There is no single European wage bargaining model. Wage bargaining takes place between social partners at the national and regional level in the Nordic countries. This is also the case in Germany, despite the decentralisation of wage bargaining at industry and company level that began in the early 2000s. In Belgium, Spain, and even Italy, the government intervenes sometimes strongly in wage bargaining. In France and Portugal wage bargaining is less centralised but the minimum wage set by the government can have a significant impact on negotiated wages. Since the crisis, there has been a general trend towards decentralised wage bargaining, which enables companies to better adjust to the economic situation.
This study documents French international trade in services broken down by the four modes of supply defined by the General Agreement on Trade in Services (GATS): cross-border supply (mode 1); consumption abroad (mode 2); commercial presence (mode 3); and presence of natural persons (mode 4). When all modes of supply are taken into consideration, sales to non-residents (exports) exceed purchases of foreign services (imports) by over EUR 200 billion, reflecting both competitiveness based on know-how and a specialisation in sectors that require a local commercial presence. However, the balance of trade in services (covering modes 1, 2 and 4), which is slightly in surplus at EUR 6.5 billion for the first nine months of 2017, reflects a degree of “territorial competitiveness” that is insufficient to ensure a stable current account balance. The third mode of supply (commercial presence), measured on the basis of statistics on foreign affiliates, predominates and accounts for 59% and 45% of French exports and imports, respectively. The majority of transport, banking and insurance, and computer, information and telecommunication service exports fall within mode 3. In order to gain a comprehensive picture of the integration of French services in the global economy, this study also assesses “indirect exports”, i.e. services for use in the production of exported goods. The hierarchy of France’s key trading partners changes when all the modes of supply are considered, with the United States supplanting the United Kingdom and Germany as France’s main import and export partner.
The 2007-09 financial crisis led to major corrections in global current accounts. However, “global imbalances” persist, raising concerns among economic policymakers. This article focuses on two key aspects of these imbalances. The first part describes how they have evolved over the recent period and how their correction has proved costly, given the required major adjustments in real exchange rates. The second part of the article provides detailed statistics on the size and composition of net and gross international investment positions. Due to the large size of gross positions, the income account has become more important for current account dynamics, contributing to the persistence of global imbalances.
After highly encouraging half-yearly results, the vitality of the 80 largest French industrial and commercial groups was confirmed with a 5.3% increase in turnover during 2017. Capitalising on their international activities, these groups reported extremely strong organic growth, which accounted for a 5.8 percentage point positive contribution to turnover. External growth brought an additional 1.7 percentage point increase, offset by a negative 2.2 percentage point contribution related to exchange rate effects and other variations resulting from the depreciation of the dollar against the euro. This improvement in turnover proved to be a source of profitable growth: EBITDA1 rose by 7.2% year-on-year and net income rose by almost one-third (up 29.2%). Thanks to these robust results, the main groups were able to reinforce their cash position and equity by 5.7% and 2.3%, respectively.
A nominal interest rate - the interest rate set when a loan is granted - includes a component that measures future interest rate expectations and a component referred to as term premium. For a central bank, this decomposition provides information on (i) economic actors' expectations of future interest rate changes, and thus the effects of monetary authorities' communications, and (ii) the compensation required by lenders for the risks they incur. This heavily depends on the uncertainty surrounding economic conditions and dynamics, and also the effects of monetary policy measures such as asset purchase programmes. Different types of risk therefore imply that some premiums are embedded in interest rates. Central banks take this decomposition into consideration when choosing their monetary policy stance. They have mathematical models to evaluate the decomposition, each one of which has its own advantages and disadvantages. This article presents a representative affine model, which notably takes into account an interest rate lower bound of less than zero. When applied to examples from the United States and the United Kingdom, this model highlights the effects of monetary policy measures on term premiums. By adapting this framework to a negative interest rate environment, interest rate swaps indexed on Eonia over the past ten years can be decomposed for the euro area.
This article exploits French data from a survey of cash usage in the euro area, which was published in 2017 on behalf of the European Central Bank (ECB). Cash is the preferred method of payment at the point of sale in the euro area, accounting for three out of every four transactions and more than half of the total value of purchases. The survey results nonetheless vary across countries, with France in particular showing a high concentration of cash usage for small purchases, coupled with a strong predilection for cashless means of payment. Among the determinants of cash usage, sociodemographic criteria (gender, age, income and profession of consumers) are found to have very little impact. However, transaction characteristics play a predominant role, with the share of cash payments diminishing as the value of the purchase rises, and increasing for purchases in shops for day-to-day items.
The College de France and Banque de France organised a joint international conference in Paris on secular stagnation. Ten academic contributions were presented during three themed sessions on measurement errors, and supply and demand-side situations.
