Depth report

　　

Paris seems to have something new. The speed of French high-speed rail construction in the past two years is obvious to all, and many places are keen to apply for high-speed rail projects in the hope that this investment can drive relevant employment and regional economies. Recently, France has opened two high-speed railways at the same time. It is reported that there are plans to build an express train connecting Charles De Gaulle Airport and the center of the French capital Paris. It will depart from Paris East Station and reach the Charles de Gaulle Airport Terminal 2 in only 20 minutes. This will really bring some improvement to the congested airport traffic.

    At the same time, the French property market has also seen a considerable increase. In the first quarter of this year, the average house price in Paris was nearly 9,000 euros, an increase of about 8% year-on-year; the supply of new housing increased significantly. A variety of high-end residences have also been rebuilt in the empty factory buildings, showing the current real estate investment to the economy. Of course, the house prices in Paris are not expensive. The house price of 100,000 yuan per square meter in the best locations is still competitive compared to the first-tier cities in China that have experienced the crazy increase in the past two years.

    Although France is the core country of the Eurozone and the second largest economy in Europe, its economic performance in recent years has been unsatisfactory. Its economic growth lags behind the EU average. For example, France’s economic growth rate last year was 1.1%, while the Eurozone’s growth rate was 1.1%. The speed reached 1.7%. The unemployment rate in France was once higher than the Eurozone average, reaching double digits. However, this year, thanks to increased consumer spending and entrepreneurial investment enthusiasm, and improved foreign trade sentiment, the French economy has improved this year, and the unemployment rate has dropped to 9.3%, a five-year low. The IMF has raised France’s economic growth forecast three times this year. French economic growth reached 1.5% and 1.7% in the past two years, which also reflects the affirmation of its economic growth.

    The French economic prosperity index rose to 109.5 in June, a six-year high. It fell slightly in July, but it was also the second highest since July 2011; consumer confidence rebounded sharply, and the consumer confidence index rose to the highest level in a decade in June. In July, it dropped unexpectedly, but it was also at the second highest level in the past ten years. In terms of investment, infrastructure investment and real estate investment have improved. France is also attracting more foreign investment projects. According to the French Business and Investment Agency, France attracted 1,117 foreign investment projects last year. Investment projects increased by 16% year-on-year, making it one of the countries that attract the most foreign investment projects in Europe.

Macron's expectations

    It is not difficult to find that many economic data in France have increased significantly since June, which is largely related to the fact that the French political black swan incident has not materialized, and the market optimism brought by Macron's election as the new French president is closely related to the market optimism. The French investors and entrepreneurs I met during this trip have great expectations for Macron’s reforms. Compared with the former French President Hollande who is not friendly to the financial industry, Macron is reducing taxes, The performance of labor reform and infrastructure construction has significantly improved, and even a 180-degree change in attitude has occurred.

    France hopes to become a potential beneficiary after Brexit and take over some of the functions of the European financial center. This is very different from Hollande's previous large tax burden on high-income people. The financial industry is generally complaining and planning to emigrate. France once imposed a personal income tax of up to 75% on high-income earners earning more than 1 million euros. Under the high taxes, many employees in the financial industry have already left Paris; the former French national treasure actor Depardi also gave up his French citizenship in 2012, joined Russia, and accepted a Russian passport issued by Putin himself; French football clubs in recent years Also because the tax burden is too high, the lack of new gravity leads to a large number of star outflows.

    France’s previous high tax burden policy has been criticized by many investors as a policy of raising lazy people. In fact, when I was working at the European Central Bank in Frankfurt earlier, I knew something about the casual and comfortable attitude of the French. At that time, the work treatment of the European Central Bank was better than that of the Bank of France, and there was also a tax exemption policy. However, colleagues from France often gave up their jobs at the European Central Bank and returned to France before they worked. In their view, life in Paris is much more colorful than in Frankfurt. Compared to the boring life in Frankfurt, Paris’s beautiful environment, developed downtown, and the company of friends and family are more attractive to them. If France's stringent taxation system can be improved in the future, coupled with the external effects of Brexit, I believe that more and more French elites will reconsider working in France.

    In addition, labor unions at all levels in France have always maintained a huge influence in the labor market. The 3,000-page labor law is strict, the labor market is rigid, and the high labor cost and insufficient mobility have contributed to the high unemployment rate in France to a certain extent. . Macron intends to make the French labor market more flexible, hoping to decentralize collective bargaining from the national level to the enterprise level, allowing trade unions to establish business-based trade relations. The current corporate tax rate in France is 33.3%, which is much higher than 20% in London and 20.5% in Frankfurt. In order to reduce corporate tax burden and enhance corporate competitiveness, France intends to reduce this tax rate to 25% by 2020.

    In addition, Macron intends to increase the European Union's global influence, which is a huge blow to the European suspicion that the market has previously worried about. Nowadays, the political demands of Germany and France are closer. Because the Eurozone is a currency union, not a fiscal union, the fundamental contradiction between the two core countries has also communicated with each other, hoping that the core institutions of the Eurozone can be established in the future. , The establishment of the euro zone budget and a super finance minister of the euro zone. It can be said that after reducing the bondage of the traditional EU dissident Britain, France is expected to exert greater influence within the EU.

    In short, although the current French economy is not as robust as Germany, and it is not as surprising as Spain's rapid growth, and the unemployment rate is also at a high level, I can still see some new things during my trip to France. Macron's taxation and labor market reforms are all directed at the key points. If they can be implemented, it will definitely bring about great changes to the French economic prospects.

    Of course, just as all reform areas have to face challenges, French reform will also touch the cheese of interest groups from all walks of life. In particular, the reform of the labor force may trigger a wave of strikes. How to remove obstacles in the future and implement the reforms effectively still needs to be done. Observed.