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Internal Market, Industry, Entrepreneurship and SMEs
France - ECSO country fact sheet
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In 2020, France’s GDP reached EUR 2.2 trillion, exhibiting a 4.0% growth as compared to the 2010 level (EUR 2.1 trillion). However, this represented a decline of 7.9% as compared to 2019

In line with the overall economy, the number of enterprises in the broad construction sector increased by 4.4%, from 698,034 in 2010 to 728,420 in 2020. This growth was largely driven by the real estate activities (+47.3%), followed by the architectural and engineering activities (+7.2%) sub‑sectors. However, this also represented a decline of 11.4% as compared to its 2019 level.

In contrast, the volume index of production in the broad construction sector decreased by 12.5% between 2015 and 2020. This was primarily due to a 14.4% and 5.1% decrease in the volume index of production in construction of buildings and civil engineering over the same period. Conversely, this represented a greater decline of 15.0% as compared to its 2019 level.

In parallel, the turnover of the broad construction sector in 2020 stood at EUR 442.0 billion, representing a 5.3% rise as compared to 2010 (EUR 419.9 billion). However, this was also 11.9% lower as compared to its 2019 level. This overall increase was mainly driven by growth in the real estate activities (+14.0%) and the narrow construction (+5.6%) sub‑sectors over the 2010‑2020 period.

47.3%
Number of enterprises in the real estate activities sub-sector between 2010 and 2020
12.5%
Production in the broad construction sector between 2015 and 2020
5.3%
Turnover in the broad construction sector between 2010 and 2020

The gross operating rate in the broad construction sector, an indication of the sector’s profitability, stood at 10.5% in 2018, being 0.9 percentage points (pp) below the 2010 level. This indicates that despite higher turnover, the profit margins are limited. According to the FFB (Fédération Française du Bâtiment), this relates to the increase in construction costs, the increasing competitiveness on price and the productivity loss.

In terms of employment, there were 2,296,762 persons employed in the broad construction sector in 2020, marking a 11.5% and 12.9% decline as compared to its 2010 and 2019 levels, respectively. This was mainly due to declines experienced in the manufacturing (-21.9%) and the narrow construction (‑15.3%) sub-sectors over the 2010‑2020 period.

The French government has already announced several measures to promote the housingmarket. It is supporting access to housing under its Housing First Plan (Le Logement d’abord) (2018-2022). The French government abolished the housing tax on the main residence. It also reformed the financing structure of local authorities. Under the 2020 budget, the housing tax has been entirely removed for 80.0% of French households. With regards to the remaining 20.0%, the country’s wealthiest households, there will be a gradual decrease in this tax rate from 2021, followed by complete cessation of housing tax by 2023. In its 2021-2026 National Resilience and Recovery Plan (NRRP), the French government has proposed the adoption of ‘Climate and Resilience Law’ to underpin its green transition. Additionally, the plan also suggested revision of thermal regulation of new buildings (‘RE2020'). Likewise, the French NRRP advocated for the implementation of the ‘2019 Mobility Law’, a broad legislative initiative to update the general framework of mobility policies and to be implemented over the NRRP timeframe. Other similar legislative reforms proposed include the ‘ASAP Law’ (acceleration and simplification of public action) and the ‘4D Law’ (differentiate, deconcentrate, decentralise, reduce complexity – “decompléxifier”). All these legislations have a direct or indirect impact on the French constructions sector. The French NRRP has also allocated EUR 5.8 billion for the renovation programme of its building stock in order to increase their energy efficiency.

With regards to the civil engineering sector, in accordance with the Grand Plan d’Investissement (Great Investment Plan) investment plan for the 2018-2023 period, the French government has allocated EUR 57.0 billion for the overall economic development. This includes EUR 9.0 billion for the thermal renovation of buildings, EUR 4.1 billion for infrastructure, renovation and sustainable transportation, as well as EUR 7.0 billion for the development of renewable energies. Additionally, the country is planning to invest EUR 13.7 billion by 2023 to improve its transport and mobility infrastructure.

Under its 2021 2026 RRP, France has allocated EUR 4.4 billion for modernisation of its railway network. This includes a EUR 4.1 billion plan to recapitalise ‘SNCF Réseau’, the railway infrastructure manager in France.

High speed railway projects also constitute an integral part of French rail infrastructure sector. Projects likely to be approved soon include modernisation of the USD 6.0 billion (EUR 5.3 billion) Montpellier - Perpignan line and the USD 22.0 billion (EUR 19.4 billion) Marseille - Nice line, along with the EUR 26.0 billion greenfield Turin-Lyon project. Other projects likely to be sanctioned soon involve Toulouse -Bordeaux line and the Normandy-Paris line

Nonetheless, the French construction sector continues to face two major issues. The foremost is the shortage of labour, which has hampered the sector’s recruitment. Secondly, the prevalence of late payments in the construction sector has an impact on the liquidity of companies. According to the 2021 Atradius Payment Practices Barometer Report for France, about 42.0% of the total value of B2B invoices issued in the French construction sector were affected by late payments.

Overall, the French construction sector has a positive outlook. The non-residential and civil engineering market are expected to be the primary growth drivers. Investments in public sector infrastructure, digitalisation as well as a circular economy, backed by EU funding and national resources, are expected to lead the future growth of the sector.