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Sunday, December 3, 2023

Faced with France’s record trade deficit, Macron wants to boost SME exports

Macron wants to relaunch the export battle. The Head of State is preparing to receive with great fanfare a delegation of around a hundred small and medium-sized enterprises (SMEs) and mid-sized companies at the Elysée Palace this Tuesday, November 21. Business leaders will be accompanied by local elected officials and employer representatives.

On this occasion, Emmanuel Macron and Bercy Minister Olivia Grégoire must detail a new program to support SMEs abroad. Objective: increase the share of SMEs in exports and conquer new international markets. “Our SMEs represent 2% of the value of exports while it is 9% in Germany and 54% in Italy”explains the entourage of the Head of State.

The glaring deindustrialization in France and forced relocations have left scars everywhere on the territory. The share of industry in gross domestic product (GDP) has fallen considerably over the last 50 years. And the recent crises (pandemic, war in Ukraine) have not helped anything. Faced with this terrible observation, Emmanuel Macon has decided to focus on SMEs and reindustrialization throughout this week. As a reminder, the presidential majority had especially rolled out the red carpet from the Elysée Palace to mid-sized companies (ETI) and the CAC 40 behemoths.

Support inspired by the French Tech model

The proposed support model must be inspired by the French tech program. “We have had a resolute policy for around ten years of supporting players and in particular startups to transform them into larger companies which have grown, which have raised funds”underlines the Elysée.

Macron in seduction operation with ETI bosses

The Head of State wants to make the “start-up nation” a lever to strengthen support “from a small number of actors on whom we will concentrate the best of State services, that is to say a one-stop shop which allows them to have a contact to whom they can turn as soon as they have difficulties “, continue Emmanuel Macron’s advisors.

To boost the international ambitions of SMEs, the presidency promises to invite more SMEs when the Head of State travels abroad. Until now, large companies and mid-sized companies were the main beneficiaries of these delegations. The executive also wants to give a boost to SMEs who want to attend trade fairs abroad. “With the Dare to Export plan, we decided to increase the support for companies that go to trade fairs by up to 30% of their cost. We aim to support 5,000 companies in these pavilions”.

A plan to try to restore the trade balance

The objective of this plan is also to help restore the deficit in the French trade balance. Over the past two decades, France has lost significant international market share. And the multiplication of crises in recent years has plunged foreign trade to unprecedented levels. In 2022, in the context of the outbreak of war in Ukraine and the energy crisis, “France’s trade balance recorded its worst year in more than 70 years”, explain the OFCE economists in their latest work devoted to the French economy in 2024.

VSEs/SMEs are resisting the lack of dynamism in the economy

In just one year, the balance has deteriorated by 70 billion euros due in particular to the surge in energy prices. As a result, the deficit recorded by customs stood at 134 billion euros. Of this total, 110 billion euros are attributable to the energy bill (4% of GDP), a level comparable to the oil shock of 1973. This year, energy prices have fallen in Europe. But the conflict in the Middle East between Hamas and Israel has revived fears of further overheating in oil prices. This particularly tense geopolitical context is unlikely to make the task of the executive easier.

Large companies and mid-sized companies represent 95% of exports

French small and medium-sized businesses are clearly absent from international trade. In a new study unveiled in the fall by the Study Center prospective andinternational information (CEPII), economist Daniel Mirza showed that 95% of exports were carried out by large and mid-sized companies. Among France’s main neighbors (Germany, Italy and Spain), SMEs occupy a much more important place in exports of goods.

In his work, the economist points out “a deterioration in price-quality competitiveness in goods, but a very strong improvement in services”. The deterioration in competitiveness would not be linked to a strong difference in cost but rather “to the scarcity of a very specific workforce”. Faced with these recruitment difficulties, he encourages “highly professional training in professions under pressure in the manufacturing sector”.