France: country overview

08 June 2012
by Ina Dimireva -- last modified 08 June 2012

France was transitioning from an economy that has featured extensive government ownership and intervention to one that relies more on market mechanisms but is in the midst of a euro-zone crisis

French flag

Year of EU entry: Founding member (1952)

Member of Schengen area: Yes

Political system: Republic

Capital city: Paris

Total area: 550 000 km²

Population: 64.3 million

Currency: euro

Listen to the official EU language: French

Map of France

Country overview

France is the largest country in the EU, stretching from the North Sea to the Mediterranean. The landscape is diverse, with mountains in the east and south, including the Alpine peak of Mont Blanc (4 810 m) which is western Europe's highest point. Lowland France consists of four river basins, the Seine in the north, the Loire and the Garonne flowing westwards and the Rhône, which flows from Lake Geneva to the Mediterranean Sea.

The president of the Republic has an important political role. He chairs the meetings of the Council of Ministers (cabinet), and retains overall responsibility in key areas of foreign affairs and defence. The day-to-day running of the country is in the hands of the prime minister. The president is elected by direct popular vote for a period of five years. The parliament consists of a National Assembly, directly elected every five years, and a Senate whose members are chosen by an electoral college.

France has an advanced industrial economy and an efficient farm sector. Main activities include automobile manufacture, aerospace, information technology, electronics, chemicals and pharmaceuticals and fashion.

Economy overview

The government has partially or fully privatized many large companies, banks, and insurers, and has ceded stakes in such leading firms as Air France, France Telecom, Renault, and Thales. It maintains a strong presence in some sectors, particularly power, public transport, and defense industries. With at least 75 million foreign tourists per year, France is the most visited country in the world and maintains the third largest income in the world from tourism. France's leaders remain committed to a capitalism in which they maintain social equity by means of laws, tax policies, and social spending that reduce income disparity and the impact of free markets on public health and welfare. France's real GDP contracted 2.6% in 2009, but recovered somewhat in 2010 and 2011. The unemployment rate increased from 7.4% in 2008 to 9.3% in 2010 and 9.1% in 2011. Lower-than-expected growth and increased unemployment have cut government revenues and increased borrowing costs, contributing to a deterioration of France's public finances.

The government budget deficit rose sharply from 3.4% of GDP in 2008 to 7.5% of GDP in 2009 before improving to 5.8% of GDP in 2011, while France's public debt rose from 68% of GDP to 86% over the same period. Under President Sarkozy, Paris implemented austerity measures that eliminated tax credits and froze most government spending in an effort to bring the budget deficit under the 3% euro-zone ceiling by 2013 and to highlight France's commitment to fiscal discipline at a time of intense financial market scrutiny of euro-zone debt levels. Socialist Francois Hollande won the May 2012 presidential election, after advocating pro-growth economic policies, as well as measures such as forcing banks to separate their traditional deposit taking and lending activities from more speculative businesses, increasing taxes on bank profits, introducing a new top bracket on income taxes for people earning over €1 million ($1.3 million) a year, and hiring an additional 60,000 civil servants during his five-year term of office.