COMMISSION STAFF WORKING DOCUMENT Assessment of the 2012 national reform programme and stability programme for FRANCE Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on France’s 2012 national reform programme and delivering a Council Opinion on France’s updated stability programme for 2012-2016
Date: 2012-05-30
Institutions: European Commission
Subjects: France, budgetary equilibrium, dismissal, electricity supply, liberalisation of the market, public debt, retirement conditions, tax reform, transport market

EUROPEAN COMMISSION 

Brussels, 30.5.2012  
SWD(2012) 313 final 

COMMISSION STAFF WORKING DOCUMENT 

Assessment of the 2012 national reform programme and stability programme for  
FRANCE 

Accompanying the document 

Recommendation for a  

COUNCIL RECOMMENDATION 

on France’s 2012 national reform programme and delivering a Council Opinion on 
France’s updated stability programme for 2012-2016 

{COM(2012) 313 final} 

EN 

   EN 

 
 
 
 
  
 
 
 
CONTENTS 

EXECUTIVE SUMMARY................................................................................................. 3 

1. 

INTRODUCTION....................................................................................................... 4 

2.  ECONOMIC DEVELOPMENTS AND CHALLENGES .......................................... 5 

2.1.  Recent economic developments and outlook .................................................... 5 

2.2.  Challenges ......................................................................................................... 6 

3.  ASSESSMENT OF POLICY AGENDA .................................................................... 8 

3.1.  Fiscal policy and taxation.................................................................................. 8 

3.2.  Financial sector ............................................................................................... 16 

3.3.  Labour market, education and social policy.................................................... 17 

3.4.  Structural measures promoting growth and competitiveness.......................... 22 

3.5.  Modernisation of public administration .......................................................... 25 

4.  OVERVIEW TABLE................................................................................................ 28 

5.  ANNEX..................................................................................................................... 34 

2

 
 
 
Executive summary 

In  2012,  France's  economic  activity  is  expected  to  grow  by  0.5%,  before  regaining 
momentum in 2013 to reach 1.3%. Unemployment is foreseen to increase further to 10.2%.  

In the last two years, France overachieved its deficit targets but the public deficit remains too 
high  and  debt  is  growing.  The  development  of  the  minimum  wage  has  been  contained  and 
measures to promote apprenticeship and help older people find a job have been undertaken. 
Measures were taken to reduce tax expenditures and to lower labour taxation.  

Budgetary  consolidation  remains  an  important  policy  challenge  in  France.  While  this  year's 
deficit  target  appears  attainable,  the  distance  to the 3%  of GDP  threshold to be achieved in 
2013  remains  significant.  The  tax  system  can  be  made  more  conducive  to  sustainable 
economic  growth  and  competitiveness.  The  long-term  sustainability  and  adequacy  of  the 
pension system requires careful monitoring. The level of segmentation of the labour market 
remains high and young people are particularly affected.  There are risks related to the long-
term impact of unemployment on human capital, given that participation in life-long learning 
remains  low  and  the  capacity  of  the  public  employment  service  is  strained.  The 
competitiveness  of  French  businesses  remains  a  significant  challenge,  and  competition, 
particularly in the retail sector and in the network industries, is sub-optimal. 

3

 
 
 
 
Introduction 

1. 
In June 2011, the Commission proposed five country specific recommendations1 (CSRs) for 
economic and structural reform policies for France. In July 2011, the Council of the European 
Union adopted these recommendations, which focused on public finances, labour market and 
tax policies and on the competition and regulatory framework.  

In  November  2011,  the  Commission  published  its  Annual  Growth  Survey  for  20122  (AGS 
2012)  presenting  the  basis  for  building  the  necessary  common  understanding  about  the 
priorities for action at national and EU level in 2012. It focused on five priorities – ensuring 
growth-friendly  fiscal  consolidation,  restoring  normal  lending  to  the  economy,  promoting 
growth  and  competitiveness,  tackling  unemployment  and  social  consequences  of  the  crisis, 
and modernising public administration – and encouraged Member States to implement them 
in the 2012 European Semester. 

Against  this  background,  France  presented  its  national  reform  programme,  prepared  in 
consultation with the social partners and local authorities, and its stability programme in April 
and May 2012, respectively. These programmes provide details on progress made since July 
2011 and plans going forward.  

The national reform programme and the stability programme were adopted by the Council of 
Ministers  on 11  April  2012.  These  documents  were  also  submitted  to  the  Parliament. 
However, due to the parliamentary recess before the election, the text could not be approved 
in  plenary  session.  The  stability  programme  was  reviewed  by  the  finance  committees 
(Commission des finances) of both the Assemblée nationale and the Sénat on 11 April 2012.  

Overall assessment 

This  Staff  Working  Document  assesses  the  state  of  implementation  of  the  2011  country-
specific  recommendations  and  the  Annual  Growth  Survey  for  2012  in  France,  identifies 
current  policy  challenges  and,  in  this  light,  examines  the  policy  plans  of  the  previous 
government.  

Concerning  public  finances,  while  the  deficit  outcome  for  2011  turned  out  better  than 
targeted,  the  consolidation  strategy  remains  to  be  further  specified  and  correcting  the 
excessive  deficit  by  2013  may  require  additional  efforts.  Reviewing  the  long-term 
sustainability of the pension system also remains a challenge. 

Regarding  employment,  the  related  country-specific  recommendations  have  been  partly 
implemented.  Despite  efforts  to  improve  the  flexibility  of  employment  contracts  for  firms 
encountering  temporary  economic  difficulties,  limited  reforms  have  been  carried  out  to 
address  labour  market  segmentation.  The  development  of  the  minimum  wage  has  been 
contained  and  the  distance  to  the  average  wage  has  increased,  reducing  distortions  to  the 
labour  market.  Hence,  the  related  country-specific  recommendation  has  been  partly 
implemented. 

1   SEC(2011) 806 final of 7 June 2011. 
2   COM(2011) 815 final of 23 November 2011. 

4

 
 
                                                 
Specific measures have been taken to promote apprenticeships and further help older people 
unemployed  find  a  job.  However,  the  limited  resources  available  to  the  public  employment 
service  undermine  the  credibility  of  the  commitments  to  address  long-term  unemployment 
better.  Country-specific  recommendation  3,  which  focused  on  return  to  employment,  has 
therefore been partly implemented.  

In  the  field  of  taxation,  relevant  measures  have  been  taken  to  reduce  tax  expenditures  and 
labour taxation although some of them lack ambition. The efficiency of some reduced rates of 
VAT  remains  questionable.  Nor  has  a  start  been  made  on  developing  environmentally 
friendly taxation. Country-specific recommendation 4 has been partly implemented.  

Finally,  reforms  have  been  undertaken  to  simplify  the  business  environment  and  remove 
restrictions  on  some  regulated  trades  and  professions.  However,  challenges  remain  that  are 
holding back France's competitiveness. In particular, there is still scope for further improving 
the  competition  and  regulatory  environment  for  services  and  the  retail  sector  and  for 
additional reforms to bring effective competition to the network industries. 

The national reform programme mainly focuses on reforms already adopted while the stability 
programme  includes  some  more  forward-looking  elements.  While  some  reforms  have  been 
made recently and have yet to bear their fruit, the measures presented in the national reform 
programme  and  the  stability  programme  will  generally  not  be  sufficient  to  tackle  the 
remaining challenges.  

2.  Economic developments and challenges 

2.1.  Recent economic developments and outlook 

Recent economic developments 

In 2011, as the government recovery plans were phased out, GDP growth in France stabilised 
on  an  annual  basis  at  1.7%,  after  1.5%  in  2010,  with  an  uneven  quarterly  growth  pattern. 
After 0.9% growth in the first quarter, GDP stalled in the second quarter; it grew by 0.3% and 
then by 0.1% in  the last two quarters of the year. Despite the still positive figures for GDP 
growth  in  the  last  two  quarters,  economic  sentiment  deteriorated  rapidly.  Consumer  and 
business sentiment indicators plunged below their long-term average on the back of increased 
uncertainties, in particular about the financial sector, and rising unemployment.  

The  relatively  weak  economic  growth  and  the  deteriorating  business  climate  resulted  in  a 
sharp increase in unemployment in the second half of 2011. The number of unemployed grew 
by  2.7%  year-on-year  in  December  2011  and  the  unemployment  rate  reached  9.9%  in 
December  2011,  close  to  its  peak  level  of  2009.3  Older  workers  were  particularly  affected, 
especially due to the phasing-out of job-search exemption measures; the number of registered 
unemployed people over 50 grew by 15.6% year-on-year in December.  

Inflation  remained  at  a  relatively  high  level  despite  sluggish  economic  growth.  The 
harmonised  index  of  consumer  prices  increased  by  2.3%  on  an  annual  basis  in  2011.  The 
acceleration  of  inflation  in  2011  was  driven  in  particular  by  the  high  energy  prices,  which 
rose by 12%. 

3   Source: Eurostat. 

5

 
 
                                                 
Economic outlook 

In  its  spring  forecast  published  on  11  May,  the  Commission  services  considered  that 
economic  growth  would  slow  down  again  in  2012  compared  with  2011.  Decreasing 
investment, which compensated for the increase seen in the fourth quarter of 2011, together 
with  sluggish  household  consumption,  brought  GDP  growth  to  a  halt  in  the  first  quarter  of 
2012. The situation is expected to stabilise in the second quarter although growth is forecast 
to continue to stall. The gradual pick-up of domestic consumption over the second half of the 
year is then expected to bring GDP growth to 0.5% in 2012 overall. This figure is very close 
to the one that was adopted by the French authorities in the stability programme. In 2013, the 
economic  recovery  is  expected  to  gain  momentum,  bringing  GDP  growth  to  1.3%.  This  is 
somewhat lower than the official forecast of 1.75%.  

The rise in oil prices, which contributed to the high level of inflation in 2011, is expected to 
ease  somewhat  in  2012.  The  impact  of  the  recent  increase  in  energy  prices  would  however 
mean that the rise in the harmonised index of consumer prices would still be 2.1% in 2012, 
close  to  its  2011  level.  The  downward  pressure on wages and production prices linked to a 
sluggish  labour  market  is  set  to  compensate  for  the  increase  in  the  reduced  VAT  rate  from 
5.5%  to  7%  on  specific  products  and  services.  The  decision  to  raise  the  standard  VAT  rate 
from  19.6%  to  21.2%  in  October  2012  is  not  expected  to  have  a  significant  impact  on 
inflation for the year.  

2.2.  Challenges 

Budgetary consolidation remains one of the main policy challenges in France. The deficit for 
2011 was lower than initially expected. Although this year's target of 4.4% of GDP appears 
achievable, the distance to the 3% of GDP threshold remains significant. In this context, and 
also  given  the  tensions  on  the  sovereign  debts,  the  French  authorities  need  to  specify  the 
measures necessary to ensure that the excessive deficit is corrected by 2013 as recommended 
by  the  Council.  It  is  important  that  the  increase  in  public  spending  remain  below  potential 
GDP growth, with special attention to the trend in social and local government spending. In 
terms  of  fiscal  revenue,  the  number  and  cost  of  tax  expenditures  is  to  be  further  reduced. 
Moreover, despite measures to reduce taxes on labour, further efforts are needed to develop a 
tax  system  that  is  more  conducive  to  sustainable  economic  growth.  The  long-term 
sustainability of the pension system also remains a challenge despite the 2010 pension reform 
which  is  set  to  balance  the  system  by  2018,  not  least  through  an  increase  in  the  statutory 
retirement age.  

The expected slowdown of economic growth in 2012 requires renewed resolve to address the 
situation  in  the  labour  market.  According  to  the  Commission  spring  2012  forecast,  the 
unemployment  rate  in  France  will  rise  above  10%  in  2012  and  2013.  The  high  degree  of 
segmentation of the French labour market remains one of the main issues. The likelihood of 
moving from a fixed-term to a permanent contract decreased dramatically between 1995-1996 
and 2010, to levels that are well below the average in the EU. While structural factors, and in 
particular  the  employment  protection  legislation,  explain  this  phenomenon,  the  crisis  has 
exacerbated  employment  risks  for  outsiders  such  as  young  people,  low-skilled  and  non-EU 
nationals.  More  specifically,  the  situation  of  young  people  is  still  a  concern  as  their 
unemployment  rate  remains  at  a  high  level  despite  the  measures  taken  by  the  national 
authorities and has stood above the EU average since 2003. Particularly worrying is the rising 
average duration of registration of jobseekers with the public employment service, a proxy for 

6

 
 
the  duration  of  unemployment  spells,  from  230  to  252  days  between  December  2010  and 
2011. The participation rate in lifelong learning remaining low and the capacity of the public 
employment service being under strain, there are risks that unemployment could have a long-
term impact on human capital.  

France's  export  performance  remains  a  significant  challenge.  The  export  market  shares  of 
France have eroded significantly in the last few years due to both cost and non-cost factors. 
Since 2000, nominal wages have increased faster than productivity, driving unit labour cost 
up.  The  strong  increase  in  unit  labour  cost  has  resulted  in  a  deterioration  of  cost 
competitiveness  and  led  exporting  companies  to  squeeze  margins.  In  terms  of  non-cost 
competitiveness,  in  spite  of  a  slight  increase  since  2007,  business  R&D  intensity  in  France 
still  appears  relatively  low  in  comparison  with  other  advanced  industrialised  countries,  due 
notably to the modest share of high-tech manufacturing and to the insufficient engagement of 
French  mid-tier  enterprises4  in  research  and  innovation.  The  low  profitability  of  French 
companies  limits  their  investment  capacity  and  may  accentuate  the  deficit  in  non-price 
competitiveness in the long term. Efforts are also needed to ensure that the general business 
environment  supports  healthy  competition  and  innovation  as,  in  certain  areas,  the  overall 
regulatory framework and the burden of regulation remain a constraint for the development of 
firms.  

In specific sectors, additional efforts could be made to foster competition. In the retail sector, 
the issue of limitations on below-cost sales by distributors needs to be evaluated (subject to 
compliance with competition law, in particular regarding predatory pricing) so that consumers 
can  benefit  from  lower  prices.  Consumers  would  also  profit  from  other  competition-
enhancing  measures  in  this  highly  concentrated  sector,  such  as  lifting  or  reviewing  spatial 
planning restrictions and speeding up procedures for setting up new distribution outlets. There 
is significant scope for reviewing more systematically the remaining restrictions on regulated 
professions in a number of sectors and their necessity and proportionality. 

Besides  the  retail  sector  and  regulated  professions,  there  is  also  room  for  improving 
competition in other key sectors. In particular, in some network industries, although specific 
regulations have been enacted, the liberalisation process has delivered mixed results so far. In 
the electricity sector, the level of concentration is among the highest in the EU. Moreover, the 
impact  of  the  on-going  liberalisation  on  households and  SMEs  has remained limited. In the 
rail transport sector, the French market remains one of the least open in the EU. New entrants 
are  still  very  limited  in  both  goods  and  passenger  transport.  France  is  underperforming  on 
railway freight transport and logistics. Finally, it should be noted that French ports are lagging 
behind in terms of performance, reliability and connections with the hinterland. 

Summary of the results of the in-depth review under the macroeconomic imbalances procedure 

On 14 February 2012, the European Commission presented its first Alert Mechanism Report 
(AMR),  prepared  in  accordance  with  Regulation  No.  1176/2011  on  the  prevention  and 
correction  of  macroeconomic  imbalances.  The  role  of  the  AMR  is  to  serve  as  an  initial 
screening  device  to  identify  those  Member  States  where  developments  warrant  further  in-
depth analysis to determine whether imbalances exist or risk emerging.  

