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B - Recovery in
employment before the pandemic
C - Industry focused on a few strengths hit hard by the pandemic
A - Pursue efforts to improve cost competitiveness
B - Address the persistent deficit in non-cost competitiveness
A - Target public support
B - Manage industrial policy more effectively
C - Leverage European cooperation
D - Rise to the challenge of the digital and environmental transitions
This policy paper is part of a body of work intended to present, on several major public policies,
the main challenges that public decision-makers will face in the coming years and the levers that
could make it possible to meet those challenges.
This series of publications, which runs from october to december 2021, is a follow-up to the
june 2021 report submitted to the President of the Republic, entitled "Exiting from crisis: A public
finance strategy".
This summary work aims to present, concerning a few essential structural issues, diagnostic
elements resulting from previous works by the Court and avenues of action capable of consolidating
long-term growth, while strengthening the equity, effectiveness and efficiency of public policies.
The Court, in accordance with its constitutional mission of informing citizens, wished to develop
a new approach, which differs from its usual work, and thus make its contribution to the public debate,
through this series of deliberately very synthetic and targeted notes, while taking care to leave open
the various possible avenues for reform.
Following an investigation and review phase running from march to july 2021 with the General
Secretariat for Investment (SGPI), the General Directorate of the Treasury (DGT), the General
Directorate for Business (DGE), the Central Government Shareholding Agency (APE), Bpifrance and
France Stratégie, this policy paper was deliberated by the 1st chamber and approved by the public
report and programmes committee of the Court of Accounts.
Publications of the Court of Accounts are accessible online on the website of the Court and the
regional and territorial chambers of accounts:
France has, more than its main partners, suffered from the deindustrialisation movement
affecting most advanced countries. In recent times, this situation can be explained in large part
by the decline in cost competitiveness that its economy suffered between 2000 and 2010, in a
context when entry into the euro resulted in the weapon of competitive devaluation being lost
and in which France's partners, particularly Germany, actively defended their competitiveness
through wage moderation and tax reallocations.
These cost competitiveness differences were partially resolved during the 2010-2020
decade. The increase in labour costs has slowed in France, particularly due to the taxation of
part of social protection financing. However, labour costs remain among the highest in the
European Union. Concerning corporate taxation, France has a high overall level compared to
its main partners.
The French economy also suffers from structural handicaps that hamper its non-cost
competitiveness. Research and development is insufficiently translated into industrial
innovations. The business environment can still be improved and industry's image among the
population has worsened. The industrial landscape is characterised by a preponderance of
large groups whose international expansion strategies, unlike other European countries, do
not foster the production of goods from France, while SMEs and mid-market companies
struggle to grow.
The essential improvement in the French economy's competitiveness must be
accompanied by determined efforts to address the structural handicaps of its industry. Five
measures need to be taken as a priority to achieve this:
Continue efforts to improve cost competitiveness (cost of labour and taxation) and non-
cost competitiveness (business environment, dissemination of innovation and
strengthening of skills);
More effectively manage the industrial policy, which must be more coordinated with
energy, research and innovation policies and sectoral policies such as health. This
management must be based on a clear identification of the public resources utilised and
results indicators;
Target public support more at a limited number of priorities, controlled by rigorous
governance that is as independent as possible and based on evaluations, to prevent this
support being captured by certain actors and excessive dispersal;
Support the industrial policy on European funding and cooperation projects to keep the
European Union at the technological frontier. Efforts to secure supply chains must also,
with some exceptions, draw on the European market;
Include responses to the challenges of the digital transition and the long-term
decarbonisation of French industry at a national level and as part of EU-level
Key figures
France, the
world's sixth
largest industrial power in 2004, eighth in 2019;
In 2019,
industrial companies, which employ
million people,
represented 13% of added value (11% for the manufacturing industry) and accounted
for 68% of goods and services exports;
Before the crisis,
per year in public support to industry, according to
France Stratégie, over
of which coming from central government (reductions in
social security contributions, tax credits, energy bill reduction, support for R&D and
innovation), with the rest coming from interventions from the regions and European
Significant new resources devoted to industry since the pandemic: reduction in
production taxes of
per year from 2021 and enhanced support for innovation
and investment.
Industrial policy seeks to maintain or increase industry's share of the economy. Industry
drives productivity gains that foster long-term growth in the economy: the corresponding
activities, and the related service activities with a high technological content, provide high-
quality, well-paid jobs; they help to rebalance the territories, as industrial employment is usually
located outside metropolitan areas; they have a ripple effect on R&D, innovation and the rest
of the economy; lastly, industry can contribute to France's sovereignty and more broadly its
strategic autonomy, i.e. its ability to contend with situations requiring it to be independent
regarding certain food, pharmaceutical or energy productions.