The financial crisis has generated renewed interest in the question of companies’ financing choices, and especially those of the largest firms which have greater latitude in this regard. In order to assess the debt of the major groups it is necessary to analyse (i) the relative share of equity and financial debt in financing the groups’ economic assets, (ii) their debt repayment ability and (iii) the relationship between debt and investment, as the latter allows for future income growth. We have observed an improvement in the solvency of major groups after they shored up their equity. However, they are struggling to generate a greater increase in their operating cash flow than that of their net debt. As a result, we analyse the extent to which the new debt of French groups can be used to finance investments that would boost future income. In 2016, new financial debt was used more to finance investment in acquisitions than investment in tangible and intangible assets.
Economic inequalities have become a major focus of academic research as well as policy makers’ deliberations. In the United States, while some of the renewed interest in this subject can be attributed to questions surrounding the election of Donald Trump, it is not the only factor: even before the election, the work of Thomas Piketty on the growth in inequalities had already fuelled considerable controversy and had been commented on in numerous research papers. Deliberations on globalisation and openness to trade have also raised questions as to their impact on economic inequalities. As the United States is a society that was founded on the promotion of access to opportunities for all, i.e. on equity and equality of opportunity rather than equality itself, the question as to the balance between inequalities and opportunities (do inequalities foster opportunities or rather do they hinder them?) often arises. This question is particularly pertinent today. Certain commentators have come to the bleak conclusion that the “American dream” has been appropriated by the wealthiest members of society or by a small fraction of the middle class and that the United States is gradually becoming a class-based society.
Companies’ turnover, value added and profitability all rose in 2015. Conversely, corporate investment continued to decline. In a low interest rate environment, the debt ratio of large enterprises increased, while that of small and medium-sized enterprises (SMEs) and intermediate-sized enterprises (ISEs) contracted. Financial profitability improved significantly.
With a total of EUR 2,543 billion in investments held by insurance firms that are subject to the Solvency II regime (see the glossary in the appendix) at the end of 2016, France has the euro area's leading insurance market. Insurers are faced with two major challenges that influence their investment behaviour. First, the historically low interest rates are gradually diluting the financial return on their investments due to the reinvestment of liquidities in extremely low-yield bonds. This environment can encourage life and composite insurance undertakings to seek additional returns from alternative sources in order to guarantee satisfactory revaluation rates for their clients. Second, determining Solvency II capital requirements involves calculating economic losses based mainly on the market risk associated with the investments held. This encourages more active investment management. As this study points out, insurers are gradually adjusting the structure of their portfolios, as their investments are essentially made up of held-to-maturity redeemable securities. 2016 witnessed a lengthening of residual maturities of fixed-rate debt securities and increased efforts to diversify assets.
In France, as in Europe, the sectors that are most integrated in international production sharing in global value chains are also those that export the most.
Traditional indicators could have led us to wrongly conclude that house prices were persistently overvalued. However, new indicators, incorporating changes in the financial environment, show that house price tensions were in reality largely absorbed in 2016.
The financial sector is undergoing a digital revolution, symbolised by fintechs, but also and especially marked by the intensification of the use of technologies in customer relations and the management of established financial players. This article looks at the challenges of regulation and supervision related to this digital revolution.
French banks rank fourth worldwide in terms of international activity, with a strong geographical diversification. This diversification is mainly achieved though intra-group financing and the collection of deposits by a large network of local branches. The activity of French banks contributes positively to the balance of payments.
Tax hikes and/or public spending cuts: what is the role of tax compliance in the composition of fiscal consolidation episodes?
France has savings in abundance, but little of it goes towards long-term business financing – particularly equity financing. Real estate assets form a dominant presence in household wealth, with financial assets essentially made up of life insurance contracts and bank deposits. Fewer than 12% of households owned equities directly in 2015, down from 16.3% in 2004. This situation cannot be put down to irrational household behaviour. Rather, the explanations lie with inadequate albeit improving returns on equity investments, particularly in comparison with the US stock market, the small size of the French market, domestic levels of financial literacy and advice, which could be raised, and regulatory and tax incentives, which do little to support risk taking.
TAt the end of 2015, France’s national economic wealth was valued at EUR 13,585 billion, equivalent to 7.6 times the country’s net domestic product for the year. After falling by 1.8% in 2014, national wealth rose by 1.3% year-on-year, helped largely by the disappearance of the downward pressure from house prices.
The indicator of excess private sector credit – the “Basel gap” – amounted to 1.8 percentage points at end-2016. At two percentage points, the European Systemic Risk Board considers that financial stability could be at risk and recommends that national macroprudential authorities activate the countercyclical capital buffer. But what does this indicator mean exactly? How is it measured? Is it robust?
Given the profound changes in the financial sector brought about by the collapse of Lehman Brothers and the subsequent strengthening of regulations, it is vital to acquire greater knowledge in order to anticipate the possible response of financial markets to the new regulations or to monetary policy measures.
