تدريب Shadowing: Why France’s Economy Is Stalling - تعلم التحدث بالإنجليزية مع YouTube

He was young, he was smart,

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He was young, he was smart,

and he was supposed to embody a French renaissance.

In 2017, 39-year-old Emmanuel Macron won the French presidency with a supply-side economic program aimed at lowering taxes,

cutting unemployment, and reducing public spending.

He wanted to unleash the energy of the country.

Because he has this very pro-business image,

it really was the final piece of the puzzle that was missing.

The idea was to make the economy more dynamic in order to be able to afford the generous welfare system.

But over the years, the plan fizzled out.

By the end of 2025,

France's debt-to-GDP ratio had skyrocketed to 117% and is projected to reach 120% by 2027.

Meanwhile, GDP growth has stayed low,

with a rise of only 0.7%,

below the eurozone average of 1.3%.

The paradox is that Emmanuel Macron came to power on an agenda of strong public finances and a dynamic French economy.

Fast forward eight years, you actually see a greater debt and an economy that is not growing very much.

So what went wrong?

And why does France's economy still feel broken?

And looking back at the past eight years,

it's fair to say France hasn't had a smooth ride and neither has Emmanuel Macron.

First there was the gilet jaune,

then the pandemic, Russia's war on Ukraine and the resulting energy crisis,

a re-election, the pension reform and some self-inflicted wounds like the dissolution of parliament in 2024.

But beyond global external factors,

Macron's economic policies didn't give him the results he'd planned,

despite some encouraging debuts.

This is the place to be,

to invest, to work, to invent,

to launch your business, to become a start-upper.

The idea was that by lowering taxes for companies in particular,

for individuals as well, this would help revitalize the economy altogether.

Flat tax, basically capping at 30% the taxation on investment income,

suppression of the wealth tax replaced by a real estate tax.

So supply side policies which probably went in the right direction.

With the former president, there were some propositions to do some very high taxes,

which actually created a bit of a brain drain.

And there was really this feeling of France is hostile to entrepreneurs.

The launch of the startup nation was embodied by Station F,

the world's largest startups campus.

When Station F arrived, Macron arrived, that really changed.

People understood that it's okay to launch a business here.

Foreign direct investment began to flow into France's tech scene.

And in 2019, France overtook Germany and the UK as the top FDI destination in Europe.

It still held that title in 2024,

and that investment seems to be making an impact.

In 2016, France counted only three unicorns,

companies worth $1 billion or more.

By 2025, that number had increased by a tenfold to 30 unicorns.

When we started in 2017,

our companies raised 350 million.

Well, this year, our companies raised 1 billion in the first nine months of the year.

That's the equivalent of the whole country of Italy,

just happening at Station F.

The poster child of success is Mistral AI.

And the AI scene actually,

France is very well placed in Europe.

Of our 1,000 companies on campus,

roughly 80% is around AI.

But we still do have other sectors.

We have some climate, we have some robotics,

which is still linked to AI.

But we do have other sectors as well.

Another success of Macron's was reducing unemployment,

France's long-standing bugbear since the 1990s.

Unemployment is near some historic laws in France.

Essentially, some of the structural reforms I brought in helped with that.

More flexibility for companies to hire and fire workers as well.

We're still giving some protection,

allowed to retrain some of the workers as well.

Unemployment has dropped noticeably since 2015.

That year, 10.4% of the labour force was unemployed.

By 2024, that number had fallen to 7.4%.

However, France's youth is still out of work.

Although following the same trend as other age groups,

youth unemployment still stood at 18.5% in 2025,

a stark contrast to Germany's 6.6% rate.

While fixing employment is a priority in most countries,

it's especially key in France.

That's because pensions are mainly funded through employees' contributions.

France's current pension system started in 1945,

just after World War II.

Workers contribute to a fund that pays for their elders' pensions,

with the expectation that they'll be able to collect their own pension through the future workforce.

That system might have worked in the 20th century, but demographics have changed.

In 1960, France counted four workers for each pensioner.

In 2023, that ratio plummeted to just 1.8 workers per pensioner.

To solve this, contributions are regularly rising,

but that makes a dent in workers purchasing power.

Another potential solution to the problem was raising the pension age,

a reform Macron's government proposed in 2023.

Despite mass protests, the measure was ultimately passed.

However, the reform was paused in December 2025 to ease political tensions.

We have a whole group above 55 years old that are too young to retire,

but actually too old to find a new job.

The main reasons for unemployment include a skills mismatch with job opportunities and employer uncertainty about future growth.

Another factor often cited is the difficulty of letting go of employees.

That is, until the 2023 labor market reform gave companies more latitude.

There is more flexibility than people are usually aware of outside of France.

There's had some labor market reforms,

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the introduction of some experience rating,

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what we call bonus malus system to make firms accountable for their layoff,

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capping basically the amount of money which can be demanded from firms when they dismiss a worker.

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We need to protect workers.

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That's important, but we have to do it in an efficient way.

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There are lots of wrong policies in labor market protection.

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And this applies to both workers and companies.

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Normally, when an employee resigns,

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they aren't entitled to unemployment benefits.

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But in France, if both parties agree to dismissal by agreement,

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the employee can claim benefits while the company is protected from wrongful dismissal claims.

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And that's ultimately at the expense of the social security system.