In 2019, France had just over 250,000 industrial companies as defined by Insee, i.e.,
companies with "economic activities that combine production factors (facilities, supply, labour,
knowledge) to produce material goods intended for the market". They account for nearly 8 %
of businesses in the non-agricultural and non-financial market sectors. In 2019, industry
represented 13 % of added value (11 % considering the manufacturing industry alone) and
employed nearly 3.2 million people, including 2.8 million in the manufacturing industry. Industry
makes a decisive contribution to the economy: in 2019, it represented 31 % of revenue and
28 % of added value in market sectors (excluding agriculture and financial services) and
supplied 73 % of imports and 68 % of goods and services exports.
The interpenetration between industry and services has increased substantially. Industry
sells a growing amount of services and also buys them in significant volume, due to a process
of outsourcing part of its activities and because it is tending to "digitise". Several public
programmes introduced in key countries point to the emergence of digital technology in
factories (
Industry 4.0
in Germany
, Industry of the future
in France
, Made in China 2025
In all industrialised countries, public interventions in the markets and sectors defined as
priorities combine cross-cutting policies and sectoral actions. At the start of the 2000s, French
industrial policy primarily sought to grow the knowledge economy (with the creation of
competitiveness clusters and Oséo). Affected by the very negative impact on industrial
employment from the 2008 financial crisis, France then stepped up public support for
innovation (launch of the investments for the future programme
and the creation of
Bpifrance) and endeavoured to reduce the cost competitiveness differences between its
businesses and those of other countries (competitiveness and employment tax credit,
taxation). The strengthening of industrial policy continued in 2019 with the five commitments
of the "Production pact for 2025", structuring the industrial strategy around the ecological
transition, innovation (PIA 4), territories (creation of industrial territories, decentralisation of
competitiveness clusters, digitisation of SMEs and regional aid), skills and research.
According to France Str
atégie, industry receives around €17
-20bn in public support
every year. More than 80% of the corresponding expenditure is from central government. This
mainly consists of cross-cutting measures aimed at supporting business competitiveness
(reductions in social security and tax charges), developing R&D (research tax credit), reducing
companies' energy bills (tax expenses) and supporting innovation (specific aid). Sectoral
ministries, France's regions and European funds finance other interventions.
Meanwhile, the European Commission has since 2015 paid more attention to "vertical"
or sectoral interventions. This new priority was chosen following the economic crisis of
2008-2011 and the dual observation of the risk of Europe stalling technologically compared
with other major blocs and the industrial rise of Asian countries, in particular China. The
European Union therefore took the industrial dimension into greater consideration in its
interventions to foster innovation. It is also paying more attention to Europe's strategic
autonomy by emphasising the development of disruptive innovations, securing its supply of
raw materials and supporting strategic sectors. The EU also encourages cooperation between
European countries and industrial businesses as part of "Important Projects of Common
European Interest" (IPCEI).
The pandemic has prompted central government to step up its actions to foster business
cost competitiveness. Contributing to this are the €10bn annual reduction in production taxes
from 2021 (
including €3.7bn for industry), the implementation of the PIA 4 (€20bn to foster
innovation over 2021-2025) and funding for digitisation, decarbonisation and targeted
relocations to strengthen the resilience of the economy and France's strategic autonomy.
These actions will be supplemented by the "France 2030" plan (€34bn planned from 2022),
under terms yet to be defined.
This policy paper first establishes a diagnosis of the situation in French industry, the
decline of which has been more pronounced than in most comparable countries (1). It then
shows that although the cost competitiveness differences have been partially reduced, French
industry's non-cost competitiveness continues to suffer from handicaps (2). Lastly, it highlights
the need for stronger targeting of sectoral interventions and renewed governance of the
industrial policy (3).
A - A general trend towards deindustrialisation that is stronger in
The deindustrialisation movement, understood as a reduction
in industrial added value's
share of GDP, affects most advanced countries, as well as emerging countries like China. This
results from the combined effect of productivity gains in industry (which leads to a fall in the
relative prices of industrial products), the development of services, the increase in
subcontracting (outsourcing movement) and the fragmentation of value chains. In France,
industrial employment peaked in 1974 before declining at a more or less sustained rate until
the period preceding the pandemic.
