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Businesses around the world are still in a precarious situation and France is no exception. A series of abrupt lockdowns struck a blow for the tourist-driven economy and put the kibosh on a big summer revival. While the 2021 Christmas period provided a boost for retail, many French businesses are still finding their feet.
Look beyond the surface, however, and there is reason to be optimistic. While French businesses are in a bad place now, the environment they are returning to still shows improvement over previous years. In some ways, the situation may even have been enhanced by the pandemic. Here are just five reasons why French businesses should be positive and looking forward to a brighter future.
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Tourism Will Bounce Back
It’s well-known that France is the center of global tourism and the world’s number-one holiday destination. While the coronavirus outbreak slowed the return of international travel, people are missing it more than ever. As soon as a majority of people deem it safe to resume holidays—likely when social distancing and other restrictions are phased out—France could easily see more holidaymakers than at any other time in its history.
French Tech Keeps Growing
Most businesses have had struggles of one kind during the pandemic. However, it has arguably had less of an effect on tech companies. Often more agile and willing to adapt to the need for remote working, tech firms have suffered less from the restrictions imposed by the pandemic. Indeed, they have benefited in certain areas. From apps to websites to fitness devices, tech has been a refuge and saving grace for millions of people isolating at home.
This strength is also due in part to the extraordinary development of the French tech sector. The network of “La French Tech” hubs and the support structures in cities across France have helped to bring businesses together. This has made them more resilient, even as co-working spaces have closed. A variety of funding sources—including BpiFrance, government grants, and EU R&D credits—have also been a lifeline for many to keep innovating and creating during this period.
From food to cars to fashion, France has always been renowned for the exceptional quality of its exports. This is not something the pandemic has dulled. It is if anything a growing market. Online shopping accelerated during lockdown, both as a necessity with retail outlets closed, and also as a means of escapism during a tough period. French businesses have already benefited from this demand and they should continue to do so post-pandemic.
The good news here is that there shouldn’t be too much of a delay. The biggest markets in terms of visitors to France are arguably South Asia, the United States, and the UK. These are all places where the vaccine rollout has proved relatively successful and life has begun to return to normal. As long as France is able to liaise with these countries in the use of “COVID passports” to mitigate the risks to its own citizens, the tourism industry should get a very welcome shot in the arm.
The potential to increase exports should excite anyone who is growing, manufacturing, or otherwise creating products in France. Brexit has put up barriers with the UK but other markets show positive signs of growth. Japan, for instance, has only recently signed a comprehensive trade deal with the EU. Meanwhile, the United States is now distancing itself from the protectionism of the Trump administration. Manufacturing outside of China is also set for a boom, as businesses and consumers look to distance themselves from the Chinese government’s actions in Xinjiang.
The last year was a huge drain on almost every economy. France isn’t much worse off in that respect than most of its neighbors. However, one positive is that, from a structural perspective, the country is better off than it was a few years ago. A series of reforms conducted by President Macron have, despite some opposition, given French businesses a stronger platform to scale and grow within France, without feeling that they have to leave to seek further investment.
Starting with the “Macron law” that he helped to push through as Minister for the Economy and Industry, Macron has made “Macronomics” a key part of his legislative agenda. Changes include extending the working week to Sundays, increasing companies’ power to hire and fire workers, reducing payouts for unfair dismissals, scrapping the “wealth tax,” and reforming the pension system. These have all helped to make businesses more competitive and flexible and thus better able to attract workers and investment.
While things aren’t great in France, they could be worse. Businesses in the UK have successfully returned from lockdown. However, they also have Brexit to contend with and it continues to cause problems. Delays in shipping remain unresolved. These cause shortages and place exporters of time-limited goods such as fresh fish or produce at a disadvantage. It has also raised the price of shipping and taxes for many smaller businesses to the extent that they have had to stop shipping outside of the UK.
These issues will doubtless be smoothed over in time. However, for the moment they are something that French businesses will look to exploit. Many financial firms have already been attracted away from London and toward a burgeoning new enclave in Paris. Additionally, other businesses are crossing the channel to make doing business on the continent easier. This is something that Macron and local officials have actively pursued. Moreover, it is a gap that French businesses can fill by selling to customers who previously dealt with UK firms.
France has suffered the most from the limitations placed on international travel over the past 18 months. However, it also stands to have the biggest bounce-back. From the tech economy to the tough economic decisions made prior to the pandemic, France is in a great position to rebound after COVID. Moreover, it is a great place to start a new business.
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About the Author
Katya Puyraud is the co-owner of Euro Start Entreprises, specializing in company formation in Europe. They have helped budding entrepreneurs and expanding SMEs, as well as helping people to start a business in France.
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