4   Entreprise  de  taille  intermédiaire,  250-5 000  employees.  This  category  of  enterprises  was  introduced  in 

France in the Loi de modernisation de l'économie (2008). 

7

 
 
                                                 
For France, an economic reading of the indicators shows that the main challenges relate to the 
external sector. France's share of world exports decreased by 19.4% between 2005 and 2010, 
much  above  the  6%  threshold  set  in  the  AMR.  This  puts  France  among  the  EU  countries 
where the export market share has decreased the most, just behind the UK (-24%) and Greece 
(-20%) and on a par with Cyprus (-19%). On the internal side, the high level of French public 
debt stood at 82% of GDP in 2010, well above the 60% threshold.  

Both  cost  and  non-price  factors  have  played  a  role  in  the  deterioration  of  France's  export 
performance. While product and geographical market orientation seem to have had a negative 
impact,  most  of  the  deterioration  comes  from  lower  performance.  The  relatively  rapid 
increase  in  nominal  wages  in  France  over  the  last  decade  has  resulted  in  lower  cost 
competitiveness. However, most of the development in export market shares is explained by 
non-price competitiveness. Strong linkages exist between cost and non-price competitiveness 
due to the downward pressure on margins, and hence on investment, that high costs exert. In 
addition, the insufficient innovativeness of French firms and the limited number of exporting 
firms are among the factors that explain the deterioration of France's export performance.  

The  French  authorities  have  taken  measures  to  limit  cost  development  and  strengthen  non-
price competitiveness. Measures have been taken to limit the rise in the minimum wage and 
to  lower  taxes  on  labour.  In  addition,  some  reforms  have  been  implemented  to  strengthen 
non-price competitiveness. In particular, the tax credit on research expenditure was broadened 
to SMEs in 2008 and a set of clusters, known as pôles de compétitivité, have been developed 
to  foster  linkages  between  public  and  private  research.  As  these  measures  have  been  taken 
fairly recently, no comprehensive assessment of their effectiveness is available yet, although 
formal reviews are planned. 

The high level of public debt poses a threat to the sustainability of public finances, and the 
recent  rise  in  bond  spreads  suggests  that  markets  are  concerned  about  the  country's  fiscal 
position.  Rising  public  debt  reduces  the  space  to  tackle  future  shocks  and  can  crowd  out 
private  investment,  thus  lowering  growth  prospects.  It  inevitably  implies  high  interest 
payments, which either go to the detriment of more productive growth-enhancing expenditure 
or need to be financed by higher revenue while the tax burden is already high in France. 

3.  Assessment of policy agenda 

3.1.  Fiscal policy and taxation 

Budgetary developments and debt dynamics 

The main goal of the 2012 stability programme is to achieve the medium-term objective, i.e. a 
balanced budget in structural terms, as in last year's programme. The target year for reaching 
the  medium-term  objective  is  2015,  which  was  neither  covered  by  nor  mentioned  in  the 
previous  stability  programme.  However,  based  on  the  recalculated  structural  balance5,  the 
medium-term objective will not be achieved until 2016. The adjustment path over 2012-2016 
aims first to bring the deficit back to the reference value of 3% of GDP by 2013, the revised 

5   Cyclically adjusted balance net of one-off and temporary measures, recalculated by the Commission on the 

basis of the information provided in the programme, using the commonly agreed methodology. 

8

 
 
 
                                                 
deadline  set  by  the  Council  under  the  excessive deficit procedure  in 2009 (see Box 1). The 
(recalculated)  structural  balance  is  projected  to  improve  from  a  deficit  of  4.1%  of  GDP  in 
2011 to a surplus of 0.2% in 2016. 

Box 1. Excessive deficit procedure for France 

On 27 April 2009, the Council decided that an excessive deficit existed in France. The most 
recent Council Recommendation under Article 126(7) of the Treaty on the Functioning of the 
European Union was adopted on 2 December 2009. The Council recommended that France's 
authorities should put an end to the present excessive deficit situation by 2013.  

The  French  authorities  should  bring  the  general  government  deficit  below  3%  of  GDP  in  a 
credible and sustainable manner by taking action in a medium-term framework. Specifically, 
to  this  end,  the  French  authorities  should:  (a)  implement  the  deficit-reducing  measures  in 
2010  as  planned  in  the  government  proposal  for  the  budget  law  for  2010  while  avoiding  a 
further deterioration of public finances, and implement and strengthen the fiscal effort from 
2011  onwards  above  the  consolidation  measures  already  planned;  (b)  ensure  an  average 
annual  fiscal  effort  of  above  1%  of  GDP  over  the  period  2010-2013,  which  should  also 
contribute  to  bringing  the  government  gross  debt  ratio  back  on  a  declining  path  that 
approaches  the  reference  value  at  a  satisfactory  pace  by  restoring  an  adequate  level  of  the 
primary surplus; (c) specify the measures that are necessary to achieve the correction of the 
excessive deficit by 2013, cyclical conditions permitting, and accelerate the reduction of the 
deficit if economic or budgetary conditions turn out better than currently expected. 

An  overview  of  the  current  state  of  excessive  deficit  procedures  is  available  at: 
http://ec.europa.eu/economy_finance/economic_governance/sgp/deficit/index_en.htm  (please 
refer to country sections at the bottom of the page). 

In 2011, the general government deficit reached 5.2% of GDP, down from 7.1% in 2010. This 
is lower than  the official  target of  5.7% of GDP contained in the 2011 stability programme 
(the  target  was  also  overachieved  in  2010).  While  partly  due  to  the  phasing-out  of  the 
remaining  stimulus  measures,  exceptional  military  equipment  expenditure  recorded  in  2010 
and  some  other  exceptional  factors  (adding  up  to  nearly  1%  of  GDP),  the  deficit  reduction 
also  stemmed  from  new  measures  on  the  revenue  side  (0.7%).  Growth  above  potential  also 
played  a  role  (0.2%  of  GDP).  The  outcome  better  than  the  target  partly  stemmed  from 
windfall  revenues  and  statistical  reclassifications,  implying  only  a  limited  base  effect  for 
2012.  

Turning to 2012, the deficit is expected to decrease further on the back of the consolidation 
measures  announced  in  the  second  half  of  2011  and  in  January  2012  (estimated  impact  of 
around  1%  of  GDP)  and  adopted  as  part  of  the  supplementary  budget  for  2011  and  of  the 
budget and the supplementary budget for 2012. These measures are mainly revenue based and 
aim  to  compensate  for  significantly  lower  growth  prospects  compared  with  the  previous 
programme (0.7% now expected vs. 2.25%). Higher revenues are expected both from direct 
and  indirect  taxes  (see  Box  2).  On  the  expenditure  side,  savings  come  from  cuts  in  central 
government  expenditure,  less  than  full  indexation  of  some  social  benefits  (e.g.  family  and 
housing) and a tighter healthcare spending norm. Furthermore, the recently adopted pension 
reform  will  start  yielding  substantial  savings.  However,  growth  below  potential  will  have  a 
negative  impact  on  the  (headline)  deficit.  Overall,  the  Commission  spring  2012  forecast 

9

 
 
projects  a  deficit  of  4.5%  of  GDP,  broadly  in  line  with  the  target  contained  in  the  stability 
programme. 

10

 
 
Box 2. Main budgetary measures 

The on-going consolidation strategy has resulted both in new revenue measures and in 
expenditure  savings.  On  the  revenue  side,  these  include:  a  cut  in  tax  expenditures,  no 
indexation of tax brackets concerning personal income tax and tax on wealth in 2012-
2013,  limiting  the  possibilities  for  carrying  over  losses  in  the  calculation  of  corporate 
income  tax,  an  additional  temporary  tax  on  top  incomes  and  large  companies,  higher 
taxes on capital income and gains, a new intermediate VAT rate for several categories 
of  goods  and  services,  and  a  rise  in  excise  duties  on  tobacco  and  alcohol.  On  the 
expenditure side, savings come mainly from cuts in central government expenditure and 
a tighter healthcare spending norm. Furthermore, the 2010 pension reform has started to 
yield budgetary savings.  The proramme projects further savings in 2013-2016 (central 
government and healthcare expenditure), but these remain to be specified. 

Main budgetary measures 

  Revenue 

Expenditure

2011 

•  Application of the standard VAT rate to 

triple play services (0.1% of GDP) 

•  Higher  taxes  on  supplementary  health 

insurance schemes (0.1% of GDP) 

•  Reduction  in  personal  income  tax  and 
social  security  exemptions  (0.2%  of 
GDP) 

•  Savings on compensation of employees 
and running costs in central government 
(-0.3% of GDP) 

•  Savings  in  healthcare  and  age-related 

expenditure (-0.2% of GDP) 

2012 

•  Savings on compensation of employees 
and running costs in central government 
(-0.3% of GDP) 

•  Savings  in  healthcare  and  age-related 

expenditure (-0.3% of GDP) 

•  New 

intermediate  VAT 

rate  and 
increase  in  the  standard  VAT  rate 
(0.2% of GDP) 

•  Reduction  in  personal  income  tax  and 
social  security  exemptions  (0.3%  of 
GDP) 

•  Increase  in  social  levies  on  capital 

income and gains (0.1% of GDP) 

•  No indexation of tax brackets (personal 
income tax and tax on wealth) (0.1% of 
GDP) 

•  Temporary  5%  increase  in  corporate 
income  tax  for  large  companies  (0.1% 
of GDP) 
•  Reduction 

employers' 
in 
contributions (-0.2% of GDP) 

social 

2013 

•  Increase  in  the  standard  VAT  rate 

•  Savings  in  age-related  expenditure  (-

(0.4% of GDP) 

0.1% of GDP) 

•  Reduction  in  personal  income  tax  and 

11

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
social  security  exemptions  (0.1%  of 
GDP) 

•  Increase  in  social  levies  on  capital 

income and gains (0.1% of GDP) 

•  No indexation of tax brackets ( personal 
income tax and tax on wealth) (0.1% of 
GDP) 
•  Reduction 

employers' 
in 
contributions (-0.5% of GDP) 

social 

•  n.a. 

•  n.a. 

•   

2014 

•  Savings  in  age-related  expenditure  (-

0.1% of GDP) 

2015 

•  Savings  in  age-related  expenditure  (-

0.1% of GDP) 

2016 

•  Savings  in  age-related  expenditure  (-

0.2% of GDP) 

Note:  The  budgetary  impact  in  the  table  is  the  impact  reported  in  the  programme,  i.e.  by  the  national 
authorities. A positive sign implies that revenue / expenditure increases as a consequence of this measure. 

Going forward, the programme projects that the general government deficit will reach 3% of 
GDP  in  2013,  the  deadline  set  by  the  Council  on  2  December  2009  for  correcting  the 
excessive deficit, and gradually decrease thereafter, with a balanced budget achieved by 2016. 
The  targets  for  2013-2014  are  unchanged  compared  with  the  previous  update  of  the 
programme.  While  the  measures  so  far  have  concentrated  on  the  revenue  side,  expenditure 
savings are expected to account for the bulk of the effort from 2013 onwards. In real terms, 
the  authorities  project  that  general  government  expenditure  will  increase  by  only  0.4%  on 
average  in  2013-2016.  This  compares  with  an  average  annual  growth  of  around  2%  in  the 
previous decade. Curbs on expenditure growth are envisaged at all sub-government levels. 

At  central  government  level,  according  to  the  programme,  expenditure  will  continue  to  be 
frozen  in  nominal  terms  and  spending  excluding  interest  payments  and  civil  servants' 
pensions is set to decrease by 0.05% of GDP a year. In order to comply with those spending 
norms, the authorities plan to contain operating expenses, including through measures seeking 
to  curb  the  civil  servants'  payroll  and  to  decrease  the  running  costs  of  the  public 
administration through efficiency gains based on measures carried out as a result of the on-
going review of public policies (revue générale des politiques publiques). As regards social 
security funds, the programme projects a 2.5% annual rise in healthcare expenditure in 2012-
2016;  this  compares  with  average  annual  growth  of  around  3%  in  2008-2011.  Regarding 
pension  expenditure,  the  2010  reform  will  start  yielding  substantial  savings  as  from  2012 
(0.15% of GDP per year on average in 2012-2016). Concerning local authorities, the strategy 
anticipates only a subdued increase in expenditure over the period, to come especially from 
the decision to freeze, in nominal terms, transfers from central government. 

12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Under the usual no-policy-change assumption, the Commission spring 2012 forecast projects 
that the deficit for 2013 will stay significantly above the official target of 3% of GDP. Around 
half of the difference (1.2 pps) stems from expected higher expenditure growth, since savings 
backing the various spending norms still need to be specified (apart from savings stemming 
from  the  latest  pension  reform).  Concerning  central  government,  maintaining  the  freeze  on 
base  wages  beyond  2012  (which  also  applies  to  staff  in  social  security  funds  and  local 
authorities)  has  not  been  explicitly  confirmed  and  further  reducing  the  number  of  civil 
servants (only half of retiring staff have been replaced since 2007) cannot be taken fully for 
granted; the reduction in running costs also needs to be specified, especially since the planned 
decrease  of  5%  in  2011  did  not  materialise.  Regarding  social  security  funds,  additional 
savings  in  healthcare  expenditure  compared  to  previous  years  will  be  needed  to  meet  the 
tighter spending norm. Specifics are also lacking on the subdued growth in local government 
spending.  The  impact  of  measures  such  as  a  freeze  on  transfers  from  central  government 
remains rather uncertain since local authorities are entitled to increase local taxes and widen 
tax  bases  (although  the  2010  local  business  tax  reform  has  affected  the  fiscal  autonomy  of 
sub-national  tiers).  While  decentralisation  has  undoubtedly  led  to  an  increase  in  local 
government  spending,  this  is  also  due  to  discretionary  measures  decided  at  the  local  level. 
Divergent macroeconomic scenarios (see above), planned revenue measures of which details 
are  still  to  be  given  and  a  small  base  effect  from  2012  explain  the  remaining  difference 
(around 0.3%, 0.2% and 0.1% pps, respectively). The lack of specification of measures and 
risks  linked  to  a  less  favourable  macroeconomic  scenario  are  also  valid  for  the  outer  years 
covered by the programme. More generally, France's track record when it comes to meeting 
its budgetary targets is mixed. 

The  average  annual  fiscal  effort,  based  on  the  evolution  of  the  (recalculated)  structural 
balance from the programme, would be 1.1% of GDP in 2010-2013, in line with the Council 
recommendation of 2 December 2009. The fiscal effort for 2013 from the Commission spring 
2012  forecast  is  significantly  lower  than  that  projected  by  the  authorities.  When  assessed 
against  the  projected  rate  of  medium-term  potential  output  growth  and  taking  into  account 
discretionary  revenue  measures,  expenditure  projections  seem  to  ensure  an  appropriate 
adjustment  path  towards  the  medium-term  objective  thereafter.  Indeed,  annual  progress 
equivalent  to  a  further  0.7%  of  GDP  is  projected  in  2014-2016,  in  line  with  the  adjustment 
benchmark  set by  the  Stability  and Growth Pact (0.5% of GDP per year after the excessive 
deficit has been corrected). 

The  general  government  debt  has  increased  substantially  since  the  beginning  of  the  crisis. 
Starting  from  64.2%  of  GDP  in  2007,  the  debt  ratio  reached  85.8%  of  GDP  in  2011  and  is 
projected  to  increase  further.  The  authorities  expect  public  debt  to  reach  89.2%  of  GDP  in 
2013 and then drop to 83.2% in 2016. In 2014-2015, France will be in a transition period and 
current  plans  would  ensure  sufficient  progress  towards  compliance  with  the  debt  criterion. 
According to these plans, the debt benchmark will be met at the end of the transition period 
(2016). The Commission forecast for 2012-2013 is above the official figures due to the higher 
projected  deficits.  Negative  stock-flow  adjustments  from  the  programme  (other  than 
contributions to the European Financial Stability Facility and European Stability Mechanism 
and direct loans to vulnerable euro area countries) explain the rest of the difference. Risks to 
the debt scenario are clearly on the upside, mainly related to the above-mentioned risks to the 
deficit targets. In the past, the debt targets of the successive programmes have regularly been 
revised upwards and often missed. 

