The French economy has been hit hard by the global recession and, more recently, by turmoil in the euro area. The crisis has been well managed, but unemployment has been rising sharply. As confidence recovers, activity should pick up gradually in the coming two years and the unemployment rate stabilise in late 2013. Yet, France faces serious long-term challenges. While the degree of inequality remains moderate, growth of per capita GDP has been among the lowest in the OECD in the last 20+ years, and firms’ poor competitiveness has risen to the top of the policy agenda.