France’s economic revival

It is an axiom of British self-esteem that France should always be slightly behind the UK in everything that it does, whether it be in sport, race relations, international influence, military prowess or, if at all possible, the economy. 

Right now, however, it is the French economy that is pulling ahead. The CAC 40, France’s truncated equivalent of the Footsie 100, last week posted an aggregate increase in pre-tax profit for its members of 13 per cent for the first six months of this year on turnover up 7.4 per cent. Combined, the country’s grandes enterprises saw first-half net profits hit a record €89 billion. 

Stellantis, the world’s fourth-largest carmaker, boasting Peugeot, Citroën and Fiat among its brands, along with Chrysler, Opel and Dodge, increased its net sales by 12 per cent to a value of €98 billion. At rival Renault, sales were up 27 per cent to a little under €27 billion, while those at Safran, the aerospace and defence group, nudged €11 billion, an increase of 28 per cent. Edenred, a digital payments pioneer, joined in with the usual suspects, recording a 26 per cent rise in revenues, and may be one to watch in the years ahead. 

The biggest winner in terms of gain, was Bouygues (pronouned Bo-ig), the telecoms heavyweight, which registered a 41 per cent growth in sales to a total of €26.13 billion. By contrast, sales at rivals Orange, at €21.5 billion, barely rose,  Overall, 29 of the top 40 were on an upwards trend, including, notably, luxury goods conglomerate LVMH, controlled from Paris by the world’s richest man, Bernard Arnault, which saw sales soar 15 per cent to €42 billion. 

Among the losers (relatively speaking), oil giant TotalEnergies recorded a 17 per cent drop in revenues, but still managed to lead the pack with sales of €108.55 billion. Arcelormittal, part of the Mittal steel empire, saw sales fall by 15.6 per cent, while Societé Générale, France’s third-largest bank, experienced a decline of 7 per cent. BNP-Paribas, the French Number One, stood still, while Crédit Agricole saw turnover improve by a modest 4.2 per cent.  

Airbus, viewed from Paris as a French, rather than a European, national treasure, increased sales by 11 per cent, to a value of €27.7 billion, but growth year-on-year fell by 20 per cent. Trainmaker Alstom, now owned by GE of America but registered in France, has yet to publish its results, as has Eurofins Scientific, a leading provider of testing and support services to the pharmaceutical sector worldwide. Carrefour, Europe’s biggest retailer, employing 320,000 people in 30 countries, saw sales increase by 11 per cent to €45.5 billion. 

L’Oreal, Michelin and Danone were among others heading in the right direction. 

Of interest to the UK, the high-tech weapons manufacturer Thales, whose Belfast plant supplied Ukraine with the acclaimed NLAW anti-tank missile system, saw profits in the first six months of this year jump 5.6 per cent to €8.72 billion. It is having a good war. 

Yet it need hardly be said that not everything is rosy in the garden. Big Manufacturing, Big Tech and Big Banking, to say nothing of Big Perfume, Big Champagne and Big Suitcases, are not the whole of the French economy. The public sector remains bloated and the burden of pension provision has only been eased, not removed, by the government’s enforced increase in the state retirement age from 62 to 64. 

In the first quarter of this year, France recorded growth of just 0.2 per cent, barely above the EU average but trailing far behind not only market leader Poland, at 3.9 per cent, but Portugal, Croatia and Cyprus, as well as Italy and Spain. If recession does hit the Eurozone as a whole in 2024, occasioned by the war in Ukraine and the ongoing slowdown in China, France will almost certainly be among the victims.  

In the meantime, unemployment, though seemingly on a downwards trajectory, remains a worry. At the end of June it stood at 7.1 per cent, down from 7.5 a year earlier and a full 2.4 per cent lower than in 2017, when Emmanuel Macron took over as President. In the UK, the rate is currently around 4 per cent, though more than in France the figure is skewed by the numbers who are economically inactive.  

There are growing concerns, too, about the actual French component of much of the CAC 40. Airbus (EADS) is shared with German and Spanish interests; Stellantis, which inherited little Vauxhall in the UK along with Opel, is determinedly multinational. Alstom is essentially owned by GE; the supermarket chain Casino, with 50,000 employees across the country, has just been bought by the Czech billionaire Daniel Kretinsky, who made his money from building coal-fired power stations.

Equally important is the fact that a number of large French corporations are owned or part-owned by the State, including not only Airbus, but EDF, Europe’s largest provider of electricity (100 per cent nationalised this year), Orange the telecoms giant, the national railway company SNCF, Naval Group (a leading builder of submarines), Air France/KLM and the postal service La Poste. French governments do not hold back when it comes to rescuing or sustaining national assets.    

This year, his fifth as President, has not been easy for Macron, whose entire time in office has been beset by insurrection at home and abroad. But in purely business terms, with little fanfare, he has rarely put a foot wrong and the message this month is upbeat. It feels as if France is awakening from a long sleep. 

Listen, if you can bear it, to the front-page editorial in last Saturday’s edition of the centre-right newspaper, Le Figaro. 

“France’s biggest companies are doing well. Very well even. Is the war in Ukraine destabilising the world? Is growth slowing down? Is inflation coming back at a gallop? Are interest rates soaring? Nothing stops their march forward. In an environment that is more complex and unpredictable than ever, our champions are growing their businesses around the world, along with their profitability.”

Written by the paper’s leading economics commentator Gaëtan De Capèle, the editorial goes on to rubbish the “slayers of capitalism,” who he says are “legion” in France. The “disciples of Oxfam,” he says, “making their back-of-an-envelope calculations, will go to great lengths to demonstrate widening inequality, exploitative labour practises and, for good measure, ‘climate crime’.” 

De Capèle is having none of this. Now well into his stride, he tells us that “in the great international melée, there is no possible survival without agility and without profitability … The CAC 40, which so many detest, is a blessing … it represents hundreds of thousands of jobs, gives structure to entire sectors, produces numerous centres of excellence and provides the state with billions in tax revenue.” 

To the sound of trumpets, Figaro’s message is one of unalloyed patriotic pride: “In a country in search of its lost sovereignty, the international presence of its gigantic companies constitutes a precious tool of influence and reconquest. It is an asset that these days we should defend at all costs.” 

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