Deindustrialisation, which began in the 1970s, is more pronounced in France than in
most advanced countries
France, the sixth-largest industrial power in 2004, was ranked eighth
in 2019, with emerging countries accounting for a growing share of the production and trade
in manufactured goods. Over the past decade, France's market share in world trade has
declined, while countries like Germany and Spain have managed to maintain theirs. This
development is mainly attributable to industry, which represents nearly 70% of French exports.
The balance of trade in goods, which had become positive in the 1990s, returned to a
deficit from the early 2000s and then steadily declined, reaching its all-time low in 2011. French
exports' share of eurozone exports fell sharply until 2012, pointing to more acute
deindustrialisation in France than the average in eurozone countries. However, the 2017-2019
period preceding the pandemic was characterised by a stabilisation and even a slight recovery
in the situation.
Graphique n° 1 : French exports' share of goods in the eurozone (%)
Source: Eurostat, national accounts
N.B.: the eurozone in this case excludes Ireland due to anomalies concerning
the measurement of its GDP in 2015
Large businesses in services or industry are an asset in terms of tax revenue, the
structuring of sectors and the presence of head offices and R&D centres in France. However,
their international expansion strategies have had significant impacts on industrial employment
and contributed to deindustrialisation in certain sectors. In 2018, France was the world's third-
largest economy in terms of outward foreign direct investment (FDI), after Japan and China.
The stock of French investments abroad was exceeded only by those of Japan and the US.
Since 2000, this has generated increasing income, helping to balance the current account and
partially offset the deficit in the balance of trade. Like their competitors, large French
businesses organise their production abroad to meet local demand or export to neighbouring
markets. Conversely, their exports of goods produced in France have grown less than in other
European countries.
Lastly, although it has risen slightly over the past 20 years, French exports' range level
remains lower than that of British, German, Dutch or Italian exports, even though production
costs in these countries are not necessarily higher than in France.
Graphique n° 2 : structure of exports of manufactured goods by value range, unitary,
as a percentage of the total
Source: CEPII, France Strategy calculations. WFTC basis. Value ranges according to the price difference compared
to a global benchmark (top range: difference greater than 15%, mid range: difference between -15 and + 15%, low
range: difference of at least - 15%).
The structure of French production is therefore characterised by a bigger proportion of
large companies, the loss of competitiveness in the 2000s and a mid-range positioning. These
specifics explain the disappearance of production capacities, industrial jobs and skills in many
B - Recovery in industrial employment before the pandemic
Industrial employment has been declining since 1974. From 2000 to 2008, its decline
was greater in France than in the eurozone and could be explained less by business closures
than by the low level of job creations. Industrial job losses were huge during the 2008-2012
crisis. After 2012, while many European countries created industrial jobs again, France
continued to destroy them.
However, since 2017, industrial employment has picked up in France, after the US, the
UK, Italy and Spain, Japan and Germany. Job creations were particularly significant in 2017.
In 2018-2019, long-term job creations replaced temporary work, with overall industrial
employment remaining stable. These creations, which came at the top of the economic cycle,
mark a break from the continuous job destructions for over 15 years.
Graphique n° 3 : net change in industrial employment (including temporary
employment) in thousands
Source: Insee, quarterly estimates of salaried employment
C - Industry focused on a few strengths hit hard by the pandemic
The French economy has seen its production specialisation evolve over the last 20
The automotive industry, electrical products, coking and refining, rubbers and plastics,
and machinery and equipment have all experienced a sharp decline. Other sectors have held
firm, such as the food industry, where positive results in certain products (wines and spirits,
dairy products, cereals) nevertheless mask the stagnation or decline in the rest of the sector.
Aviation, pharmaceuticals and chemicals have seen their added value grow faster than GDP.
Graphique n° 4 : breakdown of French industrial production in 2018 (%)
Source: Insee
The comparative advantages by sectors can be assessed based on their performance
in the export of goods. France's market shares highlight a situation of comparative
disadvantage in the extractive industries, IT, clothing, transport and storage, the automotive
industry, metallurgy, rubbers and plastics, and electrical equipment. Statistical analysis does
not provide a precise measurement of the performance of the luxury sector, where France is
well positioned but which is divided between agrifood (wines and spirits) and textiles and also
has a knock-on effect on chemicals (cosmetics).
