Chapter 18. France

Institutional and regulatory framework

Although the cost for starting a business remains low in France, administrative burdens and procedures constrain entrepreneurial activities. Insolvency regimes could also be better designed for rehabilitating or liquidating firms. France Experiment was relaunched in 2018 in order to simplify legislative texts and administrative procedures. The 2018 Finance Bill introduces a major tax overhaul with a reduction of corporate tax to 25% by 2022 (stable rate at 15% for SMEs). The tax regime of microenterprises has also been simplified to benefit more entrepreneurs. A Plan for increasing the social benefits of self-employed was launched in 2017 with a view to encouraging firm creation. A new Justice reform (2018-22) also aims to simplify and accelerate court procedures.

Market conditions

Market opportunities for SMEs are sizeable in France. A large share of the domestic market is domestically supplied, public procurement is significant despite long payment delays and trade procedures and facilitation are efficient. The government launched its Trade Strategy in 2018 with a view to nurturing a culture of export and reorganising the export support system. Bpifrance has become the contact point for SMEs to access export guarantees and funding; the range of instruments has been enlarged while the procedures have been streamlined. The application of the 2014 EU directives on public procurement that aim to simplify and secure SME participation also came into force in 2016.

Infrastructure

France’s investments in ICT is high and fixed broadband widespread. Transport and energy infrastructure perform slightly above OECD median but research infrastructure is uneven, strong inter-regional networks co-existing with weaker industry-science and international networks. As part of its Grand Investment Plan (2018-22), the government earmarked EUR 3.5 billion to support scientific excellence, consolidate world-class universities, and boost the research system. The revision of the Research Infrastructure Roadmap in 2018 also aim to achieving greater capacity.

Access to finance

There is a good flow of bank financing for French SMEs, thanks to a robust banking system, low interest rates and easing credit conditions. Alternative sources are on the rise, with venture capital investments on par with the OECD median. The government has recently focused on boosting investments in new risky projects and SME modernisation. Since 2017, the SME Innovation Account proposes tax breaks to business angels for reinvesting capital gains in innovative firms. Bpifrance, the SME development bank, introduced in 2016 two medium-term instruments that complement bank loans and cover SME financial needs during their digital transition. Development Loans (up to EUR 50 000) support investments by very small firms. The EUR 2.2 billion Industry for the Future Loans finance the transformation of industrial SMEs.

Access to skills

France has an educated adult population showing strong entrepreneurial intentions but unemployment rate is persistently high at over 9% and training opportunities for reskilling workers could be strengthened. In 2017-18, the government engaged in a series of reforms with a view to renewing the French social model, focusing on vocational education and labour regulation. The Investment Skills Plan (2018-22) allocates EUR 57 billion for the training of two million jobseekers, while efforts are made to improve the attractiveness of apprenticeship and the insertion of young workers in fast-changing industries. A major reform of the French Labour Code also aims to increase labour market flexibility and social dialogue.

Access to innovation assets

French SME access to innovation assets is on par with the OECD median except for the adoption of high-speed broadband or cloud computing services. In 2018, an online platform France Num was launched in co-operation with regions, showcasing sectoral models of digitalisation and providing micro-firms and SMEs with self-assessment tools, guidance and financing solutions. A strong policy focus is also given to increasing the number of medium-sized firms and scaling-up firms through domestic and global innovation networks. The 2018 “Pacte PME” Law foresees inter alia boosting investment in innovation.

The full country profile is available at https://doi.org/10.1787/34907e9c-en