How Foreign Trade Became France’s Weakness – Economy



Nearly 85 billion last year. It will take ten years to reduce the trade deficit. The cruel diagnosis of Bruno Le Maire himself. France is unable to restore her productive apparatus and her accounts. The historical deterioration in 2021 (+30%) year-on-year is partly due to the crisis. The explosion in energy prices due to the fall has greatly affected the situation. The barrel fluctuated between $25 and $80. The gas has tripled. The energy bill has increased by 18 billion compared to 2020. Or. And we are not the only ones affected. But if you subtract energy and military sales, the deficit will still increase by 8.5 billion year on year.

In truth, cyclical or structural, the causes of French evil have been known for a long time. We import more goods than we sell abroad, both in value and in kind. We lack competitiveness, we are expensive, we do not produce enough high-quality products. And no matter what the followers of Emmanuel Macron say, deindustrialization remains a recurring evil. A very strong recovery did the rest. A record 7% growth after an equally record 8% decline spurred household consumption and business investment. All prices – or almost – for raw materials soared, we bought 585 billion worth of goods abroad. Almost 20% more than in 2020. And then the old demons reappeared.

Competitiveness, it’s a recurring evil

Our exports, of course, also jumped by 17%. Luxury and agro products performed well. But aeronautics suffered from the context. And, as in automobiles and electronics, the balance of manufactured goods has deteriorated. Balance sheet, 68 billion hole. All the more worrying as research by the Rexecode Institute shows that France lost market share during the crisis, both in the eurozone and in the rest of the world. From 2019 to 2021, our deficit increased by 27 billion, or 1 point of GDP. Three years ago, France occupied 13.9% of the European market out of 19. Only 12.6% last year. Our deficit is 57 billion, and Italy and Spain are out of the game, coming out of the crisis.

“Since 2000, our decline has been the sharpest among the major economies in the eurozone. This is still the case after the pandemic,” lamented economist Emmanuel Jessua. A bitter disappointment when the supply policy, started by Hollande and continued by Macron, managed to stabilize the bleeding.

Social security cuts, corporate tax cuts, production tax cuts: Full year company fees cut by $55 billion. Should we add more? Pekress and Zemmour are primarily targeting production taxes, which impact activity at 3.5 points of GDP versus 0.5% in Germany, where exports are more than double ours. Where foreign trade shows a positive balance of 179 billion, despite a gloomy year. Taxes – the cure for all diseases?

Deindustrialization, our ruthless failing

Nothing more than working hours, to name just one criterion that is often misused. With 1,402 hours a year, the French, it’s a fact, lag behind in the OECD. Conversely, they work more than the Germans (1332 hours), the Danes (1346 hours) and the British (1367 hours). The evil that affects the trade balance and de facto punishes employment has many sources.

In addition to chronic lack of competitiveness, made in France is not specialized enough, too expensive and of average quality, experts say. Too harsh? Generalizations should be avoided. Along with brilliant industries (aeronautics, luxury, electronics, etc.), French technology does stand out in Europe. But despite Toyota making France its nerve center for Europe and foreign investment continuing to rise, the weight of fees and taxes remains an overall deterrent in our country, the undisputed champion of public spending and taxes in Europe. Most upsetting is undoubtedly the ruthless decline of our industry, which is especially sad in the post-COVID world. Production last year was 10% lower than 20 years ago. Capacities are nearly 6% lower than in 2018, and industrial fabric wear and tear “doesn’t help recovery,” Rexecode says. There was a pandemic, of course. But we import too many capital and consumer goods. Emmanuel Macron, President, will not be able to cancel the derivative. And if his generous “whatever the cost” policy has undoubtedly saved a number of companies and retained the purchasing power of employees, then it is clearly not without flaws. Fortunately, a strong recovery has sparked a boom in imports. What is the reason for the record trade deficit. The sad state of the trade balance, like our public finances, is of little interest to candidates for election campaigns.

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