Industrial activity is relatively concentrated geographically: the Île-de-France, Rhône-
Alpes and Pays de la Loire regions account for the majority of jobs
However, industry is no
longer the number one economic sector in any of the 306
employment areas
identified by Insee
and Dares
in 2020, while this was still the case for a dozen in 1990. Nevertheless, the industrial
employment rate remains high in 37 areas, notably in Brittany and Pays de la Loire, as well as
in Grand Est, Bourgogne-Franche-Comté, Auvergne-Rhône-Alpes, Hauts-de-France and
Nouvelle-Aquitaine. A significant proportion of the areas in which industrial employment
remains high are located in low-density rural areas.
Industrial ecosystems are now reduced in number
They are located in areas far from
decision-making centres and account for a low share of economic activity. This raises
questions about maintaining, over the long term, a production base of sufficient critical mass
for industrial development and innovation. This change over the last twenty years has been
joined by the impact of the pandemic, which has affected two of French industry's main sectors,
aviation and the automotive industry, which are also under pressure from increased
international competition and the carbon transition that needs to take place.
Despite the economic recovery, the pandemic appears to have affected French exports
more than those of other European countries. The gloomy scenario of a resumption in the
decline of fragile ecosystems, following the pre-crisis upturn, cannot therefore be ruled out.
This calls for stronger efforts to restore competitiveness and more effectively target sectoral
actions as part of renewed governance.
The measures taken in recent years have made it possible to halt the decline in French
industry's cost competitiveness. These must continue and be accompanied by determined
efforts to address the more structural handicaps that affect its non-cost competitiveness.
A - Pursue efforts to improve cost competitiveness
1 - A pronounced loss of cost competitiveness in the early 2000s
The factors that could explain the trend in exports and the decline in the French current
account have been the subject of numerous publications, which have not identified the causes
with certainty
The Gallois report of 2012 drew up the diagnosis
confirmed by the National
Productivity Council in 2019 and now widely shared
of a loss of cost competitiveness in
France in the 2000s linked to a divergence in its economic policy from those in the eurozone,
particularly in Germany. This deterioration caused a contraction in companies' margins, which
may have increased their non-cost competitiveness deficit, particularly by reducing their
investment capacities.
Graphique n° 5 : industry margin rate
Source: Eurostat, calculations by the National Productivity Council and the Court of Accounts.
While France was experiencing a relatively rapid increase in its costs, Germany
implemented a proactive policy of wage moderation, particularly in the service sector, with a
positive indirect effect on industry through intermediate consumption. It also transferred
taxation from companies to households. At the same time, the taxation of company profits fell
in the eurozone (from 35% on average in 1998 to 24 % in 2016), a movement that France did
not keep pace with until very recently.
Although not the only factor, the divergence in production costs would explain a sizeable
proportion of the growth differences seen until 2011 between French exports and those of its
main partners, particularly Germany. As such, the OFCE says that wage moderation in
Germany explains 40 % of the growth gap between French and German exports from 1999 to
2012, the rest being attributable to the improvement in quality and most likely to a better
geographical orientation of exports. The situation did not stabilise until 2012.
2 - A reduction in cost competitiveness gaps over the last decade
Labour cost dynamics have slowed since 2012,
a level that remains high within the EU
After growing fairly rapidly during the 2000s, labour costs in industry and services have
increased more moderately since 2012. However, the cost of labour in the economy as a whole
remains high.
Graphique n° 6 : change in labour costs by sector of activity in the EU between 2004
and 2018
Source: Insee, Eurostat data
This is not primarily the result of high wages but rather of non-wage costs, which are
among the highest in the EU. This specific situation is due to the high level of social protection
and its financing methods, which despite the reductions implemented since the 1990s are still
largely based on social contributions.
Graphique n° 7 : breakdown of the hourly labour cost in industry in 2019
Source: Eurostat
From 2014, continuing a movement of exemption from social security charges on low
wages that began in the 1990s, the competitiveness and employment tax credit (CICE), and
the reductions in charges that supplemented and replaced it, have had the effect of bringing
the change in labour costs closer to that of productivity. Having been focused on low wages,
the cost reduction measures mainly benefit service activities and certain industrial sectors
where wages are lower (agrifood). They can also indirectly benefit industry, through the cost
of intermediate consumption. Indeed, via the latter (transport, trade, financial and legal
services, temporary employment), the cost of indirect labour represents a share similar (19 %)
to that of the cost of direct labour (18%) in the value of the production of manufactured goods.
