionable efficiency

Trade structure by destination/origin

(% of total)

Exports Rank Imports
Germany 15%
1
18% Germany
United States 8%
2
9% Belgium
Italy 7%
3
8% Italy
Spain 7%
4
8% China
United Kingdom 7%
5
7% Spain

Trade structure by product

(% of total)

Exports Rank Imports
Other transport equipment 12%
1
10% Road vehicles
Road vehicles 9%
2
6% Other transport equipment
Medicinal and pharmaceutical products 6%
3
6% Petroleum, petroleum products and related materials
Electrical machinery, apparatus and appliances, n.e.s. 6%
4
6% Electrical machinery, apparatus and appliances, n.e.s.
Other industrial machinery and parts 5%
5
5% Miscellaneous manufactured articles, n.e.s.
The payment behavior of domestic companies is good but does have some margin for improvement as the average DSO does not match the standards set forth in recent regulations stringently transposing EU payment standards into domestic law.

  • Low

  • Medium

  • Sensitive

  • High

  • Payments

  • Court proceedings

  • Insolvency proceedings

French courts are fairly efficient in dealing with disputes in a timely manner.

The law in France provides for a complete set of restructuring proceedings when a company is facing financial difficulties, however, when liquidation proceedings are opended, the chances of collecting debts are very low.

Contact Euler Hermes

Economic Research Team

research@eulerhermes.com

Contact Selin Ozyurt

Senior Economist for France and Africa

selin.ozyurt@eulerhermes.com 

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