13

 
 
Overall, the recommendation that France received on 12 July 2011 in the field of fiscal policy 
has  been  partly  implemented.  The  deficit  target  for  2011  was  overachieved  and  additional 
measures  have  been  adopted  to  adjust  for  lower  growth  prospects  in  2012.  However, 
measures  backing  the  consolidation  strategy  from  2013  onwards  still  need  to  be  specified, 
especially on the expenditure side, and additional efforts may be needed for France to bring 
the deficit below 3% of GDP by 2013 and ensure an average annual fiscal effort of above 1% 
of  GDP  over  2010-2013,  as  recommended  by  the  Council  on  2  December  2009  under  the 
excessive deficit procedure and recalled in the context of the 2011 European Semester. The 
Council has also recommended that France make adequate progress towards its medium-term 
objective  of  a  balanced  budget  in  structural  terms  thereafter.  Based  on  the  information  on 
structural  measures  for  2013-2016,  timely  progress  towards  the  medium-term  objective 
cannot be ensured at this stage. 

Long-term sustainability  

With  regard  to  the  sustainability  of  public  finances,  the  long-term  change  in  age-related 
expenditure  is  below  the  EU  average.  The  initial  budgetary  position  adds  to  the  long-term 
costs. Assuming no policy change, debt would increase to 93.2% of GDP by 2020. Additional 
fiscal consolidation beyond the forecast horizon would be needed to make progress towards 
the reference value for government debt beyond the short term. Although full implementation 
of the programme would be enough to put debt on a downward path by 2020, it would still be 
above  the  60%  reference  value.  Recent  pension  reforms  will  contribute  to  improving  fiscal 
sustainability. Ensuring sufficient primary surpluses over the medium-term, as planned in the 
programme update, and beyond, would improve the sustainability of public finances. 

Fiscal framework 

France  has  made  considerable  changes  to  its  fiscal  framework  in  recent  years.  These  have 
consisted  of  introducing  new  fiscal  rules  or  amending  rules  already  in  force,  strengthening 
existing  budgetary  procedures  and  establishing  multi-annual  planning  of  public  finances. 
Furthermore,  a  constitutional  reform  to  strengthen  the  legal  status  of  the  multi-annual 
planning is currently being discussed. 

A  dual  spending  norm  applies  to  central  government  level.  Under  the  second  multi-annual 
public finance planning act, covering the period 2011-2014, central government expenditure 
excluding interest payments and civil servants' pensions is frozen in nominal terms. This rule 
comes  on  top  of  the  zero  volume  rule  introduced  in  2004,  which  applies  to  all  central 
government expenditure. The dual spending norm has been strengthened in the 2012 budget, 
with  a  0.05%  of  GDP  decrease  in  central  government  expenditure  excluding  interest 
payments and civil servants' pensions in nominal terms. Regarding social security, healthcare 
expenditure  is  subject  to  a  nominal  spending  target  set  on  an  annual  basis.  This  rule  was 
strengthened in 2010. Concerning local authorities, the golden rule effective since the 1980s 
prohibits financing current expenditure by debt. In addition to strengthening the fiscal rules, 
the multi-annual planning of public finances has been improved. The constitutional reform of 
July 2008 created a new category of law for the purpose of defining multi-annual guidelines 
for public finances while striving towards balanced budgets. 

The  reforms  adopted  in  recent  years  moved  in  the  right  direction  and  improved  the  fiscal 
framework in France. However, the current budgetary framework shows several weaknesses 
that  should  still  be  addressed.  The  first  major  drawback  is  that  it  is  insufficiently  binding. 

14

 
 
Indeed,  fiscal  rules,  spending  limits  and  other  provisions  contained  in  the  first  two  multi-
annual  planning  acts  have  not  always  been  met.  A  second  challenge  is  to  use  realistic 
macroeconomic  assumptions.  Growth  and  revenue-to-GDP  elasticity  assumptions  presented 
in  the  successive  stability  programmes  and  planning  acts  have  proved  too  optimistic  on 
several  occasions  and  thus  contributed  to  non-compliance  with  the  deficit  targets.  Another 
significant cause for concern is tax expenditures. Their number and cost tends to weaken the 
effectiveness  of  fiscal  rules.  Tax  and  social  security  exemptions  have  often  proved  to  be  a 
substitute  for  direct  expenditure,  allowing  the  French  authorities  formally  to  meet  existing 
spending  rules.  Finally,  the  principle  of  autonomy  of  some  sub-sectors,  including  local 
authorities,  raises  the  question  of  consistency  with  the  adjustment  path,  which  covers  the 
entire general government sector. 

Taxation 

In  2010,  France's  tax-to-GDP  ratio  stood  at  42.5%  (the  fourth  highest  in  the  EU  and  well 
above the EU average of 35.6%). Social contributions accounted for the highest share relative 
to GDP in the EU at 16.7% and employers' contributions made up more than two-thirds of the 
total. As a consequence, the implicit tax rate on labour at 41.0% in 2010 is among the highest 
in the EU, though less so towards the very end of the wage scale due to measures targeted at 
(very)  low  wage  levels.  In  addition,  France  has  the  second  lowest  share  of  environmental 
taxes in GDP. Their level declined from 2.2% in 2000 to 1.8% in 2010; this compares with an 
EU average of 2.6%. 

Efforts have been made to reduce tax expenditures (the so-called niches fiscales et sociales), 
in particular by increasing the liability of passive investment income (interest, dividends and 
capital  gains)  and  alternative  remuneration  (e.g.  stock  options)  to  social  contributions, 
removing mortgage-interest deductions, capping total tax expenditures and removing the tax 
shield  (bouclier  fiscal).  However,  these  measures  have  also  been  accompanied  by  rate  rises 
(social levies, marginal personal income tax rate, additional temporary levy on top incomes), 
which tend to increase the already high tax burden on labour. This conflicts with the objective 
of shifting taxes away from labour, as stipulated in the 2011 country-specific recommendation 
and highlighted by the 2012 Annual Growth Survey. One possible avenue for broadening the 
tax  base  (still  a  priority  in  the  Annual  Growth  Survey  priority)  would  be  to  review  and 
streamline the complex system of taxes and levies on labour. No specific measures have been 
taken  to  raise  VAT  efficiency,  except  for  increasing  the  reduced  rate  from  5.5%  to  7%  for 
certain  categories  of  goods  and  services.  The  efficiency  of  some  reduced  rates  in  achieving 
their  employment  or  social  objectives  should  be  assessed.  In  the  case  of  labour-intensive 
services such as catering, the measure has been criticised as costly with a limited impact on 
employment.6 Overall, the measures taken are relevant and, in the case of personal income tax 
but not VAT, relatively ambitious. Their credibility will depend both on clear monitoring and 
on additional efforts to streamline the array of existing taxes, as well as on measures to review 
the use of reduced VAT rates. 

France  has  recently  adopted  a  'social  or  employment'  VAT,  consisting  of  abolition  of  the 
5.4%  family  social  contribution  paid  by  employers  for  wages  up  to  2.1  times  the  minimum 
wage and progressive partial abolition up to 2.4 times the minimum wage. It is financed by an 

6   See, for example, the report from the Conseil des prélèvements obligatoires, 

http://www.ccomptes.fr/fr/CPO/documents/divers/Rapport_de_synthese_Entreprises_et_niches_fiscales_et_
sociales_071010.pdf, page 200 et seq. 

15

 
 
                                                 
increase  in  the  standard  rate  of  VAT  from  19.6%  to  21.2%  and  a  2  pps  increase  in  social 
levies on capital income and gains to 15.5%. The impact in terms of job creation will depend 
very  much  on  the  extent  to  which  companies  use  this  opportunity  to  increase  their  margins 
which, in time, will translate into higher prices. In parallel, other measures taken increase the 
tax burden on labour. 

The  country-specific  recommendation  on  developing  environmentally  friendly  taxation  has 
not been implemented. France has the second lowest share of environmental taxation in the 
EU  in  tax  revenues.  France  still  has  considerable  room  for  manoeuvre  to  develop  further 
environmentally  friendly  charging  and  taxation  (interoperable  road  charging  and  urban 
congestion  charges).  In  particular,  France  should  pursue  efforts  to  implement  the  éco-
redevance in line with the established plan. Furthermore, environmentally harmful subsidies 
continue  to  have  a  high  budgetary  cost  and  to  generate  negative  externalities,  the  costs  of 
which  are  largely  borne  by  public  expenditure.  France  taxes  natural  gas  and  electricity  at  a 
reduced  VAT  rate,  applies  more  favourable  tax  treatment  to  diesel  fuel  than  to  petrol  and 
provides  many  exemptions  from  VAT  or  excise  duties  on  oil  products.  Agriculture  in 
particular  benefits  from  exemptions  from  the  polluter  pays  principle,  especially  as  regards 
taxes on fuels and water prices.7 Overall, France has ample room for increasing and adjusting 
environmentally friendly taxation and for using the potential revenues to meet the objective of 
decreasing the tax burden on labour. 

Removing the mortgage-interest deduction as from 1 January 2011 has helped reduce the debt 
bias in housing taxation. One point to watch is the very high tax burden on corporations, in 
terms  of  both  statutory  and  effective  tax  rates,  which  are  further  aggravated  by  cuts  in 
corporate income tax expenditures (albeit a positive development if accompanied by cuts in 
rates)  and  new  surcharges  on  large  companies.  These  measures  make  France  less  attractive 
both as a location for business activities and for foreign direct investment. Finally, the debt-
equity bias in France is amongst the highest in the EU (measured as the gap between effective 
marginal tax rates on debt- and equity-financed new investments). 

3.2.  Financial sector 

Financial stability 

During the summer of 2011, tensions resurfaced on the European banking markets. Concerns 
over sovereign debt markets and difficulties on the interbank market resulted in a call by the 
European Council on 27 October to increase banks' capital to further ensure their stability. A 
temporary increase in the core Tier 1 capital ratio to 9%, above the threshold discussed as part 
of the Basel III package, by mid-2012 was requested. For the four French banks monitored by 
the  European  Banking  Authority  (BNP  Paribas,  Banque  Populaire  Caisse  d'Epargne,  Crédit 
Agricole SA and Société Générale), this requirement translated into additional capital needs 
of  EUR  7.3  billion.  According  to  the  results  of  the  July  2011  European  Banking  Authority 
stress test, no French institution was below the 5% core Tier 1 capital legally required by the 
Capital Requirements Directive (two banks have core Tier 1 levels between 6 and 7%). 

7   http://www.oecd.org/dataoecd/40/32/44813125.pdf 

16

 
 
                                                 
Funding the economy 

The  French  banks  have  continued  to  lend  to  the  economy.  In  December  2011,  outstanding 
credit  to  household  grew  by  4.8%  and  to  non-financial  corporations  by  5.0%  year-on-year. 
French  household  debt  was  equivalent  to  80%  of  disposable  income  in  the  third  quarter  of 
2011 (compared with 97% on average in the euro area). The level of credit to non-financial 
corporations has been increasing in the last few years to represent 67% of GDP in the third 
quarter of 2011, close to the 70% average for the euro area.8  

The low profitability of non-financial companies in France might make them very dependent 
on  credit.  This  is  particularly  the  case  for  small  and  medium-sized  enterprises  (SMEs)  as 
alternative sources such as venture capital or the SME equities market are still scarce. Bank 
lending  surveys  conducted  by  the  Banque  de  France  show  that  credit  conditions  did  indeed 
tighten in the last quarter of 2011, before stabilising in early 2012. Short-term cash facilities 
for small or very small enterprises were particularly affected. Meanwhile, demand for loans 
has continued to decline. Credit growth can therefore be expected to slow down in the next 
few months, mainly because of the subdued demand. 

In order to encourage companies to invest, the government has set up a number of financing 
schemes.  These  target  in  particular  SMEs  whose  access  to  finance  is  generally  more 
problematic. Innovative and high-growth SMEs, enterprises operating in technological sectors 
with  high  R&D  intensity  and  very  small  enterprises  face  particularly  acute  difficulties.  The 
Fonds stratégique d'investissement9 can invest in companies, and in particular SMEs, through 
its  various  targeted  funds.  In  addition,  existing  support  through  OSEO10  has  been 
strengthened and refocused to support companies that have difficulties raising capital. These 
schemes have contributed to improving the availability of external financing. However, they 
bridge  only  part  of  the  financing  gap  and  are  not  expected  to  address  the  structural  lack  of 
equity financing from private sources. 

3.3.  Labour market, education and social policy 

Of the five country-specific recommendations addressed to France in 2011, two specifically 
targeted labour market and social policies. These country-specific recommendations covered 
a  wide  range  of  issues,  including  the  general  employment  protection  regulations,  lifelong 
learning, the tax on labour and services offered by the public employment service. In general, 
the  country-specific  recommendations  have  been  only  partly  implemented,  to  an  extent  that 
the  country-specific 
the 
varies 
recommendations,  the  deterioration  of  unemployment  statistics  in  the  second  half  of  2011 
calls  for  renewed  attention  to  labour  market  and  social  policies.  In  particular,  youth 
employment, a domain where commitments were made by France in the context of the Euro 
Plus  Pact,  was  particularly  hit  by  the  crisis  and  has  remained  below  the  average  in  the  EU 
since then.  

the  different  areas.  Besides 

implementation  of 

in 

8   Source: Banque de France. 
9   Set up in 2008 with initial capital of EUR 20 billion, it was allocated an additional EUR 1.5 billion in 2011. 
10   OSEO is a public undertaking whose mission is to finance and support SMEs growth. 

17

 
 
                                                 
Labour market policies 

Increasing  labour  market  participation,  reducing  structural  unemployment  and  ensuring  a 
match between the skills of the workers and the needs of the labour market are among the key 
objectives  set  in  the  national  reform  programme.  The  French  labour  market  suffers  from  a 
number of weaknesses that makes achievement of these objectives particularly critical.  

Segmentation of the labour market 

One  of  the  main  issues  on  the  French  labour  market,  as  mentioned  in  the  country-specific 
recommendations for 2011, is its high degree of segmentation. The likelihood of moving from 
a fixed-term to a permanent contract dropped from 45% in 1995-1996 to only 12.8% in 2010, 
clearly below the 25.8% average for the EU. The strong decrease in temporary employment in 
the second half of 2011 (-34 000 posts) is also illustrates the burden that the segmentation of 
the  labour  market  puts  on  the  population  most  at  risk.  The  extensive  use  of  fixed-term 
contracts and temporary employment also has consequences on human capital as employees 
under  these  type  of  contract  tend  to  have  lower  access  to  vocational  training.  This 
segmentation is rooted in particular in the high level of employment protection legislation for 
both permanent and fixed-term contracts. In particular, while the notice period and severance 
payments  are  not  comparatively  higher  than  in  other  European  countries,  some  parts  of  the 
legislation make dismissal particularly complex. In particular, it is possible to make a claim 
for  unfair  dismissal  up  to  one  year  after  the  date  of  economic  dismissal  (one  of  the  longest 
periods in the EU11). In addition, the definition of economic dismissal excludes the possibility 
of  economic  dismissal  as  part  of  a  strategy  to  improve  a  firm's  competitiveness  and 
profitability.  In  order  to  effectively  address  the  labour  market  segmentation  effectively,  the 
quality of labour relations may play a critical enabling role.  

