When Emmanuel Macron was elected to the presidency in May 2017, his victory was greeted optimistically by France’s economic partners and international investors. Today, despite recent political unrest, business here and abroad remains upbeat. The first foreign investor in France remains the United States, followed by Germany and the United Kingdom. And for good reason. France’s enduring strength is based on four long-standing pillars, on which both government and the country’s economic players agree. Decisions and policies to strengthen them are part of the broad national consensus.
by Bernard Spitz, President French Insurance Federation
The first pillar is the dynamism of the French economic fabric itself France ranks first in Europe for the number of businesses listed among the world’s 500 largest corporations. Among those are world leaders in a wide range of fields — luxury goods, wine & spirits, food, cosmetics, aerospace, automotive, financial services, technology, telecommunications, media industries… Their strength is due to having taken in time the turning point of globalization (yesterday), and of digitalization (today). One specificity of the French economy is the wide cooperation between traditional corporations — leaders in their field — and the new economy’s very dynamic start-up ecosystem (the number of new entrants rose by 17% in 2018; French Tech sent the biggest delegation to the last CES; Station F, the new Paris incubator, is the largest in the world, etc.) The competitiveness of French businesses is reinforced by access to efficient infrastructure (transport, telecommunications, health services, education, etc.) The recent lowering of labor costs is another asset, as well as the labor market flexibilization, achieved through reforms carried out in the first year of Emmanuel Macron’s presidency. In the same vein, corporate taxation is due to decrease as part of the next Budget.
The second pillar is France’s leading position in financial services
France is the first banking, insurance, and asset management market in the post-Brexit European Union: it numbers 5 of the 10 largest banks, 4 of the 10 largest insurers, 3 of the 5 largest asset managers in the EU. This allows a strong investment in tomorrow’s infrastructure and innovation. French insurers, for instance, invests € 2.5 trillion in the economy, 60 % of which in businesses, with an increasing share (+ 50% in the last 3 years) in SMEs and ETIs. The authorities have supported this trend by backing the industry’s drive to revise prudential rules (most notably the Solvency II Directive) which penalized investment in the economy (equities, infrastructure, etc.), or through the fall in the taxation of capital.
The third pillar is the quality of France’s education system and of its talent pool
With three of the top six European business schools, two of the world’s ten best business schools, 1.6 million engineers and scientists, 13 Fields Medal laureates, thousands of entrepreneurs, France demonstrably deploys a highly qualified and attractive workforce. This explains both the good performances of French businesses as well as the number of French highly-qualified expatriates, from London in finance to San Francisco in tech. Government programs have been put in place to initiate a series of further reforms aimed at improving the education system from the earliest age, especially in less privileged areas. Employers’ associations work with training institutions to bring skills offerings to closely matching demand, modulated and evolving in sync with technological and organizational changes, with programs available throughout today’s more flexible careers.
The fourth pillar is the promotion of sustainable and responsible growth
The competitiveness of our companies is built in the long term, taking into account future developments (availability and cost of raw materials, ecological consequences, evolving customer expectations, etc.). France has encouraged numerous initiatives to foster green finance, gender equality, inclusiveness, framing these not as brakes on business development, but, on the contrary, as creating the conditions for their sustainability over time. The COP21 and the Paris Climate Agreement are strong markers from the current authorities (through the One Planet Summit), to which business, and particularly the insurance industry (which constitutes de facto an early warning system for catastrophic events), are closely associated.
France has made a point of pushing these causes beyond her own borders. Without allies, there are evident risks to carrying environmental or social burdens alone for the benefit of free riders. But more obviously, like her European neighbors, our nation is aware that it is no longer possible to carry a significant weight alone: strategically, diplomatically, economically.
Europe has never been so criticized — and yet Europe has never been so necessary as today
France knows what she owes Europe today and how much more she will owe Europe tomorrow. We live in a world of expanding great powers. This makes it necessary to think about transformation, not only nationally, but also Europe-wide. As a founding member and historical pillar of the Union, France finds herself in a situation similar to that General de Gaulle found when he came back to power: “In this present moment, Europe can only be born from France. Only France can speak and act […] In such times, France finds herself elected by destiny. If she takes this initiative to push back against fear, revive hope in the future, and make possible the creation of a true force for peace, she will have liberated Europe”.[1] With Germany currently preoccupied with the end of the Merkel era, with Italy in the hands of a populist alliance, Spain weakened by calls for regional independence, and the UK on the threshold of departure, Emmanuel Macron has taken Jean Monnet at his word. The French president is well aware that the May European elections will be decisive, for both for France and the world.
Our world must boldly accept the challenge of the twenty-first century
We are experiencing a deep crisis of globalization and multilateralism. The macroeconomic — yet real —benefits of free trade are no longer enough to defend it against the individual fears and frustrations feeding populists and protectionists around the world. This applies, even more, when technological disruptions and climate disorder further increase economic inequalities created by wealth concentration and competition both between individuals and nations.
National policies are key, especially in France – but global issues call for global responses
The Bretton Woods post-war world governance is no longer appropriate. The world structure it created ignored social issues while disregarding the war’s losers, emerging countries, international institutions, NGOs: it was a reflection of the twentieth century. Governments, businesses and trade unions can today work together to build a model for the 21st century that fully integrates social issues, more inclusive growth (featuring education and infrastructure spending), and a more balanced approach (between regional masses, generations, genders). Such a model would operate under international governance and provide for a social approach to dangerous inequalities.
This is the objective of the 2019 French B7 and G7, which will be held with an overarching aim to fight against inequalities and for the inclusion of social issues in global governance.
[1] Jean Monnet, 3 May 1960 – source: Jean Monnet AMG Documentary Fund 1/1/6.