France Economic Policy Roundup

Macroeconomic outlook:


  • Consumer Price Index (CPI) rebounded slightly at +0.1% in October, after -0.5% in September. This increase is mainly due to the rebound in prices of services (+0.3% after -1.6%), particularly those of transport (+4.1% after -11.6%). Year on year, consumer prices went up by 4.0% in October 2023, after +4.9% in September.
  • The unemployment rate increased by 0.2 points in Q3, to 7.4% of the labour force. It increased by 0.2 points over the year and stood at its Q2 2022 level, but remained well below its peak level reached in Q2 2015 (-3.1 points). The long-term unemployment rate was stable over the quarter at 1.8% of the labour force.
  • GDP fell slightly in the third quarter at -0.1%, after rising significantly in the previous quarter (+0.6%).  This was due to less sustained investment and household consumption than previously estimated, with INSEE estimating an increase of 0.1%. Household consumption rebounded this quarter (+0.6% after -0.1%), driven by an increase in consumption of goods (+0.6% after -0.6%), particularly of food (+0.3% after -1.7%) and manufactured goods (+1.0% after 0.0%), while spending on energy remained sluggish (+0.2% after +0.1%). Exports fell sharply (-1.0% after +2.5%), driven by transport equipment and transport services. Imports were virtually stable (+0.1% after +2.4%). Overall, foreign trade made a negative contribution to GDP growth for the third quarter (-0.4 points after 0.0 points).

Novo Nordisk announces €2.1 billion for its plant in Chartres, a record investment in the health sector for France

Announced on November 23rd, Danish pharmaceutical giant Novo Nordisk will invest a record €2.1 billion on its plant in Chartres, west of Paris. This is the largest investment ever made in France in the health sectorPresent in Chartres for 60 years already, the surface area of the site will be doubled to 230,000m2, coming into operation between 2026-2028. This will be accompanied by the creation of more than 500 jobs, added to the 1,600 employees currently working at this site, the largest private employer in the Eure-et-Loir departmentThe Danish laboratory supplies around 50% of the world's insulin, with the Chartres plant producing insulin cartridges and vials, as well as diabetic injection pens. Its star products, currently produced in Chartres, include the anti-diabetic drug Ozempic and its derivative Wegovy, which treats obesity.

According to an Elysée source, the Danish pharmaceutical giant had put France in competition with other countries, and in particular with Ireland, however a number of reasons brought France over the line. Novo Nordisk has run its only EU plant in Chartres for over 60 years, and the site was readily available for expansion at the speed required for the increased production demands. Another crucial factor highlighted by Novo Nordisk's CEO was France’s decarbonised electricity, thanks to nuclear power, as the company is committed to energy transition, aiming for carbon neutrality by 2045, in line with France’s national ‘green reindustrialisation’ strategy.

Moreover, France's geographical position and connectivity means it is well placed to serve the company’s European market. Demand for Ozempic and Wegovy are expected the rise greatly, as they become available. In Europe, Wegovy is only marketed in Denmark, Norway, Germany, the UK and, for the first time, Switzerland. In France the treatments were only available to selected patients on early access programmes that ended in mid-2023. The laboratory intends to submit an application for evaluation of the product to the French National Authority for Health in early 2024, a prerequisite for the negotiation of the price of coverage by France’s Social Security system.

Also weighing in the balance was personal contact with the French president at the last "Choose France" summit in May 2023, where Emmanuel Macron received the company's CEO on a one-to-one basis, "a policy that is bearing fruit when we see the results" according to an Elysée insider. Macron welcomed the announcement with a visit to the plant, stating that “We are fighting an essential battle for the country, that of full employment and reindustrialisation. We have made many reforms and we have caught up".

Since the beginning of his second five-year term, Macron’s has been focused on the reindustrialisation of France and the strengthening of its economic attractiveness as well as industrial sovereignty, particularly in terms of health and pharmaceuticals. In the midst of the pandemic, when France ran into medical supply difficulties, Macron committed to reconquer the health sovereignty of France and to allow it to return to the forefront of the stage for pharmaceutical innovation. Several steps have been taken in the relocation of the production of essential medicines, from antibiotics to paracetamol. In addition, several Big Pharma companies have announced major investments in France, starting with Pfizer (€1.5 billion) and, more recently, GSK (€350 million) and Lilly (€160 million).

European Commission criticises France for its excessive budget spending, out of line with the EUs debt and deficit rules

The European Commission warned France on November 21st, that it risked "not being in line with the recommendations" of the European Union for 2024, due to a growth in public spending deemed excessive. The growth announced by Bercy (+2.6%) is higher than the maximum authorised by the Commission and so France has since been asked to "take the necessary measures" to get back on track.

By continuing to overspend and not reduce energy support measures fast enough, France could find itself under new excessive deficit procedures. France had been asked to limit the increase in primary spending (excluding debt charges) to a maximum of 2.3% in 2024. According to the Commission, they will grow by 2.8%, which will represent 0.3% of GDP.

Minister of Economy, Bruno Le Maire responded by saying that "In terms of net primary expenditure, the difference is only 0.3 points, the thickness of a line. What's more, this +2.3% target was calculated before the summer, when economic forecasts were better. If this had been done today, it's a safe bet that the target would be close to +2.6%,". The French authorities also note that the structural adjustment on the deficit for 2024 is 0.8 points of GDP, "higher than the 0.5 points target of European rules", while the growth outlook remains better than that of Germany.

As things stand, therefore, Bercy has no plans to take additional measures to reduce public spending, while the Finance Bill for 2024 is due to return to the Assembly in early December. "When the Commission wants to ask for measures, it writes letters. We haven't received any, whereas other countries have had to justify themselves", countered Le Maire. We're going to stick to our forecasts," he continued, “Outside the Covid period, France has always respected its forecasts in recent years."

France unveils new communication campaign to attract foreign investment

With a tagline of “In France, we're not just like everyone else. And we think you're not, either”, and powered by the new slogan ‘Make it Iconic: Choose France’, France has unveiled its latest international communication campaign to market the country as an attractive destination for foreign investment and entrepreneurs. The priority of the campaign is to illustrate French excellence and singularity of the country, namely its strengths in traditional know-how, gastronomy, digital and scientific innovation, and research.

The campaign asserts "France's strengths: creativity, talent, research, education, public health, infrastructure, access to the European market, solid, sustainable and inclusive growth". It champions the ‘icons’ of France, from architectural heritage to star citizens, featuring the likes of footballer Kylian Mbappé, AI pioneer Yan le Cun and astronaut Sophie Adenot, as well as monuments such as the Mont-Saint-Michel.  The new brand launch comes a few months after President Macron announced a record number of foreign investments in France in 2022 at €13 billion at the Choose France summit in Versailles back in May.


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