Five reasons for French businesses to be optimistic

Businesses around the world are still in a precarious situation, and France is no exception. A series of abrupt lockdowns struck a blow for the tourist-driven economy, and put the kibosh on a big summer revival. While the hope is that the lessening of restrictions will prove a major boost for retail, many businesses are still finding their feet.

Look beyond the surface, however, and there is reason to be optimistic. While the French economy is having to make adjustments for its losses, it still shows improvement from previous years - and in some ways, may even have been enhanced by the pandemic. Here are just five reasons why French businesses should be positive, and looking forward to a brighter future.

Tourism will bounce back

It's well known that France is the centre of global tourism, and the world's number one holiday destination. While the coronavirus outbreak has slowed the return of international travel, people are missing it more than ever. As soon as a majority of people deem it safe to resume holidays, France could easily see more holidaymakers than at any other time in its history.

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The good news here is that there shouldn't be too much of a delay. The biggest markets in terms of visitors to France are arguably South Asia, the United States and the UK - all places where the vaccine rollout has proved relatively successful, and life has begun to return to normal. As long as France is able to liaise with these countries in the use of 'Covid passports' to mitigate the risks to its own citizens, the tourism industry should get a very welcome shot in the arm.

Tech keeps growing

While most businesses have had struggles of one kind during the pandemic, it's arguably had less of an effect on tech companies. Often more agile and willing to adapt to the need for remote working, tech firms have suffered less from the restrictions imposed by the pandemic, and indeed have benefitted in certain areas. From apps to websites to fitness devices, tech has been a refuge and saving grace for millions of people isolating at home.

This strength is also due in part to the extraordinary development of the French tech sector. The network of 'La French Tech' hubs and the support structures in cities across France have helped to bring businesses together and made them more resilient, even as co-working spaces have closed. A variety of funding sources - including BpiFrance, government grants, and EU R&D credits - have also been a lifeline for many to keep innovating and creating during this period.

People still want ‘Made in France’

From food to cars to fashion, France has always been renowned for the exceptional quality of its exports. This is not something that's been dulled by the pandemic, and is if anything a growing market. Online shopping has accelerated during lockdown, both as a necessity with retail outlets closed, and also as a means of escapism during a tough period. French businesses have already benefited from this demand, and should continue to do so post-pandemic.

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The potential to increase exports should excite anyone who is growing, manufacturing or otherwise creating products in France. While Brexit has put up barriers with the UK, other markets show positive signs of growth; Japan for instance has only recently signed a comprehensive trade deal with the EU, while the United States is now distancing itself from the protectionism of the Trump administration. Manufacturing outside of China is also set for a boom, as businesses and consumers look to distance themselves from the Chinese government's actions in Xinjiang.
The economy is more resilient

The last year has been a huge drain on almost every economy, and France isn’t much worse off in that respect than most of its neighbours. However, one positive is that from a structural perspective, the country is better off than it was a few years ago. A series of reforms conducted by President Macron have, despite some opposition, given French businesses a stronger platform to scale and grow within France, without feeling that they have to leave to seek further investment.

Starting with the ‘Macron law’ that he helped to push through as Minister for the Economy and Industry, Macron has made ‘Macronomics’ a key part of his legislative agenda. Changes including extending the working week to Sundays, increasing companies’ power to hire and fire workers, reducing payouts for unfair dismissals, scrapping the ‘wealth tax’ and reforming the pension system have all helped to make businesses more competitive and flexible, and thus better able to attract workers and investment.

The ongoing Brexit bounce

While things aren’t great in France, they could be worse. Businesses in the UK have successfully returned from lockdown, but they also have Brexit to contend with, and it continues to cause problems. Delays in shipping remain unresolved, causing shortages and disadvantaging exporters of time-limited goods such as fresh fish or produce. It has also raised the price of shipping and taxes for many smaller businesses to the extent that they have had to stop shipping outside of the UK.

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While these issues will doubtless be smoothed over in time, for the moment they are something that France will look to exploit. Many financial firms have already been attracted away from London and towards a burgeoning new enclave in Paris, and other businesses are crossing the channel to make doing business on the continent easier. This is something that has been actively pursued by Macron and local officials, and is a gap that French businesses can fill in by selling to customers who previously dealt with UK firms.

France has suffered the most from the limitations placed on international travel over the past 18 months, but it also stands to have the biggest bounce-back. From the tech economy to the tough economic decisions made prior to the pandemic, France is in a great position to rebound after Covid - and is a great place to start a new business.

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