The competitiveness of the French economy continued to decline at Covid-19

The historic trade deficit was € 84.7 billion and I didn’t expect anything else. In the 15th Annual Report on France’s Competitiveness, published on Tuesday, February 15, the Rexecode Institute warned again. After 20 years of slow deterioration, France’s competitiveness continued to decline during the crisis.

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The numbers speak for themselves. Between 2019 and 2021, France’s share of European exports fell from 14.5% to 13.6% in 2021, the lowest level ever. “” France has been one of the eurozone countries with the lowest share since the 2000s, but it is also the country with the most significant decline during the Covid crisis, despite no health restrictions. It was bigger than anywhere else. “ Emmanuel Jessua, Research Director at Rexecode, explains.

All manufactured products affected

In detail, no industrial sector survived the decline. “With a few exceptions, such as leather and skin, which are probably caused by luxury goods, the deterioration of the trade balance is due to all manufactured products (transport equipment, capital goods, pharmaceuticals, etc.). That is, poor French people Performance cannot be explained by special effects “Emanuel Jessua continues.

So how can you explain this performance degradation? Is this evidence that all efforts made to ease the burden on businesses over the last five years have not paid off? Since being voted under François Hollande, it has been converted into permanent tariff reductions, gradual corporate tax reductions (33.5% to 25%), and production tax reductions granted within the framework of recovery. Among CICE, Bercy has reached nearly 25 billion euros in corporate costs over five years. Not to mention the various reforms made to simplify the labor market and the € 30 billion investment plan …

When asked about this at a press conference, Michel Didier, president of Rexecode, did not break it down as follows: It is true that reforms will not have a significant impact on our competitiveness, except that the decline has slowed slightly. For the time being, surveys of importing countries show that France remains too high in terms of the quality of its products. One possible reason is that despite our efforts, it is still above the European average, especially when it comes to production taxes. »» In France, the latter fell from 3.5% of GDP in 2019 to 3.1% in 2021, but averaged 1.5% in Europe.

The dynamics of industrial hollowing out

“In addition, we need to keep in mind that it is very difficult to stop the dynamics of the deindustrialization that we have trapped ourselves in. In particular, we need to recreate the skills that have disappeared.” Added Michel Didier.

→ Read.In France, the hollowing out of industry is inevitable

According to the Institute, the tricolor economy will, in fact, continue to de-industrialize faster than its European neighbors. Therefore, in 2021, France was the European country with the largest decline in manufacturing activity sales (-6.5%), especially in the external market. “This means that there is a perfect parallel between the expansion of the trade deficit, the loss of export market share, and the hollowing out of the territory’s industry.” Michel Didier concludes.

Not surprisingly, Rexecode urged the President-elect to continue his efforts, especially by further reducing production taxes to € 39 billion. France has no choice but to do this. “Stop the flow of public spending, increase the length of work per year, and throughout life”, Consider a laboratory that has a reputation for being close to the company. I don’t know if the French are buying it.