Many actors believe that the issue of labour costs has now been addressed, based on
the comparison with Germany in industry. However, this comparison has its limits. Indeed, the
range level of French products is generally lower, making them more replaceable than their
One of the highest rates of corporate taxation in the European Union, despite
the measures on corporate tax and the most distorting taxes
France is characterised by its tax structure, which exerts more pressure on the
production system and less on consumption than in other European Union Member States. As
such, according to Eurostat, France applied the highest effective tax rate for non-financial
companies in the EU in 2019.
Graphique n° 8 : effective average rate (%) of taxation of non-financial companies
(over 250 employees)
Source: Taxation trends in the EU. Eurostat.
According to the Council of Mandatory Contributions (CPO), corporation tax and so-
called "production" taxes accounted for 15.7% of total compulsory levies in 2018 in France,
versus 12.8 % on average in all European Union countries. The difference stems mainly from
production taxes, although international comparisons should be viewed cautiously given the
differences in method. The Economic Analysis Council (CAE) stresses that within this
category, France is, along with Italy, the only EU state to apply a tax based on added value
(the CVAE, the proceeds from which represented 11.4 % of direct taxes paid by companies in
2019) and a revenue tax, through the social solidarity contribution of companies (C3S).
According to the CAE, the C3S reduces the productivity of businesses, acts as a tax on
exports, constitutes a subsidy on imports of intermediate goods and exacerbates France's
trade deficit.
Over the past decade, the authorities have taken measures aimed at rebalancing
corporate taxation to reduce the differences versus the European average and comparable
countries. From 2017, corporate tax, characterised by a narrow base and high rates, saw its
base widen and its rate decrease. The trajectory of a gradual reduction in the corporate tax
rate from 33.3 % in 2017 to 25 % in 2022 should therefore put France back in line with the
average for OECD countries and the eurozone. The authorities have taken measures to reduce
production taxes, without eliminating the most distorting ones. From 2010, the abolition of the
professional tax and its replacement with the contribution on the added value of companies
(CVAE), the corporate real property tax (CFE) and the flat-rate tax on network companies
(IFER) generated an annual gain for companies of around €5.7bn between 2009 an
d 2012,
including nearly €2bn for industry from 2012. In 2021, new measures to reduce the CVAE and
the CFE, likely to benefit a large number of micro-enterprises and SMEs, were also
implemented to the tune of €10bn, or 0.4 GDP points. The manufacturing ind
ustry is expected
to benefit the most, in the amount of €2.9bn (€3.7bn when adding the energy, water and quarry
Conversely, although the elimination of the C3S was announced in 2014, the movement
initiated in this direction was interrupted in 2015. However, the revision of the thresholds for
this tax generated a gain for companies of €1.1bn in 2015 and a further €0.8bn in 2016 (€1.3bn
in 2020).
3 - Pursue efforts to improve the cost competitiveness of businesses
Many observers feel there is still work to do on rebalancing taxation to benefit industry.
The elimination of the most distorting production taxes, such as the C3S, could be initiated.
This should form part of an overall change to corporate taxation taking into account the tax
competition context. In this regard, as the CPO recommended, the strategy aimed at bringing
the nominal French corporate tax rate closer to the OECD or eurozone average, which is now
close to 25 %, should continue. In addition, introducing a minimum global rate of 15 %,
confirmed by the agreement of 136 countries concluded under the aegis of the G20 on 8
october 2021, should help to reduce tax competition.
Although the growth in wage costs has slowed down recently, these remain high in
France; the Court notes that the options for acting are limited: the reductions in charges on
high wages are very costly in a context of suboptimal public finances and could result in wage
increases more than in cost reductions for companies, against a backdrop of tensions in the
recruitment of the most qualified staff.
B - Address the persistent deficit in non-cost competitiveness
1 - Stagnant R&D expenditure, insufficient connection between public and private
Research and development (R&D) is decisive for innovation in businesses, as well as
for the quality and diversity of their products. France devotes 2.2% of its GDP to this area,
which is lower than the OECD average (2.5 %)
Despite increasing, businesses' share of this
expenditure (57 %) is also below the average for OECD countries (63 %). Although France
has international research, particularly fundamental research, public R&D does not sufficiently
translate into industrial innovations. Between 1990 and today, France has fallen from fourth to
sixth place in the ranking of OECD countries for the number of patents filed. It is placed behind
Japan, the US and Germany and has now also been overtaken by China.
France's relative position as a host country for foreign multinationals' R&D activities is in
decline. With the research tax credit (CIR), it is nevertheless implementing the most generous
support system in the OECD, 61 % of which reportedly goes to the industrial sector.
