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Competitiveness: the French position structurally degraded

After a record-breaking year in 2022 for the trade balance, due to the explosion in energy prices and supply difficulties, the 2023 vintage may seem almost satisfactory.

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Competitiveness: the French position structurally degraded

After a record-breaking year in 2022 for the trade balance, due to the explosion in energy prices and supply difficulties, the 2023 vintage may seem almost satisfactory. With an expected trade deficit of around 100 billion euros, it actually reveals the deterioration of French competitiveness. The energy crisis cannot be judged responsible for all of France's misfortunes.

“The deficit on manufacturing industry products excluding energy would stand at nearly 50 billion euros in 2023, or 21 billion more than in 2019. It concerns a majority of sectors, and certain sectors traditionally in surplus ( transport equipment, pharmaceutical products) saw their surplus sharply reduced between 2019 and 2023,” writes the Rexecode economic institute, in its annual report on competitiveness.

The deficit on trade in goods thus widened by nearly 47 billion euros between 2019 and 2023, including 27 billion for the energy deficit and 21 billion for manufactured products. Within Europe, France is losing ground: its share in euro zone exports has decreased by 0.9 points for goods and services (-1 point for goods, -0.6 points for services ) during these four years.

“The weakness of our foreign trade in manufactured products reflects a structural lack of competitiveness of our industrial base,” judge the economists at Rexecode. The sentence seems harsh even though the executive has made the battle for competitiveness one of its mantras since 2017. The figures, however, support it. The country's price competitiveness has deteriorated since 2019, in other words the cost of French exports is increasing faster than those of other European countries.

“Non-price competitiveness surveys indicate, edition after edition, that French products are judged as being of rather good quality but also as too expensive in relation to this quality, which refers to the question of price competitiveness,” further indicates the Rexecode report. For these economists, the only solution to give French industry some breathing room in international competition would then be a new massive reduction in taxes on “the factors of production of companies: labor, capital, land and energy”.

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