2023-07-20 14:36:56
Posted Jul 20, 2023 at 1:56 p.m.Updated Jul 20, 2023 at 2:36 p.m.
The improvement was “ephemeral”, recognized the governor of the Banque de France François Villeroy de Galhau when presenting this Thursday the “annual report on the balance of payments in 2022”. Slightly in surplus in 2021, France’s current account balance – which includes the balance of trade in goods and services and money inflows and outflows – plunged back into the red last year with a “historically high” deficit of 53.9 billion euros, or 2% of GDP.
Banque de France experts associate this poor performance with the “exceptional deterioration” in the exchange of goods linked to the country’s energy bill. Under the effect of soaring gas and oil prices, this has increased by 70 billion euros, propelling the deficit in the trade balance of goods to a peak of 137.7 billion euros in 2022, after a “hole” of 67.4 billion in 2021. “The unavailability of the nuclear fleet has cost 16 billion euros to the balance of payments”, specified François Villeroy de Gal high.
Further deterioration in cost competitiveness
The cost competitiveness of the country, which has been recovering since 2010, has started to deteriorate again since 2019. “The deterioration in productivity is more significant in France than elsewhere”, underline the economists while specifying that “this movement is not linked to the evolution of remuneration but to that of employment which is very favorable”.
A l’inverse des biens, les échanges de services ont enregistré l’an dernier un excédent record de 52 milliards d’euros, soit presque deux fois plus qu’en 2019. Le surplus du tourisme a bondi de 4 milliards d’euros à 17,4 milliards, un niveau jamais atteint depuis 2014. Non seulement la clientèle internationale est revenue dans l’Hexagone, mais les Français ont aussi moins voyagé à l’étranger, ce qui a fait chuter leurs dépenses hors des frontières de 13 %. For their part, transport services generated a surplus of 21.6 billion thanks to sea freight, the surplus of which increased by a further 7.5 billion euros (to 29.4 billion).
“Spectacular success” of the Place de Paris
France also posted a surplus on financial services: it even fell from 8.8 billion euros to 10.4 billion. While this improvement reflects the increase in commissions on securities and foreign exchange transactions in 2022, it is also explained by the “spectacular success” of the Paris financial center since Brexit. “It has accelerated over the recent period and exceeds our expectations”, welcomed François Villeroy de Galhau.
Financial companies relocated from London to Paris thus contributed to the surplus of financial services to the tune of 1.5 billion euros last year. On the other hand, penalized by the rise in interest rates, income from investments fell from 54.5 billion to 46.6 billion.
Ultimately, France’s net external position improved by 143 billion euros last year due to “the fall in the market value of the debt”. At the end of the year, France posted a debtor position of 629 billion euros, equivalent to 23.8% of its GDP. “France’s financing needs resulted in net capital inflows of 57.7 billion euros,” specifies the monetary institution. Foreign investments in France amounted to 34.6 billion euros (+8 billion). Investments by France outside the borders reached 45.6 billion.
Marked by the shock wave of the war in Ukraine, 2022 should go down in history as a dark year. In its projections, the Banque de France expects an improvement in the balance of trade in goods and services. “The year 2023 should mark a recovery, with the reduction of the energy bill”, she writes. According to its experts, the deficit should return in the medium term “to around 2% of GDP against 3.2% in 2022”. “However, the improvement in the current account balance will be less,” they warn.
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