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Positive results for French economy

Record tourist numbers and firms are hiring again

The outlook is positive for the French economy with tourist numbers at a record high and employment at its highest level for 37 years.

Economists put the improvement down to a mixture of global factors and policies of the European Central Bank – the euro zone in general is performing well – plus Hollande-era measures for businesses which have borne fruit and are helping to create jobs.

The national statistics body Insee predicts 1.6% economic growth in GDP in 2017 with some economists going further and predicting 1.8% based on current trends. This compares to 1.1% in 2016 and is a boost after recent years which saw in 2009 the worst recession since the Second World War followed mostly by years of sluggish growth. 

It also means France’s economic growth is likely to outpace that of the UK this year, which global accounting firm PwC forecasts will be 1.5%, dropping to 1.4% in 2018. Meanwhile the euro continues to strengthen (compared to sterling at €1.08 [August 28, 2017] which is at its lowest since 2009).

Economist Hélène Timoshkin from the economic research centre Asterès said: “There was growth in France 2010-2011 but this was making up for the huge setbacks of 2008-2009. This time it is real.

“There has been a growth in exports for the first time in two years, more jobs have been created than lost for the first time in eight years and both industry and households are investing more. The economy is still fragile but with the right measures it is solid enough for growth to continue.”

She thinks the election made a difference as the Front National lost while the construction industry has benefited from people putting money into bricks and mortar due to its  perceived security. Hollande-era initiatives which have helped include tax and social charges reductions for firms taking on staff, as well as tax reductions linked to investing in the business, such as buying equipment.

Insee says France’s employment rate – the percentage of working age people employed – is at its highest since 1980 at 65.3%. The boost concerns all age groups but especially those aged 50-64.

The second quarter of 2017 saw 92,000 new jobs in the private sector, up from 58,000 in the first quarter – the largest rise since figures began in 2010.

The biggest growth area is services, and temping also saw a boost with 106,000 more people employed in June compared to June 2016 taking the total over 700,000 for the first time.

Less positively, numbers of registered jobseekers rose 1% in July, however this may be a blip.

Tourism has shaken off a drop linked to terrorism to rise to a new high of 96.8million nights in hotels in the first half of 2017, up from 92.5m last year. In Paris, hotel stays were up 12.5% in the first quarter compared to 2016, making it the best first quarter for at least 10 years. Visitors from Japan and Russia were up 62% and 51% respectively.

Air travel is booming, with a record 10m people passing through Paris airports in July compared to 9.6m last year.

There was a 14% rise in new building sites from spring 2016 to 2017, compared to the previous year and 13% more planning permissions were granted. New car sales rose 3.8% in January to July compared to 2016.

Among firms feeling an upturn is Paris-based KAZoART which launched in 2015 selling  contemporary art online. It has tripled turnover in the past year and hopes to up its workforce from three to eight next year.

Founder Mathilde Le Roy senses new consumer confidence. “Art is one of the first areas to suffer in a recession and the fact we are expanding is a good indicator that the economy is improving,” she said. “Since the beginning of the year we
have seen an increase in the amount people are spending, with more sales over €1,000.”

She feels buoyed by promises of Mr Macron to help start-ups.

“I agree we should pay social contributions as we have good health and education cover in France but we should not be treated the same as big companies as our costs are not the same and we should at least have help when we start taking people on.”

She added: “The growth in the economy is small but it makes us feel more confident about life. It does us good to think that we can be creative and succeed.”

Another firm, UV Germi, which was created seven years ago and has now launched on the stock market, has seen an annual increase of 20% in turnover.

Based in Corrèze, it specialises in ultra-violet water and air treatment and has a turnover of €5m of which 20% is in export, a figure it aims to double in the next three years. It has 30 employees and hopes to take on 20 more
by 2021.

Founder André Bordas says having a niche product has been key rather than state measures.

“We concentrate on products which fulfil a growing need to clean up the environment. We rely on our own capacities and intend to increase exports so we create our own success,” he said.

“The government should do more to support small, innovative businesses but I cannot depend on the authorities and continue to build my business myself.”

Even so, the general trend in his area is positive, says the Corrèze Chamber of Commerce and Industry, which produces regular studies based on interviews of 360 firms.

The author of the latest one from the end of the second quarter, Anne Mambrini, said: “In June, 53% said they are confident in the future of the French economy, whereas in March only 32% said the same thing, while 66% are confident of growth in their own business.

“The level of investment is always a good indicator and with the help of tax incentives which ended this April, there was a huge increase in the numbers who invested in comparison with 2016. Four out of ten said they would continue to invest, despite an end to the advantages.

“One in five companies now intends to recruit, whereas up to now more have been losing staff than gaining.”

She added: “What companies hope for from the new government is simplification without too many changes as they have to spend time adapting to.”

Ms Timoshkin added: “We need the reform of the Code du Travail Mr Macron is proposing so it will be easier to employ and sack workers. It is necessary because France is known for its expensive labour costs and an average quality of goods, unlike Spain where employment costs are low and Germany, which has a reputation for excellence”.

“At the same time people fear their jobs could be taken over by robots and artificial intelligence so a secure social system with more training opportunities is needed to reassure them that if they lose their job they will still have a future to look forward to.”

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