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2019 OECD Economic Surveys: France 2019

image of OECD Economic Surveys: France 2019

France's economic growth has slowed down after a gradual recovery. Limited productivity and employment gains have reduced the growth of GDP per inhabitant; public spending remains very high. Reducing public expenditures is needed to put debt on a firmly declining path. This and streamlining the tax system would also help reducing taxes, which would boost economic activity eventually. Continuing to foster a more flexible labour market would lead to higher productivity growth and living standards. The unemployment rate is particularily high for low-skills, and young and older workers: higher skills and better education outcomes would support a more inclusive labour market and intergenerational mobility. The quality of the public capital stock is high in France: improving its maintainance would strengthen this asset. New investment should help drive the economy towards greener growth – in particular investments in energy and transport – and more digitalisation. This should be achieved by applying rigourous cost-benefit analyses even more widely.

SPECIAL FEATURES: LABOUR MARKET PERFORMANCE; PUBLIC INVESTMENT

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Key policy insights

The French economy has a high productivity, ensuring standards of living in line with the OECD average (Figure 1, Panel A). This good economic performance is underpinned by a well-rated infrastructure, a dynamic working-age population, long life expectancy in good health, and a tax and transfer system that significantly reduces income disparities and poverty rates (Figure 2, Panel A). Moreover, from 2015 to end-2017, monetary policy, the global economic upturn and structural reforms have bolstered a gradual economic recovery.

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