France and the Great Recession

David S. Park , Kathrine M. Hagen, Marque A. Jones, Nicholas J. Hosler

Government Background• Semi-Presidential Republic (democracy)

• Executive Branch - President - Chief of State, Cabinet of Ministers

• Legislative branch - Prime Minister - Head of State, National Assembly, Senate

• Judiciary - State Council, Constitutional Council

• President appoints Prime Minister• Prime Minister presents laws and policy changes - voted by Senate/Assembly

• In case of a tie Assembly vote is majority

• Prime Minister Appoints other ministers

Taxing and Spending

• Ministry of Finance and Public Accounts

• Prepares annual budget/taxes to present to parliament

• Ministry of Economy, Industry and Digital

• Responsible for forecasting/competition (works closely with above)

• Budget/Taxation voted on by legislative branch

• Voting held at annual meeting of French Parliament

• Presidential ordinance can force budget into effect after 70 days

Fiscal Policies• Tax structure similar to United States, some differences

• Higher individual maximum tax rate (41% in 2011, 45% in 2013)

• National sales tax (VAT)

• Social levies

• Property, excise, wealth taxes

• Spending focuses on French wellbeing• Social protection

• Health care

• Education

Photo source pkfaudit.fr

Revenue• Social security

contributions (37.17%)

• Goods and services (24.08%)

• Personal income and other gains (18.57%)

• Stable since 2000

Photo source OECD.org

Expenditures• General public

services (31.19%)

• Social protection (21.34%)

• Education (16.77%)

• Economic affairs (12.82%)

• Stable since 2007

• All as % of GDP

Photo source OECD.org

Before the Crisis• France had a small

deficit between 2000 and 2007

• -1.32% of GDP to -3.86%

• 2008 seemed stable as well at -3.18%

• 2009 saw a rise in the deficit

Photo source OECD.org

Economic Impacts

• GDP falls $0.01 million ($US) in 2008, climbs back

• Financial institution debt-to-equity rises

• Household spending doesn’t decrease, but savings increase sharply, debt

rises to 100%+ of net disposable income

• Unemployment rose from 6.5% to 9.2% between 2008 and 2010

• Average wages increased by about $2,000 US

• Decreases in some government spending, increases in public welfare

• Government deficit doubled as a percent of GDP

• Government debt climbs to over 100% of GDP between 2007 and 2011

• Tax revenue falls between 2008 and 2010, climbs to more than 2008 figure

by 2014

Macroeconomic effects

● Reverse Supply Side economics

● Very strong until 2008

● Severe credit crunch (like US)

Responses to the crisis

• How did the government respond to the crisis?

- Increase in government spending

- Introduced package of stimulus measures to accelerate planned public investment.

- Focused on infrastructure projects and investments

- Injected $15 billion in the French banking system.

- Remained a mixed economy of with a high level of public spending and taxation.

Works Cited

• Edminston, W. F., and Annie Dumenil. La France Contemporaine.5th ed. Boston: Cengage Learning, 2014 Print.• France Tax Guide 2013. Pannell Kerr Forster. 2013. Web. http://www.pkfaudit.fr/docs/PKF%20Tax%20Guide%20France.pdf

• "France - Unemployment Rate - Historical Data Graphs per Year." France - Unemployment Rate - Historical Data Graphs per Year. Web. 2 Dec. 2015. http://www.indexmundi.com/g/g.aspx?v=74&c=fr&l=en

• "French Financial Crisis ( 2008 - 2009 )." September 4, 2009. Accessed December 2, 2015. http://www.gsdrc.org/docs/open/hd584.pdf

• Government Expenditure on Education. The World Bank. 2015. Web. Data table. http://data.worldbank.org/indicator/SE.XPD.TOTL.GB.ZS/countries

• "International Financial Crisis - French Rescue Plan - President Sarkozy's Speech following Council of Ministers." La France Au Canada/France in Canada. Web. 2 Dec. 2015. http://www.ambafrance-ca.org/International-financial-crisis

• Jackson, James K. "The Financial Crisis: Impact on and Response by The European Union." Congressional Research Service (2009). Print.

Works Cited cont.• Organisation for Economic Co-operation and Development. OECD.org. 2015. Web.

• OECD (2015), Tax on goods and services (indicator). doi: 10.1787/40b85101-en• OECD (2015), Social security contributions (indicator). doi: 10.1787/3ebfe901-en• OECD (2015), Tax on personal income (indicator). doi: 10.1787/94af18d7-en• OECD (2015), Central government spending (indicator). doi: 10.1787/83a23f1b-en• OECD (2015), General government deficit (indicator). doi: 10.1787/77079edb-en• OECD (2015), Gross domestic product (GDP) (indicator). doi: 10.1787/dc2f7aec-en• OECD (2015), Financial corporations debt to equity ratio (indicator). doi: 10.1787/a3108a99-en• OECD (2015), Household spending (indicator). doi: 10.1787/b5f46047-en• https://stats.oecd.org/Index.aspx?DataSetCode=SOCX_AGG#

• The French Tax System. Ministère de l’economie des finances et de l’industrie. impots.gouv.fr. July 31, 2011. Web. http://www.impots.gouv.fr/portal/deploiement/p1/fichedescriptive_1006/fichedescriptive_1006.pdf

• "Welcome to the French Ministry for the Economy and Finance." Welcome to the French Ministry for the Economy and Finance. Service-Public.fr, n.d. Web. 28 Nov. 2015.

• "International Financial Crisis - French Rescue Plan - President Sarkozy's Speech following Council of Ministers." La France Au Canada/France in Canada. Web. 2 Dec. 2015. http://www.ambafrance-ca.org/International-financial-crisis