France Economic Policy Roundup 22-30 June 2023

Macroeconomic outlook:

Business climate: In June 2023, the business climate in France is stable. At 100, the indicator that synthesizes it, calculated from the responses of business managers from the main market sectors, remains at its long-term level. This stability is the result of mixed movements in the different sectors: the business situation has improved a little in manufacturing industry and in retail trade compared to May, but it has kept deteriorating in building construction, while it is stable in services. In manufacturing industry, the business climate has somewhat rebounded and has returned just above its long-term average, help up mostly by the balances of opinion related to production and global order books. In retail trade, the business climate has also improved, mainly thanks to the rebound in the balance of opinion on ordering intentions. In services, the business climate indicator is stable, a little above its long-term average. Finally, in building construction, the business climate has darkened again, the balances of opinion related to the activity declining again.

Business Births: In May 2023, the number of business births for all enterprises fell back month on month (‑2.8% after +4.3% in April, seasonally and working-day adjusted). This decline is due to both micro-entrepreneurs' registrations (‑4.1% after +5.7%) and conventional business births (‑0.5% after +2.1%). The raw number of business births over the last twelve months (June 2022 to May 2023) increased by 1.3% compared to that of the same period one year earlier (June 2021 to May 2022). In May 2023, seasonally and working-day adjusted, business births fell back over a month in most sectors. They fell sharply in education, human health and social work activities (‑8.6% after +8.7%), as well as in business support activities (‑2.7% after +3.2%) and household services (‑5.8% after +3.8%). However, they rose again in information and communication (+2.4% after +5.1%).

Minister of Economy warns that inflation in France is not expected return to the "very low" pre-pandemic levels

Asked about rising prices on Monday 26th of June on Radio J, Minister of Economy, Bruno Le Maire, warned that France would not return to the "very low" or even zero inflation rates that prevailed before the pandemic. "Will we come out of this crisis with inflation levels like those we had before the Covid-19 crisis? The answer is no", said the Minister.

The reason given for the non-return to zero inflation is for "two very structural reasons", explained Le Maire. "The first is that we have decided to put the value chains back in France and that it is more expensive to produce electric batteries in France than to import them from China, so this has a structurally inflationary effect", he detailed. "The second reason is green transition: it has a cost and will weigh on prices in the years to come", he noted. As a result, prices are unlikely to stabilise, with inflation "around 0%, as we have seen in previous years", he warned. "We have seen much lower rates in years gone by. I don't think we're going back to those very low rates."

However, Le Maire also welcomed the fact that the situation was improving. "Inflation is beginning to recede after months of fighting price rises", which exceeded 6% year-on-year at the start of the year. "We are in the process of winning this long and difficult battle. The consumer price index rose by 5.1% year-on-year in May, according to figures from INSEE, which is due to publish a first estimate of inflation for June in the coming days, as reports Challenges.

Backlash from French medical professionals on the list of 450 medicines selected to be produced in France

President Emmanuel Macron, Minister of Health François Braun and Minister of Industry Roland Lescure recently announced that "eight major relocation projects will be launched in the coming weeks, representing a total investment of more than €160 million, supported by the State". They also presented a list of 450 "essential medicines" that the government is committed to ensuring are available. This list was drawn up by "learned societies and the Ministry of Health and Prevention", according to the Ministry, as reports le Sud-Ouest.

However, this list of 450 “essential medicines” to be fully or partially produced in France in the fight against shortages, presented last week by the French government is attracting criticism, as reports Le Journal du Dimanche. Medical associations and societies that were not consulted, such as the French Society of Pharmacology and Therapeutics, question the "medical and scientific rationale behind the selection process, insofar as many essential drugs are not included and the choice of certain drugs appears highly questionable", as reports le Sud-Ouest. Among the major criticisms is “the inclusion of medicines deemed to be of no major medical interest by the French National Authority for Health (HAS) which was not consulted, and medicines that have not been prescribed to patients for some time”, as reports Le Monde. 

The independent medical journal Prescrire came out against the list which they label as "unsubstantiated" and "drawn up without rigorous methodology". They note their surprise that "certain first-choice drugs for common ailments" were not on the list, such as "non-steroidal anti-inflammatory drugs, such as ibuprofen and naproxen, used in a variety of painful situations", "most inhaled drugs used in asthma or chronic obstructive pulmonary disease (COPD)", "antivirals used in HIV infection and hepatitis B or C" and "all drugs used in common skin disorders". Another omission they note is that the list not including any drugs used for contraception other than in emergency situations.

