France’s main economic challenges in 2019 were its high rate of 𒁃unempᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚloyment, lagging competitiveness, and sluggish growth.

A modern country and a leader among European nations, France long enjoyed a diversified economy, with tourism, manufacturing, and pharmaceuticals among its leading industries. Emmanuel Macron–founder of the center-left Forward! Party–took office in 2017, becoming the youngest president since the establishment of the Fifth Republic.

At the time, prior to Brexit, France was the third-largest EU economy after Germany and the United Kingdom, and the second-most populated. However, it had also maintained slow  since the mid-2000s. France, like other EU countries, had struggled with high unemployment since the 2008 global financial crisis. But while unemployment had impro♓ved for other European nations, 🍒it continued to affect France's productivity and competitiveness.

High Unemployment

The 澳洲幸运5官方开奖结果体彩网:unemployment rate in France remained stubbornly high in 2019, while showing some signs of improvement. In the fourth quarter of the year, the country posted an unemployment rate of 8.1%, which was better than the 8.5% registered in the third quarter and the 8.8% notched in the year-ago period. In 2019, France had the fourth-highest unemployment rate among European countries. Only Italy, Spain, and Greece were doing worse. For workers 25 to 49 years of age, the unemployment rate was 7.4% in the final quarter of 2019, improved from the 7.9% registered in the third quarter. Workers over the age of 50 also did better. Their unemployment rate was 5.8%, compared with 6.3% previously.

Sustained high unemployment was a drain on the French economy because social safety nets accommodating the unemployed would have to grow while being supported by a smaller fraction of the populace. High sustained youth unemployment was especially worrisome because it stunted skill development and wealth accumulation of the generation that was supposed to drive 🔯the economy in future decades.

Previously, Macron had announced plans to spend 15 billion euros on job training and to increase sanctions against unemployed workers who did not look for work by reforming unemployment benefits.

Lagging Competitiveness

By 2019, France had seen its competitiveness wane. The nation had run a 澳洲幸运5官方开奖结果体彩网:current account deficit over the past decade, meaning it imported more than it was exporting. In 2018, its current account showed a deficit of 15.1 billion euros, slightly better than in 2017, when its current account deficit was 16.4 billion euros.

The Banque de France attributed the improvement to increased trade in services, driven by R&D and professional management services. However, France paid more for energy, which put pressure on the current account.

In 2013, France had introduced the Competitiveness and Employment Tax Credit (CICE) to lower labor costs and help French firms become more competitive. In 2019, the CICE was scrapped and replaced with reduced employer contributions to social welfare programs.

Despite lower labor costs, many French manufacturers struggled to find sufficient skilled labor to meet demand, hampering growth. Government reforms of apprenticeships and 澳洲幸运5官方开奖结果体彩网:vocational training may have helped in this regard.

Where France saw some improvement was in foreign direct investment. While French firms struggled to gain market share abroad, foreign companies were drawn to doing business in France, which had become more business-friendly since Macron assumed the presidency. In 2018, an estimated $38.2 billion of foreign direct investment flowed into the country, compared with $24.8 billion in 2017, according to statistics published by the United Nations Conference on Trade and Development in 2020.

Sluggish Growth

In December 2019, the Banque de France expected 澳洲幸运5官方开奖结果体彩网:economic growth for the year to come in at 1.3%. The bank forecasted growth easing to 1.1% in 2020 before strengthening in 2021 and 2022.

The bank said a deterioration in the global economy could weigh on growth, although strong domestic demand would provide support. It also projected that inflation would fall to 1.1% in 2020 on lower food and energy prices.

In the four years from 2016 to 2019, France added one million new salaried jobs, thanks to lower labor costs and other labor reforms. The bank expected wage tax reforms, unemployment benefit reforms, and vocational training to help in further job creation.

Bottom Line

France faced several economic challenges in 2019, primarily high unemployment, sluggish growth, and lagging competitiveness. During this time, the country undertook several policy responses, including increased apprenticeship programs and reduced labor costs. While the country held a trade deficit, it also saw increased foreign direct investment. The economy would soon undergo a major economic disruption in ☂2020 with the onset of the Covid-19 pandemic.