Business

How has French business fared in the Sarkozy era?

  • 15 April 2012
  • From the section Business
French president Nicolas Sarkozy
President Nicolas Sarkozy has steered France through turbulent economic times

As France heads to the polls for the presidential elections, Radio 4's In Business revisits some French businesses to find out how they have fared in the Nicholas Sarkozy era.

In the lead-up to the last French presidential ballot in 2007, Radio 4's In Business visited small, medium and large French companies to ask what they hoped for after the votes had been counted.

Back then, Henri de Castries, chairman and chief executive of the French global insurance giant Axa, was worried about the level of spending by the French government.

So returning to Axa five years later, how does Mr de Castries now see the economic outlook as the eurozone crisis rumbles on?

"If you look at where GDP growth has been since 2008, France stands out as one of the countries where the recession has been the mildest and where growth has resumed quite early in the cycle.

"So, on the surface France is resisting quite well," he concludes.

However, Mr de Castries is still concerned about the country's burgeoning debt.

"The issue we have in the country is the fact that public spending is too high and that we need further structural reforms.

"We need money to stay in the hands of those who know how to invest it, rather than having it taken by the state for additional unproductive spending."

Start-up success

On that previous trip to France, In Business also visited fledgling French start-up, Michel et Augustin.

Augustin Paluel-Marmont and Michel de Rovira of Augustin et Michel
Food company Michel et Augustin has grown 50% per year with the help of publicity stunts

It was a small company, founded by two friends making and selling cookies. Five years ago, they talked of the regulatory difficulties small businesses in France faced when starting up.

In the half decade that has since passed, their product line has gone from just two to more than 80 types of biscuits, yogurts and drinks.

They say their main aim is to make their customers smile, which they frequently do through wacky publicity stunts which serve as their advertising.

Now with an annual turnover of 15m euros (£12.4m) they are a much-used case study in French business schools.

Co-founder Augustin Paluel-Marmont says they have continued to grow by 50% every year in spite of the financial crisis - but it has not been easy.

He says it is difficult for small firms in France to make the jump to becoming medium-sized and that the country does not have the equivalent of Germany's "Mittelstand" - the broad base of medium-sized businesses which are the backbone of its industry.

Often, smaller French firms are bought up by foreign companies, but it is not always necessary, says Mr Paluel-Marmont:

"You need to be ambitious and we have to create [the attitude] for every entrepreneur in Europe that the natural market should be Europe and not only your own country."

Support for the single currency

But what about the euro? "I think it's great," says Mr Paluel-Marmont.

"Of course, if we want to be successful, we need Europe to be even more concrete," he adds.

Another supporter of the European single currency is Pierre Kosciusko-Morizet - co-founder of the online marketplace, Priceminister.

"My company is very Europe-minded, also I feel very European and I think that is a good thing for the French economy."

However, he has no time at all for the British decision to stay out of the eurozone:

"There is no question I think the euro is something that is needed. I'm really very disappointed with the English behaviour on that," he says.

"You can't build a new world by being selfish. You have to share values, currencies and you have to build things together."

Mr Kosciusko-Morizet went so far as sharing his own company - he sold up two years ago to Japanese internet company Rakuten for 200m euros.

"We wanted money to invest more aggressively. We couldn't raise the money on our own and then Rakuten came along with a plan… basically buy the company and invest a lot of money so we can make a lot of acquisitions."

Pierre Kosciusko-Morizet still runs Priceminister and is expanding within Europe.

While the businesses we have followed over the past five years have fared well - some very well indeed - the French economy as a whole has been somewhat stop-start on the growth front.

France saw its AAA credit rating placed on negative outlook by rating agency Fitch in December 2011, but it rounded out the year with surprise growth of 0.2%, which was attributed to healthy export growth.

But as Henri de Castries of insurance firm Axa said, France has fared better than many of its European neighbours, and he warns that Europe as a whole should not be underestimated.

"I think it's very fashionable these days to say that Europe is losing ground.

"It's true that because of imbalances in some countries there are challenges," he admits, "but I don't think we should underestimate the positive things which should come out of this crisis."

Mr de Castries believes that the political will to keep the euro is "extremely strong".

He also argues that, in the long term, if Europe pulls together through closer economic convergence, the euro will prove worthwhile.

"It's exactly like a rugby team. You can have bright individuals and if they don't learn to play together they will never score.

"The best thing the eurozone can do to preserve its competitiveness in the long run is precisely to try to have a more co-ordinated game."

You can hear more about how French business has fared over the past five years on BBC Radio 4's In Business.

You can listen again by downloading the podcast.

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