France loses market share despite competitiveness gains

France's loss of market share has cost it €1.5tr since 2000. [sebra/Shutterstock]

French exports are gradually becoming more competitive, according to the 2016 competitiveness study by macroeconomics NGO COE-Rexecode. But the country’s market share is still falling. EURACTIV’s partner La Tribune reports.

France’s supply policy is beginning to bear fruit. The creation of a tax credit for competitiveness and employment (CICE), the reduction of costs under the Responsibility Pact and measures to compensate for depreciation have all helped boost the competitiveness of its businesses.

The business environment has become yet more inclement since Paris enacted this strategy in 2014, stimulated by a favourable monetary policy from the European Central Bank (ECB), the decline of the euro against the dollar and low raw materials prices.

Slow salary growth

According to the COE-Rexecode study, French salaries only went up by 0.9% in 2016, compared to an average of 1.3% for the eurozone and 1.9% in Germany. For the period 2012-2016 this gap is more pronounced: salaries rose by just 0.8% in France, compared to an average of 3.7% across the eurozone and 9.1% in Germany.

“Improvements in cost competitiveness have led to improvements in price competitiveness and allowed businesses to recover their profit margins,” the institute said. “The increase in the export price of French products, which was more than six points above the average eurozone price rise for the period 2000-2007, has given way to a fall of -1.4% over the period 2011-2016. The average price of eurozone exports has fallen slightly faster (-2.5%) over the same period, while German exports have gone up by +1.3%.

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Market share down by four points since 2000

But in spite of improvements in the price competitiveness of products made in France, importers still find French products too expensive.

Worse still, the French share of the eurozone’s goods and services exports fell from 13.6% in 2015 to 13.4% in 2016. In 2000 it was 17%. “If France’s market share had remained at its 2000 level, its goods and services exports would be well above their current level of €170 billion,” COE-Rexecode said. The NGO estimated the cumulative cost of this decline since 2000 at €1.5 trillion, or around three quarters of French GDP.

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