Search ForexCrunch

According to Patrick Artus, Research Analyst at Natixis, it is hoped that the numerous reforms being implemented in France will increase the country’s employment rate and potential growth within a few years.

Key Quotes

“But if the effect of these reforms is small or comes late, then there would be reason to be concerned over the French economy’s prospects in a few years:

  • The trend in hiring difficulties shows that the structural unemployment rate is high, and that growth is going to return to the low level of potential growth;
  • Domestic supply of goods and services remains unresponsive, which results from problems of weak corporate modernisation, low labour force skills and declining cost competitiveness, and may lead to a sharp deterioration in France’s foreign trade;
  • If potential growth remains low, given the policies being implemented, France’s fiscal deficit will become high again, probably forcing the government to run a markedly restrictive fiscal policy.”

“Putting aside the effects of the reforms, the French economy in 2020- 2021 could therefore be characterised by low growth, a high external deficit and the need for fiscal austerity.”