The French economy, the second largest in the Eurozone and considered to be a critical part of the “core,” is increasingly seen as “struggling.” Fundamental structural deficiencies that are continuing to gnaw at France’s ability to compete internationally are now being emphasized in a presidential election campaign in which both leading candidates are making election promises that, if fulfilled, would surely make it even more difficult to tackle France’s economic problems. And this is occurring at a time when the Eurozone’s sovereign debt crisis is far from being resolved and much of Europe is in recession. Industrial production declined in February, the third month of declines.
On the positive side, France has more firms in the global Fortune 500 than any other European country. But French companies are struggling to compete with labor costs 10% higher than those for German firms and social charges double those that German firms face. A European Commission survey suggests that French firms also have an innovation deficiency. It perhaps is not surprising that France’s unemployment rate is 10%, compared to 5.8% in Germany.