London (CNN) Attack on Paris office billions of dollars enterprise France’s image as a place to do business may have been tarnished earlier this month by protesters angry over pension reforms.
but behind uproarEurope’s second-largest economy has shown remarkable resilience since the pandemic, making it an increasingly attractive destination for companies and investors looking to expand or establish a foothold in the region. is on the rise.
France’s economy grew by 0.2% in the first quarter of this year, France’s National Statistics Office said on Friday. Gross domestic product was weak across the 20 countries that use the euro currency. mark the time Only 0.1% over the same period.
This is welcome news for France after a year of strong protests by one million people so far. strike halted part of the country. Trade unions are calling on the government to repeal a law raising the retirement age from 62 to 64.
Days after the government passed parliament without a vote to push for pension reform, protesters light a fire as rail workers demonstrate.
Further industrial action is planned for May 1. However, according to Charlotte de Montpellier, senior economist at Dutch bank ING, prolonged protests are unlikely to have a long-term impact on the French economy.
“The experience of social tensions so far in France shows that economic impacts are generally temporary and are fully offset by a recovery in activity in the months that follow,” she said. I wrote in my notes in March.
According to official data, manufacturing output rose 0.7% in the first three months of the year. Oil refinery output jumped more than 13% after he fell 11.4% last quarter. went on strike over wages.
Resilience
This year’s mass protests are just the latest in a series of crises that have hit France since 2020. But the $2.8 trillion economy is holding up relatively well.
The International Monetary Fund the economy grows It is expected to decline by 0.7% in 2023, while its closest neighbors Germany and the UK are expected to contract.
In its February report, the IMF added that France was enjoying a “strong economic recovery from the pandemic” and that its dependence on France was “limited”. Russian natural gas It has helped keep inflation below inflation in other European countries that are highly dependent on Moscow for their energy supply.
Like other economies, France’s inflation has hit a multi-decade high in recent months, boosting some small businesses. towards the limit — But price gains peaked at a level lower than the Eurozone average.French consumer price inflation averaged 5.9% last year compared to 9.2% in the European Union.
Customers shop at an outdoor fruit and vegetable market in Toulouse, southwestern France, on March 5, 2023.
This is also thanks to the billions of euros the French government has spent to protect homes and businesses in 2022. soaring energy prices.
France has also benefited from its traditional advantages. With one of the highest labor productivity in the developed world, she has a burgeoning tourism industry and is also home to some of the world’s largest companies, including: loreal (LRLCY)total energy and LVMH (LVMHF)The latter became the first company in Europe on Monday. valued at $500 billion.
investment attraction
Despite the country’s resilience, governments will need to curb “very high” levels of public spending in order to increase investment in the economy, says Jens, director of global macro-geoeconomics at Eurasia Group. Larsen told CNN.
As a percentage of GDP, France’s government debt reached 112% at the end of last year, among the highest in the European Union.
It also has the second highest tax burden after Denmark among the 38 developed countries that make up the Organization for Economic Co-operation and Development.
Since President Emmanuel Macron took office in 2017, the government has tried to liberalize the economy and encourage investment in companies. hire and fireand reduce their tax burden.
Illuminated office buildings in the La Defense business district in Paris, France, Monday, February 6, 2023.
Larsen said the controversial pension changes were “important” to “show France can reform” and that the planned measures would boost labor supply and make public finances sustainable. He added that it would help put it on a more orbital path.
Kay Neufeld, director of forecasting and thought leadership at the Center for Economics and Business Research (CEBR), a UK-based think tank, makes a similar assessment.
“President Macron is trying to make France and Paris a more attractive place to do business, and that seems to be paying off,” he told CNN.
In fact, foreign investors poured almost twice as much money into France last year as they did in 2021, and more than tripled as much as they did in 2019, the year before the pandemic, according to the country’s central bank data. .
Paris’ commercial real estate market, including offices, has overtaken London in terms of total sales in the first quarter of 2023, according to MSCI data. Yet the UK as a whole was still Europe’s largest market.
Building Bank Momentum
Britain’s exit from the European Union has also benefited France’s financial sector.
France will record the highest number of new financial sector projects in 2021. foreign investor That same year, France overtook the UK in securing US investment in the sector for the first time, according to a study by consulting firm EY.
Some of the world’s largest banks relocated trader From London to Paris, we have increased local employment so that we can continue to serve EU-based clients that we are no longer able to serve from the UK.
of personnel bank of america (BACs) According to Vanessa Holz, the bank’s chief securities business in Europe and head of France, the Paris office is now about six times larger than it was before the 2016 Brexit vote.
Bank of America office in Paris, France
Emmanuel Goldstein, CEO of Morgan Stanley France, told CNN that Morgan Stanley’s Paris office has more than doubled its workforce to 330 since March 2021. He said he plans to hire about 500 more people in the next two years.
Brexit is only partly responsible for that increase. The bank opened a research center in the French capital last year and hired analysts to support traders.
“The pool of talent that we have seen in France is enormous,” said Goldstein.
For Neufeld at CEBR, it wasn’t until November that he started to “stop and pay attention.”
That month, France overtook Britain for the first time to become home to Europe’s largest stock market. as of friday, The CAC All-Share Index has a total market capitalization of €3.19 trillion ($3.51 trillion) and the FTSE All Shares Index in London has a total of £2.39 trillion ($2.98 trillion) in constituents. It was worth it.
“Things are coming together in Paris…there’s definitely momentum there,” Neufeld said.