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The dismissal by agreement system cost the state an estimated 10 billion euros in 2024.

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We do have nearly 40% of companies that say that they're actually able to get up and running thanks to unemployment benefits.

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People can take six months off,

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a year off, say they have been fired by the firm and get unemployment benefits.

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It's a scandal.

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While France has a relatively average corporate tax rate for Europe at 25%,

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it surpasses its neighbors in employer social security contribution.

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On average, employers bear cost equivalent to around 45% of an employee's gross salary.

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But on the flip side,

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companies also benefit from subsidies.

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BPI France, which is the sovereign fund in France,

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is funding over 50% of our companies here.

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And that's directly because they're also investors in a lot of funds.

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But there's also ones for research and innovation,

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which is one of the most advantageous tax credits that we have in Europe.

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Do you remember Mario Draghi's famous 2012 speech to save the euro?

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The ECB is ready to do whatever it takes to preserve the euro.

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In 2020, Macron mirrored that approach with another whatever-it-takes moment.

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France is one of the most redistributive countries of the developed economies.

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And certainly what we've seen,

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the answer to the multiple crises over the past few years,

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is to kind of redistribute and give more money.

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Take the pandemic's one-off 150 billion euros state-guaranteed loan to keep businesses afloat,

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or the 26.3 billion euros worth of subsidies in response to the surge in European energy prices following Russia's war on Ukraine.

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Like everywhere, there were adverse elections,

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and that zombie firms took advantage of that to stay alive longer.

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Because these loans were open to all firms without vetting the sector or viability,

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state funds helped keep these so-called zombie companies afloat.

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Now, bankruptcies in France are surging to catch up.

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A recent Senate report also found that French businesses received between 108

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and 211 billion euros worth of tax relief and subsidies in 2023,

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with little follow-up or monitoring.

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This is a very difficult policy to perform

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because we don't have the information usually about whether the companies are still worth it, worth preserving.

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Now, in terms of taxing the firms,

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it's a very bizarre situation where we tax the firms a lot.

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And then we realize that and then we give them some stuff.

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So the policies we use are not necessarily the best thing.

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Macron has tried to actually reduce,

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for example, production tax, which are taxes,

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for example, that are on turnover rather than profits.

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Economists want taxes to be on profit,

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not on turnover, because it's distortive.

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But Macron has reduced the tax,

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which is a very good thing.

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Yet, cutting production taxes didn't do enough to help boost productivity.

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For a long time, France ranked amongst the most productive countries in the world.

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But that has recently changed.

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From the turn of the century,

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productivity growth rates, measured as the value added to GDP per hour worked, have been slipping.

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After Covid, it got even worse.

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And like much of Europe,

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the country has struggled to find its way back towards growth.

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It's been the focus on low productivity services sector of the economy.

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It's been a lower adoption of technology in some sectors as well,

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heavy regulation in some sectors.

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Purchasing power is actually stagnating,

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like in many countries, but more in France than elsewhere,

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in part because we have under-invested in many things.

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So that's what I call the time bombs.

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The time bombs mean that if you don't do anything for a year or two,

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it doesn't matter.

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But after a while, it actually has a cost.

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So debt in 1975 was like 30% of GDP.

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Now it's 115%.

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Education has actually decreased in quality.

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Innovation is another case in part.

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But innovation is more generally a prime of Europe

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because all the big tech and biotech firms are in the US and China nowadays.

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So that means that we lose in productivity,

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we lose in competitivity, and people aren't happy because their wage is stagnating.

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According to the Bank of France,

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The recent drop in productivity primarily came from a rise in apprenticeships due to students being both employed and in training,

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and the delay in COVID-related bankruptcies.

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Both factors are linked to French state subsidies.

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They ended up in a situation where they had to spend

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a lot of money to maintain the fabric of the French economy during this crisis,

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but not having as much tax revenue as they expected coming into the coffers.

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There were a bunch of things which were not dealt with.

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In part, the pension reform,

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there was nothing on the reform of the state.

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It's still a bloated state,

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rather inefficient in some respects, with talents as well.

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It's not like it's black and white.

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Now you could argue, actually,

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now the French economy is quite resilient.

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If all these measures hadn't been put into place,

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maybe the situation would be even worse right now.

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So is France doomed to remain trapped in a cycle of high debt and heavy spending?

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France right now is really a good example of zero-sum thinking.

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Basically viewing the economic life as a zero-sum game.

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So the pie is fixed and we fight to grab the biggest share in a sense.

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Forgetting that in this fighting we actually reduce the size of the pie instead of trying to increase it through economic growth,

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innovation, productivity gains and so on think about the current debate in the parliament.

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It's all about grabbing stuff and no discussion of policies that could improve education,

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solve the climate issue or is going to raise innovation.

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We see this problem now of the debt really growing at a really fast pace in the country

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and in parallel you have this polarization and political instability that means addressing these key economic issues becomes more and more difficult.

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Part of me thinks that there is a chance that this this ecosystem is solid enough that regardless of the outcome,

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it will just continue to move forward.

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I do think that if we hit the extremes for the presidency,

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that could take a different turn.

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But for the moment, I'm still very optimistic that we won't go that way.

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In French, people understand compromise is a compromission.

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And you basically betray your friends if you accept any agreement with the others.

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But we need to get more mature,

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and I'm sure we will.

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We have to invest for our children.

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Nice.

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