"There was a desire to move away from prescribing physicians. In itself, this isn't necessarily a bad thing, and it may explain why the French Society of Pharmacology and Therapeutics (SFPT) wasn't consulted, but in certain fields, prescriptions are sometimes not totally in line with the most recent recommendations, and this can lead to errors or a few incongruities", stressed Dominique Deplanque, President of the SFPT. An example is the presence of fluindione, an anticoagulant which has been banned from all new prescriptions since 2018, under recommendation from the French National Agency for the Safety of Medicines (ANSM). The agency reports to not have been contacted either for their input on the critical medicines list. One psychiatrist and epidemiologist at the University of Bordeaux-II, highlights that the issue is not that some medicines are missing, but that some of them are “never prescribed" such as the antidepressants trazodone and bupropion, as reports Le Monde.

However, Pierre Albaladejo, President of the French Society of Anaesthesia and Intensive Care, revealed to Le Monde that the list had been drawn up on the basis of the experience of these two medical specialities which are regularly face supply problems and shortages. In 2018 and 2020, the society gave the French National Agency for the Safety of Medicines a list of essential medicines for anaesthesia and for intensive care. "For each medicine, we ask whether it is frequently used and, if it is not, is it serious? The same goes for medicines that are used infrequently but are essential for the health of certain patients", he explained. Faced with the difficulty of rapidly obtaining a consensus from all the medical associations, it was decided to start with the organs (heart, kidney, brain, etc.) and to add other specialities (infectiology, endocrinology, etc.) as well as the French Society of Clinical Pharmacy. In all, 400 experts from eight medical associations worked for several months, reports Le Monde. 

The Ministry points out that this list is evolving. A second version should be published in a few months' time. Jérôme Martin, co-founder of the French Observatory for Transparency in Drug Policies, believes however that list will not prevent shortages. "We need to tackle the structural causes and establish local production, at least in part public, of the active ingredients of certain medicines", he defends, pointing out that, since Macron's first term in office, the number of reports of medicines in short supply has increased six fold, from 538 to more than 3,000.

France chosen to host latest-generation European supercomputer

France has been selected by the European High Performance Computing Joint Undertaking (EuroHPC JU), with the Jules Verne consortium to host and operate the second EuroHPC exascale supercomputer. Baptised ‘Jules Verne’ after the 19th century French sciences fiction novelist, the super computer will be installed in the Paris Region, at the TGCC computing centre in the Alternative Energies and Atomic Energy Commission, CEA, in Bruyères-le-Châtel (Essonne). This latest-generation Exascale supercomputer is capable of performing more than a billion calculations per second, a thousand times faster than the Jean-Zay supercomputer, currently the most powerful in France. Representing a significant milestone for Europe,  the super computer will be accessible to scientists from 2025, the European Commission has announced.

The use of supercomputers is crucial for science, particularly in the field of artificial intelligence, in order to process massive data in competitive timescales. Such powerful super computer models are still very rare in the world, with the first starting up in the United States in 2022. Just as the existing EuroHPC supercomputers, this new system in France will be available to serve a wide range of European users, no matter where in Europe they are located, in the scientific community, as well as industry, and the public sector. It is expected to have a major impact on European scientific excellence by supporting the development of high-precision models of complex systems and helping to solve key questions regarding, for example, climate change and prediction of extreme weather events, innovative design and personalised medicine, the development of materials and new energies, digital twins for industry or use the artificial intelligence at scale.

The Jules Verne super computer is owned by the EuroHPC European Joint Undertaking, a legal and funding entity created in 2018 to enable the European Union and EuroHPC participating countries to coordinate their efforts and pool their resources with the objective of making Europe a world leader in supercomputing. With a total budget of around 540 million euros, the super computer will be co-funded up to 50% by the EuroHPC JU, with budget stemming from the Digital Europe Programme (DEP), with the rest of the funding coming from contributions from France and the Netherlands, who will be research partners on the project. To date the EuroHPC JU has already procured eight supercomputers, located across Europe, in Finland, Italy, Slovenia, Luxembourg, Bulgaria, Czechia, Spain and in Portugal, and the construction of additional two supercomputers in Germany and in Greece.

Sophie Carey

Embassy Paris