The national reform programme mentions a number of reforms that were made in the last few 
years  to  increase  the  flexibility  of  the  labour  market  in  times  of  economic  difficulties.  In 
particular,  the  contrat  de  sécurisation  professionnelle,  which  was  introduced  in  July  2011, 
makes it easier for workers hit by economic redundancies in companies with fewer than 1 000 
employees  to  return  to  employment.  For  those  workers,  responsibility  for  redeployment  is 
then shifted from the employers to the public employment service. As part of the same law, 
adopted on 28 July 2011, temporary transfers of employees between companies in the same 
employers' group were allowed. In parallel, negotiations between social partners on the accords 
de compétitivité were started in January 2012 with the aim of allowing a change in working 
hours and wages, against a commitment to retain employment. Measures have also been taken 
in order further to develop partial employment for companies facing a dip in activity. These 
measures  should  make  it  possible  for  employers  faced  with  temporary  difficulties  to  adjust 
working  conditions  with  a  limited  impact  on  employment.  However,  they  do  not  seek 
specifically to address the gap between the various forms of contracts.  

A  high  minimum  wage  is  considered  to  hinder  employment  prospects,  in  particular  for  the 
most vulnerable groups. It also contributes to weaker cost competitiveness of French exports. 
In  order  to  ensure  that  the  development  of  the  minimum  wage  supports  job  creation,  the 
French authorities have in particular eliminated the discretionary adjustments (coup de pouce) 

11   Source: OECD Indicators on Employment Protection. 

18

 
 
                                                 
since  July  2006.12  This  has  resulted  in  a  reduction  in  the  share  of  those  employed  at  the 
minimum  wage  (from  13.9%  in  2008  to  10.6%  in  2011).  The  distance  from  the  minimum 
wage to the average wage has also increased, indicating a reduction in the distortive effect of 
the minimum wage on job creation.  

Support for the employment of youth and older workers 

The  Annual  Growth  Survey  for  2012  stresses  the  need  to  pay  particular  attention  to  youth 
employment.  The  employment  rate  for  people  aged  15  to  24  in  France  (30.3%  in  2011)  is 
below the EU average. Within this age cohort, however, those who are active on the labour 
market are also those with lower levels of qualifications.13 As the level of qualification of the 
young people has a significant impact on their risk of unemployment14, this translates into a 
high level of unemployment in this age group (23.2% in 2011) in France compared with the 
average in the EU. The national reform programme clearly mentions the need to improve the 
employability  of  youth,  and  in  particular  of  those  with  low  levels  of  skills,  in  line  with 
commitments  taken  on  as  part  of  the  Euro  Plus  Pact.  The  authorities  have  committed 
themselves  to  increasing  the  number  of  apprenticeships  from  600 000  to  800 000  by  2015. 
Several  measures  described  in  the  national  reform  programme  seek  to  develop  the 
apprenticeship  framework  further,  in  particular  through  higher  quotas  for  companies  and 
tougher penalties.15 While these measures are a step in the right direction, the total number of 
apprenticeships, which stood at 629 000 in December 2011, remains a challenge, although it is 
increasing. Studies suggest that, more generally, the consistency between the skills taught in 
the schooling system and the demand on the labour market needs to be better aligned.16 In that 
respect,  the  national  reform  programme  provides  details  on  initiatives  undertaken  to  reduce 
the number of early school leavers and increase participation in tertiary education. Measures 
have  been  taken  to  improve  the  vocational  training  centres  whilst  a  number  of  specific 
support schemes target disadvantaged youth.17 

At the other end of the age spectrum, the employment rate for workers aged 55-64 in France 
(41.0%) remains among the lowest in the EU (47.1% on average). Although some aspects of 
unemployment  benefit  for  older  workers  may  represent  a  disincentive  to  work18,  the  2010 
pension reform, the end of the job-search exemption for senior workers and the phasing-out of 
early retirement schemes have contributed to the relative pick-up in employment since 2008 

12   Since  2008,  an  independent  advisory  committee  has  been  in  place  which  makes  recommendations  on 

development of the minimum wage. 

13   Although fewer people leave school without at least a secondary diploma (12.6% in France compared with 
the EU average of 15.5%), and despite a national target of 9.5% of school leavers in 2020, only a modest 
improvement has been achieved in the past few years. 

14   In  2010,  the  unemployment  rate  for  young  people  aged  15-24  with  pre-primary  to  lower  secondary 
education in France was 36.3% (+22.2 pps compared with young people having reached the first or second 
stage  of  tertiary  education  and  +16.1  pps  compared  with  young  people  with  upper  secondary  and  post-
secondary non-tertiary education). 

15   The  quota  was  brought  from  3%  to  4%  for  companies  with  more  than  250  employees  as  part  of  the 

supplementary budget in July 2011 and then to 5% in February 2012.  
16   See Joyandet (2012), "L'emploi des jeunes, grande cause nationale".  
17   For  example  the  "boarding  schools  of  excellence",  the  partnerships  set  up  between  higher  education 

institutions and secondary schools from deprived areas and the increased scholarship opportunities. 

18   Workers above 50 are entitled to unemployment benefit for a maximum duration of 36 months, compared 
with 24 months for the other age groups. Furthermore, benefits are flat over the unemployment spells and 
decline  only  when  the  unemployment  insurance  is  exhausted  and  unemployment  assistance  becomes 
payable. 

19

 
 
                                                 
(+3.2 points). However, unemployment has also increased significantly. Measures have been 
taken  to  encourage  the  employment  of  older  workers,  including  the  requirement  for 
companies to implement active age management. However, the related action plans generally 
lack  ambition  and  do  not  include  measures  such  as  reducing  working  time  or  offering 
positions that would be specifically adapted to older workers. Commitments were also made 
under  the  Euro  Plus  Pact  to  develop  further  professionalisation  contracts,  a  form  of 
apprenticeship, which is also open to older workers. Employers hiring low-skilled jobseekers 
aged  more  than  45  now  benefit  from  a  EUR  2 000  incentive.  However,  the  effect  of  this 
measure on employment seems very modest as only 4 330 workers participated in the scheme 
in 2011. 

Unemployment support 

The  merger  of  the  jobseekers'  placement  service  (ANPE)  and  the  unemployment  benefits 
agency  (UNEDIC)  into  one  single  body  (Pôle  emploi)  is  still  to  deliver  on  its  promise  in 
terms  of  individualised  support  and  advice  for  jobseekers.  The  increase  in  the  number  of 
unemployed and in the share of long-term unemployed workers, which made up 38% of the 
total number of registered jobseekers in December 2011, compared with 31% in 2008, pose 
particularly  acute  challenges  for  the  public  employment  service.  Despite  temporary 
measures19,  internal  resources  available  for  individualised  support  to  jobseekers  remain 
limited (6 700 full-time equivalents out of a total of 45 500 employees). Although in January 
2012  the  state  made  commitments  to  allocate  EUR  430  million  to  measures  to  combat 
unemployment,  it  has  to  be  noted  that  the  level  of  spending  on  training  for  jobseekers  has 
remained  stable  since  2001.20  In  this  respect,  the  target  set  for  2012  for  the  activation 
programme  Préparation  opérationnelle  à  l'emploi  presented  in  the  national  reform 
programme seems very modest. The recourse to subsidised employment – in particular in the 
non-market  sector  –  which  has  intensified  as  a  response  to  the  crisis  is  expected  to  have  a 
rather limited impact in the medium term as it is generally difficult to return to other forms of 
employment after such contracts. 

Regarding  the  medium-term  development  of  the  public  employment  service,  a  new  multi-
annual tripartite agreement (between the government, social partners and Pôle emploi) on its 
functioning and services was signed on 11 January 2012. The new 2012-2014 agreement is a 
step  in  the  right  direction  as  it  provides  for  more  individualised  support  for  jobseekers  and 
return-to-work  targets,  in  particular  for  the  long-term  unemployed.  However,  these  targets 
still  remain  to  be  set,  making  it  difficult  to  assess  properly  the  level  of  ambition  of  the 
agreement.  Also,  Pôle  emploi  is  operating  under  tight  budgetary  constraints.  Given  the 
increasing  number  of  jobseekers,  the  credibility  of  the  objectives,  which  are  to  be  achieved 
solely through efficiency gains and redeployments, can be considered uncertain.  

Lifelong learning 

Little progress has been seen in the participation of adults in lifelong learning, apart from the 
efforts to promote apprenticeship for young people. This issue would deserve further attention 
as  only  5.0%  of  adults  participated  in  lifelong  learning  in  France  in  2010,  compared  with 
6.4% in 2006 and with an EU average of 9.1%. This figure has deteriorated steadily over the 

19   In  January  2012,  a  temporary  reinforcement  of  1 000  staff  on  fixed-term  contracts  for  Pôle  emploi  was 

announced. 

20   "40 ans de formation professionnelle: bilan et perspectives", CESE, December 2011. 

20

 
 
                                                 
last  decade  despite  programmes  such  as  the  2009  Law  on  guidance  and  vocational  training 
which  aimed  to  encourage  the  development  of  a  coordinated  national  strategy,  planned  and 
implemented by national authorities, the regions and the social partners to allow each person 
to improve by at least one level of qualification during his/her professional career. Besides the 
general  low  rate  of  participation  in  adult  training, equal access  and targeting of training for 
groups  in  need  also  seem  problematic.  In  particular,  older  workers  and  workers  with  lower 
levels  of  initial  education  seem  to  participate  less  in  trainings.  The  support  fund  Fonds 
paritaire de sécurisation des parcours professionnels, created in 2009, set a target of training 
500 000  employees  and  200 000  jobseekers  each  year.  However,  results  so  far  have  been 
insufficient.21  Finally,  significant  scope  for  improvement  remains  regarding  the  quality  of 
lifelong learning provided and its appropriateness to labour market prospects. 

Social policy 

France performs better than the EU average for the three Europe 2020 poverty and exclusion 
indicators. The share of the population at risk of poverty or social exclusion stood at 19.3% in 
2010  (+0.9  pp  compared  with  2009,  23.5%  on  average  in  the  EU).  In  particular,  in-work 
poverty (6.6%) is below the EU average (8.5%) but has been on the rise since 2004. However, 
additional efforts could be targeted to reducing the poverty rate among particularly vulnerable 
segments, including non-EU nationals22 (47.4% vs. an EU average of 32.5%), people living in 
urban deprived areas (32.4% in 2009 according to national data) or young people between 18 
and 25 years old (24.5% vs. 21.2% on average in the EU, reflecting their difficulty to enter 
the labour market). 

Social protection expenditure in France increased since the beginning of the crisis from 31% 
of GDP in 2008 to 33% in 2009, above the EU average (29.5% of GDP), mostly due to the 
automatic stabilisers. Social transfers have had a strong impact on poverty in France as they 
reduced the share of the population at risk of poverty by 46% in 2009 (35% on EU average).23 
The key measure in France's active inclusion policy is the social benefit reform that came into 
force  in  June  2009  with  the  creation  of  the  RSA  (Revenu  de  solidarité  active).  The  RSA 
scheme  guarantees  recipients  an  increase  in  their  income  if  they  return  to  employment  and 
ensures  additional  resources  for  poor  workers.  However,  the  evaluations  carried  out  so  far 
have  shown  lower  take-up  rates  among  the  working  poor  than  initially  expected,  due  in 
particular to limited awareness on the part of potential beneficiaries. 

According to the latest evaluation of the RSA, presented in December 2011, possible negative 
impacts such as the development of part-time jobs or decreases in wages have not occurred. 
However, the scheme does not seem to have any significant effects on return to employment. 
According to the evaluation committee, the activity part of the RSA, which ensures additional 
resources  for  poor  workers,  resulted  in  a  decrease  of  0.2  pp  in  the  poverty  rate.  As 
acknowledged in the national reform programme, this limited impact is attributed to the low 
take-up rates among the working poor and to the amount of the benefit. Though more RSA 

21   In 2010 and 2011, only 272 000 jobseekers were trained, 173 000 employees in partial unemployment, and 
138 500 employees with a low level of qualification (see Report on vocational training by Gérard Larcher, 
April 2012). 

22   The  very  high  poverty  rate  among  non  EU  nationals  is largely  due  to  lower  qualification  levels  and  their 

low participation in employment. 

23   People at risk of poverty are those with an equivalised disposable income below 60% of the national median 

(source: Eurostat). 

21

 
 
                                                 
recipients are registered in the public employment service than were in the previous scheme, 
many  beneficiaries  do  not  receive  the  greater  support  and  activation  measures  they  are 
entitled to. Overall, the RSA has had a stronger impact on reducing the intensity of poverty, 
in particular among low-wage earners, than on the rate of poverty itself. 

3.4.  Structural measures promoting growth and competitiveness  

France has experienced a rapid erosion of its market share in international trade over the last 
few  years  (-19.4%  between  2005  and  2010).  The  long-standing  deficit  of  the  trade  balance 
since 2004 is a signal of the deteriorating export competitiveness of the French economy, in 
particular compared with some partners in the EU.  

Cost competitiveness 

French  exports  have  lost  ground  in  terms  of  cost  competitiveness  compared  with  France's 
trade  partners  since  2000.  The  real  exchange  rate  based  on  unit  labour  cost  increased  by 
12.9%  between  2000  and  2010.  During  the  same  period,  French  exports  prices  remained  in 
line with those of trade partners. This suggests that exporters reduced their margins to limit 
losses of market share. In order to improve cost competitiveness, measures have been taken 
by the authorities to limit the evolution of the minimum wage and to lower the tax burden on 
labour  (see  above).  However,  although  lower  labour  costs  could  contribute  to  restoring  the 
profitability  of  French  exporters  and  supporting  investment,  the  lagging  non-price 
competitiveness of French exports suggests that other structural features are at work.  

R&D and innovation 

Innovation is considered to be one of the key drivers of non-price competitiveness. France's 
research and development (R&D) intensity was at 2.26% of GDP in 2010, up from 2.08% in 
2007, but still far from the country's target of 3%.  

Since  2005,  France  has  conducted  a  comprehensive  reform  of  its  research  and  innovation 
system.  The  national  reform  programme  highlights  the  main  landmarks  of  this  reform:  the 
new  funding  and  evaluation  agencies  and  mechanisms  (Agence  nationale  de  la  recherche, 
OSEO,  Agence  d'évaluation  de  la  recherche  et  de  l'enseignement  supérieur),  the  pôles  de 
compétitivité, the Law on autonomy of universities, the amplified research tax credit, which 
represented  EUR  4.7  billion  of  foregone  tax  revenue  in  200924,  and  the  programme 
Investissements  d'avenir.  These  structural  measures  have  been  backed  up  by  a  public  R&D 
budget  which  has  shown  substantial  progress  since  2007  despite  severe  budget  constraints 
during  the  crisis.  The  national  innovation  strategy  has  been  complemented  at  the  regional 
level  by  specific  diagnostic  documents  (STRATER)  which,  together  with  Regional 
Innovation Strategies, will be used as the basis to define strategic directions for the regional 
innovation systems. The reforms undertaken so far have resulted in numerous new structures 
and  supporting  mechanisms.  While  the  specific  instruments  are  discussed  in  the  national 
reform programme, little detail is provided on the articulation and coordination between these 
structures. Governance mechanisms, which would ensure that the deployment of research and 
innovation  activities  is  not  overly  complex  for  stakeholders  while  limiting  potential 
redundancies and overlaps, are not presented.  

24   These amounts are not included in the government R&D budget. 

22

 
 
                                                 
Despite  some  progress  since  2007,  at  1.38%  of  GDP  in  2010,  business  R&D  intensity  in 
France  is  below  that  of  the  innovation  leaders  in  the  EU.25  While  the  generous  incentives 
provided by the extension of the research tax credit26 and the substantial on-going efforts to 
foster linkages between public research and enterprises and enhance the take-up of research 
results have probably contributed to this incremental improvement, no systemic assessment of 
the effectiveness of these support mechanisms is available yet. In terms of human capital for 
research  and  innovation,  the  proportion  of  students  pursuing  doctoral  studies  is  lower  in 
France  than  in  the  EU  as  a  whole.  This  suggests  that  the  innovation  system  would  benefit 
from better promotion of research careers as well as better career opportunities for doctorate-
holders in the business sector in order to attract a higher proportion of the best students. More 
generally, further efforts could be undertaken to ensure that innovation and entrepreneurship 
education programmes are available more systematically in higher-education curricula.  

Competition 

In its 2011 country-specific recommendations, the Commission stressed the need for further 
measures to tackle restrictions  on  regulated  trades and professions, in particular in services, 
and  on  the  retail  sector.  Although  a  number  of  reforms  have  been  made,  reforming  and 
liberalising  various  activities,  significant  scope  remains  for  further  developing  effective 
competition in these domains. 

Regarding regulated trades and professions, France has made efforts to transpose the Services 
Directive. A substantial number of legislative and practical changes have been introduced.27 
However, significant barriers remain in a number of sectors whether covered by the Services 
Directive  (e.g.  veterinarians)  or  not  (taxis,  health  sector,  notaries  and  more  generally  legal 
professions).  Furthermore,  the  justification  and  proportionality  of  some  measures  related  to 
the  establishment  of  service  providers  and  the  provision  of  services  may  warrant  further 
scrutiny.  As  far  as  the  Points  of  Single  Contact  are  concerned,  the  availability  of  online 
procedures and accessibility remain in need of improvement. 

Although the retail sector is not mentioned in the national reform programme, positive steps 
have been taken to foster competition, in particular through the Law on the modernisation of 
the  economy  (Loi  de  modernisation  de 
the  2011 
recommendations,  and  through some of the measures envisaged in the draft law reinforcing 
the rights, the protection and information of consumers (Projet de loi renforçant les droits, la 
protection et l'information des consommateurs). However, there are still some concerns about 
the  inflationary  pressure  resulting  from  the  ban  on  selling  below  costs.28  Consumers  could 
also  profit  from  other  competition-enhancing  measures  in  this  highly  concentrated  sector, 
such as reviewing spatial planning restrictions and speeding up procedures for setting up new 
distribution outlets (which can take 7 to 10 years according to the competition authority).  

l'économie),  adopted  prior 

to 

25   See the Innovation Union Scoreboard 2011 for a detailed comparison of innovation performance. 
26   An assessment conducted for the Ministry of Education and Scientific Research estimates that the current 

research tax system reduces the cost of R&D for companies by 47% on average. 

27   For  example,  the  Law  of  24  July  2010  reforming  artists'  agents  and  accountants  or  the  Law  of 22 March 

2011 allowing the installation of architects established in another Member State. 

28   In its annual report for 2010, the competition authority considered that this regulation had adverse impacts, 
in particular on the transparency of the relationships between suppliers and distributors, while the objectives 
sought by the ban could be achieved more effectively through less distortionary measures. 

23

 
 
                                                 
Network industries 

Beyond the scope of the country-specific recommendation on regulated trades and professions 
addressed to France in 2011, competition should be stepped up in the network industries.  

In  the  telecommunication  sector,  as  noted  in  the  national  reform  programme,  the  entry  of  a 
fourth mobile phone operator in January 2012 combined with the increasing weight of mobile 
virtual  network  operators  have  contributed  to  increasing  the  level  of  competition.  The 
broadband sector is also very dynamic and competitive in France, with more than 75% of the 
population having access to two or more providers offering triple-play services. 

In  the  electricity  sector,  the  degree  of  concentration  remains  one  of  the  highest  in  the  EU, 
with the historical operator (EDF) having a share of some 85% on both the generation and the 
retail markets. The Law on the new organisation of electricity markets (NOME), which makes 
available to competitors a certain amount of low-cost electricity from the historical supplier's 
nuclear  plants  and  therefore  allows  a  level  playing  field,  has  had  a  positive  impact  on 
competition, in particular for larger corporations. However, issues related to the methodology 
underpinning  the  price  at  which  competitors  have  access  to  this  electricity  remains  to  be 
settled. Due to the complexity of the issues at stake and to the large number of stakeholders 
involved,  the  tendering  of  hydro-concessions,  which  would  also  ensure  that  alternative 
operators  have  access  to  generation  capacity,  is  being  delayed.  The  limited  interconnection 
capacity with neighbouring countries, and in particular with Spain, is another constraint to the 
development  of  competition  on  the  domestic  electricity  market.  Finally,  according  to  the 
French regulatory authorities, competition is also increasing in the wholesale market for gas 
distribution, where particular attention should, however, be paid to retail tariff-setting and, in 
particular,  to  ensuring  that  the  latter  does  not  give  rise  to  margin  squeezing  that  would 
foreclose competitors. 

In the rail freight transport sector, in a context of rapidly decreasing transported volumes, the 
combined  market  share  of  new  entrants  remains  limited. Effective competition requires that 
competitors  have  non-discriminatory  access  to  infrastructure,  in  particular  maintenance 
facilities,  and  to  safety  authorisation  procedures.  Regarding  passenger  rail  services,  only 
international services have been opened up to competition. Until now, there have been very 
few  new  entrants  (Ferrovie  dello  Stato/Veolia  Transport  with  a  new  low-cost  connection  to 
Italy).  No  competitor  operates  on  the  most  profitable  international  lines  yet  (Eurostar  and 
Thalys).  Based  on  the  experience  in  other  Member  States,  France  could  consider  opening 
domestic markets, in particular via the introduction of public tendering procedures for local 
and  regional  services,  as  envisaged  in  the  national  reform  programme.  In  the  air  transport 
sector, the dramatic changes in recent years, stemming particularly from the rise of low-cost 
carriers and the development of new airport strategies, have opened up new routes. However, 
French air traffic is highly concentrated, with the ten largest airports handling about 83% in 
2010.29 As a consequence, the economic performance of smaller airports appears mixed. It is 
important to ensure that public support for non-profitable regional airports does not place an 
unnecessary burden on public finances and create an undue distortion of competition within 
the  internal  market.  Finally,  French  harbours  are  performing  unevenly.30  A  reform  was 

29   Source: Direction générale de l'aviation civile, Bulletin statistique 2010. 
30   France has seven seaports of national importance. In 2009, four French harbours were among the 40 largest 
in Europe in terms of freight traffic. While some harbours have registered an increase in traffic since 2006 

24

 
 
                                                 
launched in 2008 to separate the role of the port authorities further from other functions that 
could be provided by private companies. Although this reform should improve the situation, 
France still needs to improve connections between ports and the hinterland, in particular the 
rail  freight  network  and  inland  waterways,  to  develop  the  potential  of  its  ports,  an  aspect 
which is currently insufficiently reflected in the preparatory work for the Schéma national des 
infrastructures de transport mentioned in the national reform programme. 

Resource efficiency 

France  has  set  resource  efficiency  and  reduction  of  greenhouse  gas  emissions  as  one  of  its 
main objectives for the national reform programme. Thanks to its energy mix and the hydro-
electricity generation capacity, France is among the least CO2-intensive economies in the EU 
and one of the Member States with a higher share of renewable energy. An innovative white 
certificates scheme has been developed. Feed-in tariffs for renewables have proved successful 
in  stimulating  the  deployment  of  wind  and  solar  power,  but  had  to  be  adjusted  to  avoid 
excessive  cost  increases  for  electricity  consumers.  In  2011,  France  also  launched  its  first 
offshore  wind  tender  and  boosted  its  biogas  policy  with  a  new  tariff.  However,  the 
employment  and  growth  potential  of  green  sectors  remains  partly  untapped  in  France.  In 
particular, in the waste sector, significant numbers of jobs could be created by implementing 
the waste hierarchy better, eliminating landfill and limiting energy recovery to non-recyclable 
waste, with economic instruments such as 'pay as you throw' schemes playing a key role.31 

As the national reform programme mentions, some initiatives have been taken to strengthen 
environmental  fiscal  incentives,  in  particular  for  cars,  water  and  buildings.  However,  as 
discussed in the section on taxation, France remains the Member State with the second lowest 
share of environmental taxation in the EU. Moreover, although the report commissioned from 
the  Conseil  d'analyse  stratégique  contributed 
to  raising  awareness,  a  number  of 
environmentally harmful subsidies persist, in particular in the agricultural sector. As regards 
renewables in the transport sector, France should make sure that progress is made as planned 
in order to reach the 10% target in 2020. 

3.5.  Modernisation of public administration  

Business environment 

In 2010-2011, some notable measures to improve the businesses environment were adopted, 
such as the creation of a new independent entrepreneur scheme32. France now scores among 
good or top performers in terms of the time and cost to start a business, obtain licences and 
enforce  contracts.  France  is  close  to  the  EU  average  for  the  availability  and  take-up  of  e-
government services for businesses, although the full introduction of paperless one-stop shops 
does  not  seem  to  have  been  achieved  yet.  A  total  of  96  simplification  measures  were 
announced in 2011  and  25  were  included in a new simplification law of 29 February 2012. 
However,  most  measures  have  not  been  adopted  or  implemented  yet  (e.g.  common  starting 
dates  for  new  rules  applicable  to  enterprises)  and  cannot  be  assessed.  Other  measures  have 
not  been  fully  implemented  in  practice,  such  as  systematic  impact  assessment  of  new  rules 

(e.g. Rouen and La Rochelle), the relative importance of the main French harbours is decreasing compared 
with peers in Europe.  

31   See European Commission (2011), "Implementing EU Waste Legislation for Green Growth".  
32   Entreprise individuelle à responsabilité limitée (EIRL). 

25

 
 
                                                                                                                                                         
applicable  to  enterprises.33  Stakeholder  consultation  has  been  made  more  visible  and 
transparent  through  mechanisms  such  as  Grenelle,  Assises  and  Etats  généraux,  but  remains 
quite uneven.34 Notable steps have been taken to simplify interfaces between businesses and 
relevant  public  services,  although  there  is  significant  scope  for  further  streamlining 
administrative  structures  and  ensuring  easy  and  transparent  access  to  information  for  all 
enterprises, including SMEs. Overall, strong political commitments to improve the regulatory 
environment of businesses have not always been followed by systematic implementation. For 
example,  some  policy  objectives  overlap  or  lack  follow-up35  and  the  individual  roles  of 
several new bodies could be clarified.36 Over time, the proliferation of half-measures towards 
simplification, such as specific derogations and exemptions, tends to create a regulatory 'layer 
cake' and risks being counterproductive by making the regulatory framework for businesses 
even  more  complex  and  unstable.  This  is  particularly  acute  when  looking  at  the  fiscal 
framework:  exemptions  and  derogations  have  tended  to  lead  to  such  complexity  that  tax 
legislation is no longer transparent for businesses, notably SMEs and foreign investors. Too 
frequent  changes  in  legislation  and  related  exemptions  also  create  a  lack  of  predictability 
which is not favourable to business investment. 

As a result, France still scores clearly below the EU average in terms of burden of regulation, 
with persistent challenges linked to the burden of compliance with administrative procedures, 
the  regulatory  complexity  (e.g.  tax  legislation,  labour  law  and  corporate  law)  and  the 
instability  of  the  regulatory  framework  (including  taxation).  Permanent  monitoring  of  the 
regulatory environment from the competitiveness angle, including regular simplification and 
systematic follow-up, could lead to significant improvement over time. 

Public procurement 

A  well-functioning  public  procurement  system  boosts  the  efficiency  of  the  public 
administration  and  e-procurement  is  a  key  component  of  e-government.  The  French  public 
procurement market is estimated at between 2.8% and 3.5% of GDP. The public procurement 
directives  have  been  fully  implemented  in  French  national  legislation.  The  national  judicial 
system  for  providing  remedies  appears  to  be  quite  effective.  Concerning  e-procurement, 
approximately 2.5% of public spending on goods and services was managed using electronic 
tools  in  2010.  Since  1 January  2010,  electronic  procurement  has  been  mandatory  for  IT 
purchases above EUR 90 000 and from 1 January 2012 French administrations have to accept 
electronic invoicing from any supplier. 

State aid 

The  overall  efficiency  of  state  aid  enforcement  in  France  shows  a  number  of  weaknesses. 
France  ranks  among  those  Member  States  with  the  longest  overall  and  internal  procedures, 
which  is  compounded  by  the  complexity  of  the  cases.  France  grants  relatively  more  aid 

33   For example, the impact assessment methodology is not publicly available and ex-ante impact assessments 

do not systematically accompany draft regulations.  

34   For example, there is no rule or common practice on the minimum duration of stakeholder consultation. 
35   For  example,  the  Euro  Plus  Pact  commitment  to  introduce  paperless  procedures  for  80%  of  100  priority 
procedures  by  2011,  the  commitment  to  introduce  paperless  procedures  for  the  'most  awaited'  100 
procedures by 2013 and the commitment to ensure full on-line availability of all procedures by 2020.  
36   For  example,  the  Commissioner  in  charge  of  simplification,  the  National  Conference  of  Industry  or  the 

Council for simplification in favour of enterprises. 

26

 
 
                                                 
covered  by  prohibition  decisions  and  more  sectoral  state  aid  than  most  EU  Member  States. 
Stronger internal scrutiny and compliance mechanisms are needed.  

27

 
 
 
4.  Overview table  

2011 commitments 

Summary assessment 

Country-specific recommendations (CSRs) 

CSR  1:  Ensure  the  recommended  average  annual 
fiscal effort of more than 1% of GDP over the period 
2010-2013  and  implement  the  correction  of  the 
excessive  deficit  by  2013,  in  line  with  the  Council 
recommendations  under  the  EDP,  thus  bringing  the 
high  public  debt  ratio  on  a  downward  path,  and 
ensure  adequate  progress 
the  medium-term 
necessary 
objective 
corresponding  measures  for  2012  onwards,  take 
additional  measures  if  needed  and  use  any  windfall 
revenues  to  accelerate  the  deficit  and  debt  reduction 
as  planned;  continue  to  review  the  sustainability  of 
the  pension  system  and  take  additional  measures  if 
needed. 

to 
specify 

thereafter; 

the 

CSR  2:  Undertake  renewed  efforts,  in  accordance 
with national practices of consultation with the social 
partners,  to  combat  labour  market  segmentation  by 
reviewing selected aspects of employment protection 
improving  human  capital  and 
legislation  while 
upward  transitions;  ensure  that  any  development  in 
the minimum wage is supportive of job creation. 

CSR  3:  Encourage  access  to  lifelong  learning  in 
order to help maintain older workers in employment 
to 
and  enhance  measures 
employment.  Step  up  active  labour  market  policies 
and introduce measures to improve the organisation, 
the  public 
decision-making,  and  procedures  of 

to  support 

return 

28

Additional  consolidation  measures  were  adopted  in 
the  second  half  of  2011  and  in  February  2012  to 
adjust  to  lower-than-expected  growth  in  2011-2012, 
with  a  budgetary  impact  of  around  1%  of  GDP  in 
2012 and an additional 0.2% in 2013. While these are 
clearly a step in the right direction, measures backing 
the  consolidation  strategy  from  2013  onwards  still 
need  to  be  specified,  especially  on  the  expenditure 
side, and additional efforts may be needed for France 
to  bring  the  deficit  below  3%  of  GDP  by  2013  and 
ensure an average annual fiscal effort of above 1% of 
GDP  over  2010-2013.  Concerning  the  long-term 
sustainability  of  public  finances,  the  2010  pension 
reform is being gradually applied. However, it cannot 
be ensured that the system will be balanced by 2018, 
as  envisaged  by  the  French  authorities,  since  this 
expectation may be based on optimistic employment 
and growth projections, and the system is expected to 
fall  into  deficit  after  2020.  Moreover,  the  newly 
created steering committee, which was established to 
give  an  annual  opinion  on  the  financial  situation  of 
the  various  pension  schemes  and  the  conditions 
required  to  ensure  balanced  accounts  by  2018,  did 
not issue such an opinion in 2011. 

Overall,  the  country-specific  recommendation  has 
been partly implemented. 

Limited  reforms  have  been  carried  out  to  address 
labour market segmentation. 

Since  2011,  a  number  of  measures  have  been  taken 
that  seek  to  provide  flexible  work  arrangement  for 
companies  facing  temporary  difficulties.  In  July 
2011,  economic  dismissals  were  facilitated  for 
companies  with  fewer  than  1 000  employees.  These 
measures increase the flexibility of the labour market 
but they do not specifically address the segmentation 
of the labour market.  

The  development  of  the  minimum  wage  has  been 
kept  in  line  with  inflation  and  the  distance  from  the 
average wage has increased. 

Overall,  the  country-specific  recommendation  has 
been partly implemented. 

For  senior  workers,  companies  are  required  to 
implement an active age management plan. However, 
ambition.  The 
these 
development  of  financial  incentives  for  low-skilled 
job  seekers  aged  more  than  45  has  had  modest 

generally 

plans 

lack 

 
 
to  strengthen  services  and 
employment  service 
individualised  support  provided  to  those  at  risk  of 
long-term unemployment. 

impact,  with  only  4 330  workers  participating  in 
2011.  

The  resources  available  to  Pôle  emploi  are  a  strong 
constraint to the credibility of the objectives adopted. 
Commitments  have  been  made  to allocate additional 
temporary  resources  (1 000  full-time  equivalents)  to 
address  the  current  increase  in  the  number  of 
jobseekers.  The  French  authorities  also  expect  that, 
through  efficiency  gains,  an  additional  2 000  FTE 
could be assigned to counselling jobseekers by 2014. 
However, this is unlikely to be sufficient to improve 
significantly  the  quality  of  the  services  offered.  The 
2012-2014  public  employment  service  agreement, 
which  provides  for  more  individualised  support  for 
jobseekers and return to work targets, is a step in the 
right  direction.  However,  some  of  the  objectives  are 
still  to  be  defined.  Its  effectiveness  will  need  to  be 
monitored.  A  more  ambitious  strategy  is  needed  in 
the  field  of  adult  learning  so  as  to  raise  the 
employability of the adult workforce. 

Overall,  the  country-specific  recommendation  has 
been partly implemented. 

its  narrow  focus  and 

In February 2012, France adopted a 1.6 pps increase 
in VAT to 21.2% and a 2 pps rise in social levies on 
capital income and gains to 15.5% to compensate for 
lower  employers'  social  contributions.  This  is  a 
relevant measure, although its ambition seems limited 
the  developments 
given 
mentioned below with regard to measures increasing 
the tax burden on labour. No specific measures have 
been  taken  to  raise  VAT  efficiency,  except  for 
increasing  the  reduced  rate  from  5.5%  to  7%  for 
certain categories of goods and services. Efforts have 
been made to reduce tax expenditures; however, they 
have also been accompanied by rate rises that tend to 
increase the already high tax burden on labour. This 
conflicts  with  the  objective  of  shifting  taxes  away 
from  labour.  No  major  move  from  labour  towards 
environmental taxes has been proposed so far. 

Overall,  the  country-specific  recommendation  has 
been partly implemented. 

trades 

selected 

restrictions  on 

France  undertook  reforms  in  2010  and  2011  to 
and 
remove 
professions. However, no horizontal review has been 
conducted  and  these  measures  will  therefore  have  a 
marginal  impact.  In  the  retail  sector,  the  reforms 
provided  for  the  draft  law  strengthening  the  rights, 
the  protection  and  information  of  consumers  would 
have a marginal impact and clearly lack ambition. 

CSR  4:  Increase  the  efficiency  of  the  tax  system, 
including  for  example  through  a  move  away  from 
labour 
towards  environmental  and  consumption 
taxes,  and  implementation  of  the  planned  reduction 
in  the  number  and  cost  of  tax  and  social  security 
exemptions (including niches fiscales). 

CSR  5:  Take  further  steps  to  remove  unjustified 
restrictions  on  regulated  trades  and  professions,  in 
particular in services and the retail sector. 

Overall,  the  country-specific  recommendation  has 
been partly implemented. 

29

 
 
Euro Plus Pact (national commitments and progress) 

Public finances:  

•  Fully 

implement 

the  2010  general  pension 

reform. 

•  Adopt  a  constitutional  reform 

to 
binding multiannual budget planning. 

introduce 

•  Step  up  efforts  to  increase  the  efficiency  of 

healthcare spending. 

Labour market:  

• 

• 

Increase  the  participation  rate  for  youth  and 
senior workers. 

Increase  the  number  of  young  workers  in 
apprenticeship from 600 000 to 800 000 by 2015. 

•  Develop 

incentives 

for  companies  hiring 
workers  over  45  years  old  under  a  contrat  de 
professionalisation. 

•  Set  up  systematic  interviews  for  jobseekers 

unemployed for more than one year.  

• 

Improve  the  labour  participation  of  women  by 
creating  200 000  additional  childcare  places  by 
2012. 

30

The  public  finance  commitment  has  been  partly 
implemented: 

•  The  2010  reform  is  being  gradually  applied 
(increase in the statutory retirement age from 60 
to  62,  with  a  first  four-month  rise  for  people 
born in 1951) while the contribution period will 
increase  faster  than  previously  expected  (41.5 
years for those born in 1955 instead of 1958), in 
line  with  higher  gains  in  life  expectancy.  It  has 
also  been  decided  that  the  increase  in  the 
statutory age to 62 years will come into effect in 
2017,  i.e.  one  year  earlier  than  previously 
envisaged. 

•  The  draft  constitutional  reform  was  passed  by 
the two chambers of Parliament in July 2011. In 
order for it to be finally adopted, both chambers 
need  to  meet  in  Congress  where  a  three-fifths 
majority  is  required.  Such  a  meeting  has  not 
been called so far. 

•  Concerning  healthcare  spending, 

the  recent 
improvement  of  the  institutional  framework  led 
to compliance with the target for 2010-2011. The 
targets  for  2012-2016  have  been  tightened,  but 
the  corresponding  savings  from  2013  onwards 
are still to be specified. 

The  labour  market  commitments  have  been  partly 
implemented 

•  For  youth  (aged  15-24),  the  employment  rate 
stood  at  29.9%  in  2011,  compared  to  30.3%  in 
2010.  The  employment  rate  for  senior  workers 
(aged 55 to 64) increased from 39.7% in 2010 to 
41.4% in 2011.  

•  The  national  cross-industry  agreement  on  youth 
employment of 7 June 2011 was incorporated in 
the  law  of  28  July  2011on  the  development  of 
apprenticeships  and  secure  professional  paths. 
The  quota  for  apprentices  in  companies  with 
more  than  250  employees  was  increased  from 
3% to 4% and then to 5% in February 2012. The 
financial  penalties  have  been  increased  as  well. 
However,  in  2011,  the  number  of  apprentices 
was still far from the objective (629 000).  

•  Long-term  unemployment  has  been  increasing 
for  the  past  three  years  for  all  groups.  No  data 
are  available  so  far  on  improved  counselling 
services 
unemployed. 
According to the Employment Ministry, 87% of 
long-term  unemployed  were  received  by  Pôle 
emploi  counsellors  between  March  and  May 
2011.  However,  the  outcome  of  this  process 

long-term 

the 

for 

 
 
remains  unclear.  Under  the  new  agreement,  the 
provision  of  customised  services  will  be  one  of 
the three priorities of Pôle emploi. 

•  The employment rate for women stood at 64.6% 
in  2011,  slightly  below  its  2010  level  (64.7%). 
The  national  reform  programme  states  that  the 
childcare creation plan is being implemented and 
that  85%  had  been  completed  in  the  first  three 
years of the plan.  

The  commitments  related  to  structural  policies  have 
been partly implemented 

•  The  first  wave  of  projects  has  now  been 
completed  (400  projects  selected  in  2011);  the 
second  wave  has  been  launched  and  is  to  be 
completed  in  the  course  of  2012.  Many  aspects 
of  the  reform  are  planned  in  line  with  a  multi-
annual  agenda  (autonomy  of  all  universities  by 
the  end  of  2012,  target  for  the  completion  of 
buildings corresponding to the new Campus Plan 
only in 2015). 

•  A new Law on administrative simplification was 
adopted  in  February  2012.  It  resulted  in  the 
adoption  of  25  measures  that  were  proposed 
during 
in  April  and 
December 2011.  

the  consultation  held 

Structural policies:  

•  Strengthen the research potential and improve its 
impact  in  terms  of  innovation  and  economic 
outcome. 

•  Provide  EUR  3.6  billion  in  additional  funds  for 
2011 
research 
tertiary  education  and 
institutions.  Foster  the  emergence  of  5  to  10 
transversal research clusters.  

to 

•  Launch  the  Campus  Plan,  complete  the  reform 
granting  full  autonomy  to  the  universities  and 
accelerate  the  grouping  of  tertiary  education 
institutions.  

•  Launch 

an 

administrative 

simplification 
programme, 
in  particular  SMEs, 
resulting  from  the  consultation  process  initiated 
by the government. 

targeting 

Employment rate target: 75%  

Employment rate (%): 69.4% (2009), 69.1% (2010). 

Europe 2020 (national targets and progress) 

R&D target: 3% of GDP  

The  current  deterioration  of  the  employment  market 
creates  a  significant  obstacle  to  achieving  this 
objective. In particular, the rising levels of long-term 
unemployment  suggest  that  the  effects  will  be  long-
lasting.  Efforts  have  been  made 
increase 
employment for youth and senior workers. However, 
their effectiveness has been limited so far.  

to 

No  progress  has  been  made  towards  achieving  this 
target.  

Gross domestic expenditure on R&D (in % of GDP): 
2.26% (in 2009), 2.26% (2010 provisional figure). 

Ambitious  policy  measures  have  been  undertaken to 
develop  R&D  in  both  the  public  and  the  private 
sector.  The  effectiveness  of  these  schemes  will  be 
reviewed in the near future. 

Some progress has been made towards achieving this 
target. 

CO2 emission reduction target (development in %) of  Greenhouse gas emissions, base year 1990. 

31

 
 
 
the Member State as set in the 2011 national reform 
programme:  -14%  in  2020  (compared  to  2005), 
excluding EU ETS 

Index 1990 = 100: 92 (in 2009, compared with 101 in 
2005). 

Due  to  its  energy  mix,  France  is  among  the  least 
CO2-intensive  economies  in  the  EU.  The  economic 
crisis  should  lower  emissions  in  the  medium  term. 
Action 
de 
l'environnement  should  contribute  to  help  achieving 
the objective.  

the  Grenelle 

related 

plans 

to 

Renewable energy target: 23%  

Some progress has been made towards achieving this 
target. 

Share  of  renewable  energy  in  gross  final  energy 
consumption (in %): 12.3% (2009). 

to 

Thanks 
its  hydraulic  electricity  generation 
capacity,  France  is  among  the  EU  countries  with  a 
high share of renewable energy.  

Some progress has been made towards achieving this 
target. 

Energy  efficiency  –  Reduction  in  primary  energy 
consumption by 2020 (in Mtoe): -34.0 Mtoe 

Gross inland consumption of energy divided by GDP 
(kilogramme  of  oil  equivalent  per  1 000  euros): 
163.7 (2009), 166.7 (2010). 

The energy efficiency objectives are set on the basis 
of  national  circumstances  and  national  formulations. 
As  the  methodology  for  expressing  the  2020  energy 
consumption  impact  of  these  objectives  in  the  same 
format  has  been  agreed  only 
the 
Commission is not yet able to present this overview. 

recently, 

Early school leaving target: 9.5% 

Tertiary education target: 50% 

from 

leavers 

education 

training 
Early 
(percentage  of  the  population  aged  18-24  with  at 
most  lower  secondary  education  and  not  in  further 
education  or 
training):  12.2  (2009  provisional 
figure), 12.6 (2010 provisional figure). 

and 

The  rate  of  early  school  leaving  has  decreased  only 
moderately over the last decade (13.3% in 2000). The 
national target would represent a significant potential 
decrease.  The  government  is  planning  a  wide  range 
of  initiatives,  including  better  monitoring  of  early 
school  leavers,  plans  to  prevent  and  correct  low 
achievement,  individualised  support  and  guidance. 
Although  the  measures  already  implemented  might 
result  in  a  more  positive  trend  in  the  future,  further 
efforts may be needed.  

Some progress has been made towards achieving this 
target. 

Tertiary  educational  attainment:  43.2% 
(2009 
provisional figure), 43.5% (2010 provisional figure). 

France has made considerable progress since 2000 in 

32

 
 
Target to reduce the population at risk of poverty or 
social exclusion: reduction of the anchored at-risk-of-
poverty rate by one third for the period 2007-2012 or 
by 1 600 000 people 

in  higher  education  has 
this  area.  Investment 
increased  significantly  in  France  and  is  backed  by 
major  reforms 
the  universities  greater 
autonomy. 

to  give 

Some progress has been made towards achieving this 
target. 

People  at  risk  of  poverty  or  social  exclusion:  11155 
000 (2009), 11 763 000 (2010). 

The  main  measure  to  limit  the  risk  of  poverty  and 
social  exclusion  was  the  introduction  of  the  Revenu 
de  solidarité  active  in  2010.  Due  in  particular  to 
lower-than-expected  take-up  among  the  working 
poor, 
slightly  below 
expectations. As a consequence of the crisis, poverty 
may have increased, offsetting the impact of previous 
reforms. 

results  have  been 

the 

No  progress  has  been  made  towards  achieving  this 
target.  

33

 
 
 
5.  Annex  

Table I. Macroeconomic indicators 

Core indicators
GDP growth rate
Output gap 1
HICP (annual % change)
Domestic demand (annual % change) 2
Unemployment rate (% of labour force) 3
Gross fixed capital formation (% of GDP)
Gross national saving (% of GDP)
General government (%  of GDP)
Net lending (+) or net borrowing (-)
Gross debt
Net financial assets 
Total revenue 
Total expenditure
  of which: Interest
Corporations (%  of GDP)
Net lending (+) or net borrowing (-)

1995-
1999

2000-
2004

2005-
2008

2009

2010

2011

2012

2013

2.4
-0.6
1.3
2.2
10.7
17.4
19.8

-3.4
58.2
-40.5
50.2
53.7
3.3

2.0
2.2
2.0
2.2
8.7
18.6
20.0

-2.8
60.3
-43.1
49.7
52.6
2.9

1.6
2.0
2.1
2.1
8.7
20.4
20.0

-2.8
65.8
-41.6
50.2
53.1
2.7

-2.7
-2.8
0.1
-2.5
9.5
19.7
17.0

-7.5
79.2
-52.3
49.2
56.8
2.4

1.5
-2.5
1.7
1.4
9.8
19.3
17.1

-7.1
82.3
-58.8
49.5
56.5
2.4

1.7
-2.1
2.3
1.7
9.7
19.8
18.1

-5.2
85.8
n.a
50.7
55.9
2.6

0.5
-2.8
2.1
0.2
10.2
19.9
18.1

-4.5
90.5
n.a
51.8
56.3
2.6

1.3
-2.7
1.9
1.3
10.3
20.0
18.4

-4.2
92.5
n.a
52.0
56.2
2.6

1.2

-0.5

-1.5

0.6

0.3

-1.6

-2.1

-2.1

n.a
n.a
11.0
16.2

n.a
n.a
10.6
15.4

-75.3
9.1
9.1
16.6

-90.2
10.5
10.3
16.8

4.2
n.a
39.7
6.8
26.4
10.9

-112.5
17.5
10.0
16.7

-109.4
13.6
9.4
16.1

-106.9
10.8
11.3
16.9

4.3
119.3
38.0
6.8
24.7
10.0

4.2
126.5
39.0
6.5
24.4
10.0

4.9
137.5
39.7
6.7
26.4
11.2

3.2
132.6
38.8
6.6
24.6
9.9

4.6
141.8
39.6
6.5
26.5
10.8

Net financial assets, non-financial corporations
Net financial assets, financial corporations
Gross capital formation
Gross operating surplus
Households and NPISH (%  of GDP)
Net lending (+) or net borrowing (-)
Net financial assets
Gross wages and salaries
Net property income
Current transfers received
Gross saving
Rest of the world (%  of GDP)
Net lending (+) or net borrowing (-)
Net financial assets
Net exports of goods and services
Net primary income from the rest of the world
Net capital transactions 
Tradable sector
Non-tradable sector
  of which: Building and construction sector
Real effective exchange rate (index, 2000=100)
Terms of trade in goods and services (index, 2000=100)
Market performance of exports (index, 2000=100)
Notes:
1 The output gap constitutes the gap between actual and potential gross domestic product at 2000 market prices.
2 The indicator for domestic demand includes stocks.
3  Unemployed persons are all persons who were not employed, had actively sought work and were ready to begin working immediately or within two 
weeks. The labour force is the total number of people employed and unemployed. The unemployment rate covers the age group 15-74.

2.1
-12.6
2.1
0.9
0.0
39.5
49.7
4.5
110.0
101.8
101.2

0.8
-3.8
1.0
1.2
-0.1
38.4
51.4
4.7
104.7
101.1
98.3

-2.1
10.6
-1.8
1.6
0.0
33.7
56.6
5.8
115.2
100.6
83.9

-1.2
5.0
-1.3
1.7
0.0
35.5
54.0
5.4
112.7
99.0
86.3

-2.2
12.0
-2.3
1.8
0.0
33.8
56.1
5.4
113.4
98.4
83.4

-2.7
n.a
-2.9
1.9
0.0
n.a
n.a
n.a
114.6
96.6
84.5

-2.2
n.a
-2.9
2.1
0.2
n.a
n.a
n.a
113.3
95.8
86.1

4.5
n.a
39.9
7.1
26.8
11.3

n.a
n.a
10.5
15.4

4.4
n.a
39.6
7.1
26.9
11.3

-2.0
n.a
-2.7
2.2
0.2
n.a
n.a
n.a
113.2
96.1
87.2

Source :
Commission spring 2012 forecast

34

 
 
 
 
 
Table II. Comparison of macroeconomic developments and forecasts 

Real GDP (% change)
Private consumption (% change)
Gross fixed capital formation (% change)
Exports of goods and services (% change)
Imports of goods and services (% change)
Contributions to real GDP growth:
- Final domestic demand
- Change in inventories
- Net exports
1

Output gap
Employment (% change)
Unemployment rate (%)
Labour productivity (% change)
HICP inflation (%)
GDP deflator (% change)
Comp. of employees (per head, % change)
Net lending/borrowing vis-à-vis the rest of 
the world (% of GDP)

2011
COM SP
1.7
0.4
2.9
5.0
4.8

1.7
0.4
2.9
4.9
4.6

2012
COM SP
0.7
0.4
0.9
3.4
1.6

0.5
0.7
0.5
2.5
1.3

2013
COM SP
1.8
1.2
2.9
5.2
4.0

1.3
1.5
1.8
4.8
4.3

1.0
0.8
0.0
-2.1

0.7
9.7
1.0
2.3
1.6
2.8
-2.7

1.0
0.8
-0.1
-2.1

0.6
n.a.
1.1
2.1
1.6
2.9
-2.6

0.6
-0.4
0.3
-2.8

0.4
10.2
0.0
2.1
1.5
2.1
-2.2

0.6
-0.4
0.4
-2.7

0.3
n.a.
0.4
1.9
1.6
1.7
-2.5

1.4
0.0
0.0
-2.7

0.4
10.3
0.9
1.9
1.8
2.0
-2.0

1.3
0.2
0.2
-2.4

0.5
n.a.
1.3
1.8
1.8
1.5
-2.1

2014
SP
2.0
2.2
2.4
6.2
5.1

1.7
0.1
0.2
-1.7

0.8
n.a.
1.2
1.8
1.7

2015
SP
2.0
2.2
2.4
6.2
5.1

1.7
0.0
0.2
-1.1

0.9
n.a.
1.1
1.8
1.7

optional optional

-1.8

-1.6

2016
SP
2.0
2.2
2.3
6.2
5.1

1.7
0.0
0.2
-0.4

0.9
n.a.
1.1
1.8
1.7
n.a.
-1.3

Note:
1In per cent of potential GDP, with potential GDP growth according to the programme as recalculated by Commission services.

Source :
Commission spring 2012 forecasts (COM); Stability programme (SP).

35

 
 
 
Table III. Composition of the budgetary adjustment 

(% of GDP)

2011

2012

2013

2014

2015

2016

Change: 
2011-2016

Revenue
of which:
- Taxes on production and imports
- Current taxes on income, wealth, etc.
- Social contributions
- Other (residual)
Expenditure
of which:
- Primary expenditure

of which:

Compensation of employees
Intermediate consumption
Social payments
Subsidies
Gross fixed capital formation
Other (residual)
- Interest expenditure
General government balance (GGB)
Primary balance
One-off and other temporary measures
GGB excl. one-offs

Output gap

2

Cyclically adjusted balance

2

Structural balance
Change in structural balance

3

Structural primary balance
Change in structural primary balance
Expenditure benchmark

3

Public expenditure growth

4

 (real)

Reference rate

5,6

5,7

Lower reference rate
Deviation in % of GDP 
from applicable reference rate
Two-year average deviation in % of GDP 
from applicable reference rate

COM COM SP
51.5
51.8
50.7

COM SP
52.1
52.0

15.3
11.3
18.8
5.4
55.9

15.6
11.8
18.8
5.6
56.3

15.7
11.8
18.7
5.3
55.8

16.0
12.1
18.3
5.6
56.2

16.0
12.4
18.2
5.5
55.1

SP
52.2

16.1
12.5
18.2
5.4
54.2

SP
52.4

16.2
12.7
18.2
5.3
53.4

SP
52.6

16.2
12.8
18.2
5.4
52.6

53.3

53.7

53.3

53.6

52.5

51.6

50.7

49.8

13.2
5.5
25.6
1.5
3.1
4.5
2.6
-5.2
-2.6
0.0
-5.2

-2.1

-4.1

-4.1

-1.6

13.2
5.5
25.9
1.5
3.1
4.5
2.6
-4.5
-1.9
0.1
-4.6

-2.8

-3.1

-3.2
0.9

-0.6
0.9

13.1
5.5
25.8
1.5
3.1
4.4
2.5
-4.4
-1.8
0.0
-4.4

-2.7

-3.1

-3.1
1.1

-0.6
1.0

-0.93

1.26

0.34
-0.68

-1.37

1.26

0.34
-0.91

13.0
5.5
25.9
1.5
3.2
4.5
2.6
-4.2
-1.6
0.0
-4.2

-2.7

-2.9

-2.9
0.4

-0.2
0.4

0.47

1.26

0.34
0.07

12.8
5.3
25.6
1.4
3.0
4.3
2.6
-3.0
-0.5
0.0
-3.0

-2.4

-1.8

-1.8
1.3

0.8
1.4

12.4
5.2
25.3
1.4
2.9
4.3
2.6
-2.0
0.6
0.0
-2.0

-1.7

-1.2

-1.2
0.7

1.4
0.7

12.1
5.0
25.0
1.4
2.9
4.2
2.7
-1.0
1.7
0.0
-1.0

-1.1

-0.5

-0.5
0.7

2.2
0.8

-1.22

1.26

0.34
-0.82

-0.31

1.26

0.34
-0.33

-0.32

1.26

0.34
-0.34

11.8
4.9
24.7
1.4
2.8
4.1
2.8
0.0
2.8
0.0
0.0

-0.4

0.2

0.2
0.7

3.0
0.8

n.a.

n.a.

n.a.
n.a.

n.a.

n.a.

-0.30

-0.86

-0.58

-0.33

n.a.

SP
1.9

0.9
1.5
-0.6
0.0
-3.3

-3.5

-1.4
-0.5
-0.9
-0.1
-0.3
-0.4
0.2
5.2
5.4
0.0
5.2

1.7

4.3

4.4

4.6

n.a.

n.a.

n.a.
n.a.

n.a.

Notes:
1On a no-policy-change basis.
2Output gap (in % of potential GDP) and cyclically adjusted balance according to the programme as recalculated by the Commission on the 
basis of the information in the programme.
3Structural (primary) balance = cyclicallyadjusted (primary) balance excluding one-off and other temporary measures.

4M odified expenditure aggregate used for the expenditure benchmark, growth rates net of non-discretionary changes in unemployment 
benefit and of discretionary measures.

5The reference rates applicable to 2014 onwards will be available from mid-2012. For illustrative purposes, the current reference rates have 
also been applied to the years 2014 onwards.
6The (standard) reference rate applies starting in the year following the one in which the country reaches its M TO.
7The lower reference rate applies as long as the country is adjusting towards its M TO, including the year in which it reaches the M TO.

Source :
Stability programme (SP); Commission spring 2012 forecasts (COM); Commission  calculations.

36

 
 
 
Table IV. Debt dynamics  

average 
2006-10

71.6
3.1

2.0
1.0

2.6
-0.4
-1.1
0.1

2011

85.8
3.5

2.6
0.0

2.6
-1.3
-1.2
1.0

2012
COM SP

2013
COM SP

90.5
4.7

89.0
3.2

92.5
2.0

1.9
1.0

2.6
-0.4
-1.2
1.8

1.8
0.7

2.6
-0.6
-1.3
0.7

1.6
-0.1

2.6
-1.2
-1.5
0.6

89.2
0.2

0.5
-0.5

2.5
-1.5
-1.4
0.2

2014
SP

88.4
-0.8

2015
SP

86.4
-2.0

2016
SP

83.2
-3.2

-0.6
-0.6

2.6
-1.7
-1.4
0.4

-1.7
-0.4

2.7
-1.7
-1.4
0.2

-2.8
-0.3

2.8
-1.7
-1.4
-0.1

(% of GDP)

Gross debt ratio1
Change in the ratio
Contributions 2 :

1. Primary balance
2. “S now-ball” effect

Of which:
Interest expenditure
Growth effect
Inflation effect

3. S tock-flow adjustment

Of which:
Cash/accruals diff.
Acc. financial assets
Privatisation

Val. effect & residual

2012

2013

2014

2015

2016

2011

COM/
S P3

S P4

COM/
S P3

S P4

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

S P

-

0.7

0.0

S P

-

0.7

0.0

S P

-

0.7

0.0

Gap to the debt benchmark5,6
S tructural adjustment7
To be compared to:
Required adjustment8

-

-

-

Notes:
1End of period.

2The snowball effect captures the impact of interest expenditure on accumulated debt, as well as the impact of real GDP 
growth and inflation on the debt ratio (through the denominator). The stock-flow adjustment includes differences in cash 
and accrual accounting, the accumulation of financial assets and valuation and other residual effects. 
3Assessment of the consolidation path set in SP assuming growth follows the COM  forecasts.

4Assessment of the consolidation path set in the SP assuming growth follows the SP projections.

5Not relevant during EDP that were ongoing in November 2011 and in the three years following the correction of the 
excessive deficit.

6Shows the difference between the debt-to-GDP ratio and the debt benchmark. If positive, projected gross debt-to-GDP 
ratio does not comply with the debt reduction benchmark.

7Applicable only during the transition period of three years from the correction of the excessive deficit for EDP that were 
ongoing in November 2011

8 Defines the remaining annual structural adjustment over the transition period which ensures that - if followed – M ember 
State will comply with the debt reduction benchmark at the end of the transition period, assuming that COM  (SP) 
budgetary projections are achieved.

Source :

Stability programme (SP); Commission spring 2012 forecasts (COM); Commission calculations

37

 
 
 
 
Table V. Long-term sustainability indicators 

FR

No-policy 
change 
scenario 

Stability 
programme 
scenario

No-policy 
change 
scenario 

EU27

SCPs 
scenario

S2
of which:

Initial budgetary position (IBP)
Long-term change in the primary balance (LTC)
 of which:

pensions
health care and long term care
others

S1 (required adjustment)*

2.2

1.3
0.9

0.4
0.9
-0.5
3.0

-1.1

-2.0
0.9

0.6
0.8
-0.5
-1.0

2.9

0.7
2.3

1.1
1.5
-0.3
2.2

0.7

-1.6
2.4

1.2
1.5
-0.3
-0.1

Debt, % of GDP (2011)
Age-related expenditure, % of GDP (2011)
Source : Commission, 2012 stability programme.
Note : the 'no policy change' scenario depicts the sustainability gap under the assumption that the 
budgetary position evolves according to the spring 2012 forecast until 2013. The 'stability programme' 
scenario depicts the sustainability gap under the assumption that the budgetary plans in the programme 
are fully implemented.

86.0
31.2

82.8
25.8

* The required adjustment of the primary balance until 2020 to reach a public debt of 60% of GDP by 2030.

Figure. Medium-term debt projection 

(% of GDP)

100

Gross debt as % of GDP - FR - Medium term debt projections

90

80

70

60

50

40

30

20

10

0

0
0
0
2

2
0
0
2

4
0
0
2

6
0
0
2

8
0
0
2

0
1
0
2

2
1
0
2

4
1
0
2

6
1
0
2

8
1
0
2

0
2
0
2

COM no-policy change scenario
COM + Shock ( -1p.p. in the short-term/long-term interest rate on maturing and new debt from 2014)
COM + Shock (+1p.p. in the short-term/long-term interest rate on maturing and new debt from 2014)
COM consolidation scenario (0.5% per year on SB) in order to achieve MTO
COM consolidation scenario (1% per year on SB) in order to achieve MTO
SP scenario

38

 
 
 
 
 
 
 
 
 
Table VI. Taxation 

Total tax revenues (incl. actual compulsory social contributions, % of GDP)
Breakdown by economic function (% of GDP)1
     Consumption

              of which:

              - VAT

             - excise duties on tobacco and alcohol

             - energy

             - other (residual)

     Labour employed

     Labour non-employed

     Capital and business income

     Stocks of capital/wealth
     p.m.  Environmental taxes2
3
VAT efficiency
     Actual VAT revenues as % of theoretical revenues at standard rate

2001

43.8

2005

43.8

2007

43.4

2008

43.2

2009

42.0

2010

42.5

11.3

11.3

11.0

10.8

10.7

10.9

7.3

0.7

1.6

1.6

7.4

0.6

1.6

1.8

7.2

0.7

1.5

1.6

7.1

0.7

1.4

1.6

6.9

0.7

1.5

1.7

7.0

0.7

1.4

1.7

22.2

22.4

21.9

22.2

22.6

22.4

0.7

5.6

4.4

2.0

0.8

4.8

4.6

1.9

0.6

5.4

4.7

1.8

0.6

5.3

4.5

1.8

0.6

3.7

4.6

1.8

0.7

4.5

4.3

1.8

51.4

51.3

51.0

49.8

46.3

47.1

Note: 
1 T ax revenues are broken down by economic function, i.e. according to whether taxes are raised on consumption, labour or capital. See European Commission (2012), 

T axation trends in the European Union, for a more detailed explanation.

2 T his category comprises taxes on energy, transport and pollution and resources included in taxes on consumption and capital.

3 T he VAT  efficiency is measured via the VAT  revenue ratio. T he VAT  revenue ratio is defined as the ratio between the actual VAT  revenue collected and the revenue 

that would theoretically be raised if VAT  was applied at the standard rate to all final consumption. A low ratio can indicate a reduction of the tax base due to large 

exemptions or the application of reduced rates to a wide range of goods and services ('policy gap') or a failure to collect all tax due to e.g. fraud ('collection gap'). See 

European Commission (2011), T ax reforms in EU Member States, European Economy 5/2011, for a more detailed explanation.

Source: Commission

39

 
 
 
 
 
Table VII. Selected macrofinancial stability indicators 

2007

2008

2009

2010

2011

377.4
51.8
11.7

2.7
10.2
9.8
14.9
12.9
127.4
1.3
8.2
110.6

34.6
36.5
8.7
…

398.9
51.2
12.0

2.8
10.5
-1.0
7.0
7.4
128.4
3.0
8.5
115.7

42.6
39.2
25.0
30.3

405.3
47.2
10.8

3.6
12.4
8.2
-0.6
3.7
120.2
2.0
7.3
120.3

47.8
42.1
42.8
41.1

405.1
47.4
…

3.8
12.7
12.0
5.0
8.0
118.0
0.8
5.6
125.2

50.3
43.2
37.5
70.3

422.5
…
…

...
...
...
2.4
6.2
113.4
2.8
4.5
127.1

…
…
71.2
126.6

Total assets of the banking sector (% of GDP)
Share of assets of the five largest banks (% of total assets)
Foreign ownership of banking system (% of total assets)
Financial soundness indicators:
              - non-performing loans (% of total loans) 1), 2)
              - capital adequacy ratio (%) 1), 3) 
              - return on equity (%) 1)
Bank loans to the private sector (year-on-year % change)
Lending for house purchase (year-on-year % change)
Loan to deposit ratio
CB liquidity as % of liabilities
Banks' exposure to countries receiving official financial assistance  (% of GDP)4)
Private debt (% of GDP)
Gross external debt (% of GDP)  5)
            - Public
            - Private
Long term interest rates spread versus Bund (basis points)*
Credit default swap spreads for sovereign securities (5-year)*
Notes: 
1) Latest available December 2010.
2) The capital adequacy ratio is defined as total capital divided by risk weighted assets.   
3) The capital adequacy ratio is defined as total capital devided by risk weigthed assets.   
4) Covered countries are IE, EL, PT, RO, LV and HU.
5) Latest data 2011Q3.
* M easured in basis points.
Source :

Bank for International Settlements and Eurostat (exposure to macro-financially vulnerable countries), IMF (financial soundness indicators), 
Commission (long-term interest rates), World Bank (gross external debt) and ECB (all other indicators).

40

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table VIII. Labour market and social indicators 

Labour market indicators
Employment rate 
(% of population aged 20-64)
Employment growth 
(% change from previous year)
Employment rate of women 
(% of female population aged 20-64)
Employment rate of men 
(% of male population aged 20-64)
Employment rate of older workers 
(% of population aged 55-64)
Part-time employment 
(% of total employment)
Part-time employment of women  
(% of women employment)
Part-time employment of men  
(% of men employment)
Fixed term employment 
(% of employees with a fixed term contract)
Unemployment rate1 (% of labour force)
Long-term unemployment2  (% of labour force)
Youth unemployment rate 
(% of youth labour force aged 15-24)

2006

2007

2008

2009

2010

2011

69.3

69.8

70.4

69.4

69.1

69.1

0.7

1.8

1.3

-0.9

0.2

0.3

63.8

64.8

65.5

64.9

64.7

64.6

74.9

75.0

75.5

74.1

73.7

73.8

38.1

38.2

38.2

38.9

39.7

41.4

17.3

17.4

17.1

17.5

17.9

18.1

30.4

30.6

29.6

30.1

30.3

30.3

5.8

5.8

5.8

6.1

6.8

6.9

14.8

15.1

14.9

14.3

15.0

15.3

9.2

3.9

8.4

3.4

7.8

2.9

9.5

3.4

9.8

3.9

9.7

4.0

22.4

19.8

19.3

23.9

23.6

22.9

Youth NEET3 rate (% of population aged 15-24)

11.0

10.3

10.2

12.5

12.5

:

:

:

1.0

0.0

1.0

1.1

1.2

0.1

Early leavers from education and training (% of 
pop. 18-24 with at most lower sec. educ. and not 
in further education or training)
Tertiary educational attainment (% of population 
30-34 having successfully completed tertiary 
education)
Labour productivity per person employed 
(annual % change )
Hours worked per person employed  (annual % 
change)
Labour productivity per hour worked (annual % 
change; constant prices)
Compensation per employee (annual % change; 
constant prices)
Nominal unit labour cost growth (annual % 
change)

12.4

12.6

11.5

12.2

12.6

41.5

41.4

40.8

43.2

42.9

1.3

-1.5

2.9

1.0

1.8

0.9

0.5

0.3

-0.1

1.7

-0.8

1.1

-1.7

-0.1

3.2

0.7

-1.3

-1.4

-0.2

1.4

3.2

2.7

1.4

-0.4

1.7

1.3

0.7

-0.1

Real unit labour cost growth (annual % change)

-0.3

-0.9

Notes:

1 According to ILO definition, age group 15-74)
2 Share of persons in the labour force who have been unemployed for at least 12 months.
3 NEET are persons that are neither in employment nor in any education or training.

Sources: 
Commission (EU Labour Force Survey and European National Accounts) 

41

 
 
 
Table VIII. Labour market and social indicators (continued) 

Expenditure on social protection 
benefits (% of GDP)
Sickness/Health care
Invalidity
Old age and survivors
Family/Children
Unemployment
Housing and Social exclusion n.e.c.
Total
of which:  Means tested benefits
Social inclusion indicators
Risk-of-poverty or exclusion1 (% of total 
population)
Risk-of-poverty or exclusion of children (% of 
people aged 0-17)
Risk-of-poverty or exclusion of elderly (% of 
people aged 65+)
At-risk-of-poverty rate2 (% of total population)
Value of relative poverty threshold (single 
household per year) - in PPS
Severe material deprivation3  (% of total 
population)
Share of people living in low work intensity 
households 4 (% of people aged 0-59 not 
student)
In-work at-risk-of poverty rate (% of persons 
employed)

Notes:

2005

2006

2007

2008

2009

8.85
1.75
11.07
2.53
2.23
0.81
31.5
3.53

2006

8.78
1.76
11.19
2.51
1.96
0.77
30.9
4.16

2007

8.70
1.77
11.27
2.48
1.79
0.76
30.6
4.12

2008

8.79
1.76
11.63
2.49
1.70
0.80
31.0
4.19

2009

9.38
1.87
12.40
2.65
1.93
0.85
33.1
4.55

2010

18.8

19.0

18.6

18.4

19.3

18.1

19.6

21.8

21.5

23.0

17.5

13.2

15.2

13.1

13.2

12.7

12.3

12.9

12.0

13.5

8989

9089

10543

10591

10704

5.0

4.7

5.4

5.6

5.8

9.1

6.1

9.5

6.5

8.8

6.8

8.3

6.7

9.8

6.6

1 People at risk of poverty or social exclusion (AROPE): individuals who are at risk of poverty (AROP) 
and/or suffering from severe material deprivation (SM D) and/or living in households with zero or very low 
work intensity (LWI).

2 At-risk-of poverty rate: share of people with an equivalised disposable income below 60% of the national 
equivalised median income. 

3 Share of people who experience at least 4 out of 9 deprivations: people cannot afford to i) pay their rent or 
utility bills, ii) keep their home adequately warm, iii) face unexpected expenses, iv) eat meat, fish, or a protein 
equivalent every second day, v) enjoy a week of holiday away from home once a year, vi) have a car, vii) have 
a washing machine, viii) have a colour TV, or ix) have a telephone.

4 People living in households with very low work intensity: share of people aged 0-59 living in households 
where the adults work less than 20% of their total work-time potential during the previous 12 months.

Sources: 
For expenditure on social protection benefits ESSPROS; for social inclusion EU-SILC.

42

 
 
 
 
 
 
 
Table IX. Product market performance and policy indicators 

Performance indicators

Labour productivity1 total economy (annual 
growth in %)
Labour productivity1 in manufacturing (annual 
growth in %)
Labour productivity1 in electricity, gas, water 
(annual growth in %)
Labour productivity1 in the construction sector 
(annual growth in %)
Patent intensity in manufacturing2 (patents of the 
EPO divided by gross value added of the sector)

2002-
2006

1.3

3.0

2007

2008

2009

2010

2011

1.3

3.0

-0.5

-2.5

-2.4

-8.0

2.4

9.9

1.4

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

-0.2

-2.0

-1.3

-1.6

1.1

n.a.

3.2

2.9

2.5

n.a.

n.a.

n.a.

Policy indicators

Enforcing contracts 3 (days)
Time to start a business 3 (days)
R&D expenditure (% of GDP)
Tertiary educational attainment 
(% of 30-34 years old population)
Total public expenditure on education 
(% of GDP)

Product market regulation4, Overall
(Index; 0=not regulated; 6=most regulated)
Product market regulation4, Retail
(Index; 0=not regulated; 6=most regulated)
Product market regulation4, Network Industries 5
(Index; 0=not regulated; 6=most regulated)

2002-
2006

n.a.

n.a.
1.8

2007

2008

2009

2010

2011

535

20
1.8

542

17
1.9

548

15
2.0

549

15
2.0

26.5

30.0

31.1

32.3

33.6

556

14
n.a.

n.a.

5.1

5.0

5.1

n.a.

n.a.

n.a.

2005

2006

2008

2009

2010

2011

n.a.

n.a.

n.a.

n.a.

2

4

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

3

3

3*

n.a.

n.a.

n.a.

Notes:
1Labour productivity is defined as gross value added (in constant prices) divided by the number of persons employed.
2 Patent data refer to applications to the European Patent Office (EPO). They are counted according to the year in which 
they were filed at the EPO. They are broken down according to the inventor's place of residence, using fractional counting if 
multiple inventors or IPC classes are provided to avoid double counting. 
3 The methodologies, including the assumptions, for this indicator are presented in detail on the website 
http://www.doingbusiness.org/methodology. 
4 The methodologies for the product market regulation indicators are presented in detail on the website 
http://www.oecd.org/document/1/0,3746,en_2649_34323_2367297_1_1_1_1,00.html. The latest available product market 
regulation indicators refer to 2003 and 2008, except for Network Industries.

5 Aggregate ET CR.

*figure for 2007.

Source :

Commission, World Bank - Doing Business  (for enforcing contracts and time to start a business) and OECD (for the 
product market regulation indicators). 

43

 
 
 
 
 
Table X. Green Growth indicators 

Green Growth performance

Macroeconomic
Energy intensity 
Carbon intensity 
Resource intensity (reciprocal of resource productivity)
Waste intensity 
Energy balance of trade 
Energy weight in HICP
Difference between change energy price and inflation 
Environmental taxes over labour taxes
Environmental taxes over total taxes

Sectoral 

Industry energy intensity 
Share of energy-intensive industries in the economy
Electricity prices for medium-sized industrial users 
Public R&D for energy 
Public R&D for the environment
Recycling rate of municipal waste
Share of GHG emissions covered by ETS
Transport energy intensity
Transport carbon intensity
Change in the ratio of passenger transport and GDP

Security of energy supply
Energy import dependency
Diversification of oil import sources 
Diversification of energy mix
Share of renewable energy in energy mix

2001-
2005

0.18
0.38
0.56
n.a.
-1.7%
8
0.52
10.0%
5.3%

0.17
7.3
0.05
n.a.
n.a.
59.9%
n.a.
0.56
1.55
-0.8%

51.0%
n.a.
0.32
5.8%

2006

2007

2008

2009

2010

0.17
0.35
0.55
0.20
-2.5%
9
5.1
9.6%
5.0%

0.15
7.0
0.05
0.04%
0.02%
62.1%
23.0%
0.50
1.36
-2.2%

51.3%
0.09
0.32
6.0%

0.17
0.33
0.56
0.20
-2.3%
9
0.3
9.4%
4.9%

0.15
6.9
0.05
0.04%
0.01%
62.7%
23.3%
0.48
1.28
-1.3%

50.3%
0.09
0.32
6.4%

0.17
0.33
0.55
0.21
-2.9%
9
6.4
9.1%
4.8%

0.15
6.6
0.06
n.a.
n.a.
63.0%
23.0%
0.46
1.18
-0.6%

51.0%
0.09
0.31
7.2%

0.16
0.33
0.50
n.a.
-2.0%
8
-5.9
9.2%
5.0%

0.14
6.1
0.07
n.a.
n.a.
66.2%
21.5%
0.45
1.15
n.a.

51.3%
0.09
0.30
7.5%

0.17
n.a.
n.a.
n.a.
-2.4%
8
4.9
n.a.
n.a.

n.a.
n.a.
0.07
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

n.a.

n.a.
n.a.
n.a.
n.a.

kgoe / €
kg / €
kg / €
kg / €
% GDP
%
%
ratio
ratio

kgoe / € 
% GDP
€ / kWh
% GDP
% GDP
ratio
%
kgoe / €
kg / €
%

%
HHI
HHI
%

Country-specific notes: 
The year 2011 is not included in the table due to lack of data.
General explanation of the table items:
Source: Eurostat unless indicated otherwise; ECFIN explanations given below
All macro intensity indicators are expressed as a ratio of a physical quantity to GDP (in 2000 prices)
          Energy intensity: gross inland energy consumption (in kgoe) divided by GDP (in EUR)
          Carbon intensity: Greenhouse gas emissions (in kg CO2 equivalents) divided by GDP (in EUR)
          Resource intensity: Domestic Material Consumption (in kg) divided by GDP (in EUR)
          Waste intensity: waste (in kg) divided by GDP (in EUR)
Energy balance of trade: the balance of energy exports and imports, expressed as % of GDP  
Energy weight in HICP: the share of the "energy" items in the consumption basket used in the construction of the HICP
Difference between energy price change and inflation: energy component of HICP, and total HICP inflation (annual %-change)
Environmental taxes over labour or total taxes: from DG TAXUD's database "Taxation trends in the European Union"
Industry energy intensity: final energy consumption of industry (in kgoe) divided by gross value added of industry (in EUR) 
Share of energy-intensive industries in the economy: share of gross value added of the energy-intensive industries in GDP
Recycling rate of municipal waste: ratio of municipal waste recycled over total municipal waste
Public R&D for energy or for the environment: government spending on R&D (GBAORD) for these categories as % of GDP
Share of GHG emissions covered by ETS: based on greenhouse gas emissions as reported by Member States to EEA (excl LULUCF)
Transport energy intensity: final energy consumption of transport (in kgoe) divided by gross value added of industry (in EUR) 
Transport carbon intensity:  greenhouse gas emissions in transport divided by gross value added of the transport sector
Passenger transport growth : measured in %-change in passenger kilometres
Energy import dependency: net energy imports divided by gross inland energy consumption incl. of international bunkers
Diversification of oil import sources: Herfindahl index (HHI), calculated as the sum of the squared market shares of countries of origin 

Diversification of the energy mix: Herfindahl Index over natural gas, total petrol products, nuclear heat, renewable energies and solid fuels

Share of renewable energy in energy mix: percentage-share in  gross inland energy consumption, expressed in tonne oil equivalents