Businesses appreciate its significant impact on the overall level of taxation. However, a recent
evaluation by the National Commission for the Evaluation of Innovation Policies (CNEPI)
showed that the CIR would only have a moderate positive effect on R&D activities and that its
impact, which is significant on the economic performance of micro-enterprises and SMEs,
would be significantly lower on that of large companies and mid-market businesses.
As a result of intensified efforts to foster innovation, patent filing, licensing and the
formation of and fundraising for start-ups have increased in recent times. A recent report by
the Court on Public Aid for Innovation nevertheless showed that the results on the transfer of
research work to companies remain insufficient. According to the Global Innovation Index (GII),
France was ranked 10th in 2021 on innovation but 31st for R&D collaborations between
industry and universities. Intellectual property issues often remain a source of tension
industrial companies and public research laboratories. To remedy this, the law of 24 december
2020 on research planning for 2021 to 2030 aims in particular to promote the dissemination of
research in the economy. As such, it made the researcher-entrepreneur system more flexible,
provided mechanisms to support partnership research and simplified the systems for
combining activity. The impact of these new measures will need to be assessed in the coming
2 - Increase the attractiveness of professions and skills
Industrial professions remain poorly regarded in France
The promotion of general and
lengthy studies at the expense of vocational training, a mistrust of activities seen as
hierarchical, tough and polluting, the impact of plant closures and relocations are all factors
that are detrimental to its attractiveness. According to the Dares, three-quarters of the 30
professions that saw the most tension in 2019 were skilled workers or technicians in the
construction sector and industry. This concerns in particular electrical and electronic designers
and, in the field of metallurgy, boilermakers, sheet metal workers, plotters, locksmiths,
metalworkers and blacksmiths. Recruitment difficulties, which were already becoming evident
before the pandemic, create a more acute need for measures aimed at improving the
attractiveness of jobs in industry, which will only produce effects over the long term.
For years, reforms of initial training (including apprenticeship) and continuous training
have been carried out, with significant resources sometimes devoted to these efforts. As such,
the 2018-2022 skills investment plan, targeting the most long-term unemployed individuals,
was allocated €15bn.
However, vocational training must be the subject of a more proactive
effort based on professional branches that are competent in the matter. These should develop
initiatives that make it possible to plan ahead for new needs in terms of know-how or
companies' skills, drawing in particular on existing systems (profession campuses and
qualifications of excellence, vocational training engineering, university research schools,
production schools).
3 - A business environment that can still be improved
As measured by the number of foreign investments in the country, France's
attractiveness improved before the crisis
According to the Ernst & Young barometer, in 2019
it was ranked first among European countries for the number of foreign direct investments
(FDI) received. However, according to UNCTAD data, France is the number 13
destination for
FDI worldwide by amounts invested, behind Germany and the UK, the US and China. Between
2009 and 2019, the stock of FDI received in France increased by 15%, versus 13% on average
in OECD countries. Industry accounts for around a third of this. However, FDI does not provide
an exact measurement of a country's attractiveness. It not only reflects new investments but
can also come from mergers and acquisitions or result from cash flows between companies.
In addition, part of the FDI corresponding to buyouts of French companies could actually reflect
their vulnerability.
France is stagnating in the World Bank's
Doing business
ranking of the business
environment, being positioned 15th among EU countries despite major administrative
simplification efforts, with the ESSOC law in 2018, the PACTE law in 2019 and lastly the ASAP
law of 2020, which includes several provisions to secure and accelerate industrial
establishment projects by improving the predictability of lead times and the outcome of
decisions. France still has to make progress, being one of a group of countries with very long
lead times for building permits.
The industrial landscape is suffering from the growth difficulties of SMEs and mid-market
companies. This fragility is
linked in particular to their weak margins, unbalanced and not
always confident business relationships with most large groups and the fragility of industrial
ecosystems. Initiatives were taken in early 2020 to foster the growth of intermediate-sized
businesses (the
"Mid-Market Businesses Nation"
strategy). However, their growth is adversely
affected by a persistently complex situation in terms of the aid they are likely to receive. France
Stratégie has identified over 600 support systems for businesses (excluding local authorities),
including 468 tax systems, 29 reduced rates or exemptions from the domestic consumption
tax on petroleum products (TICPE), 34 assigned taxes and 24 downgraded tax expenditures.
Added to this are the notified central government aid for R&D, innovation and training, regional
mechanisms and the tax expenditures of local authorities not compensated by central
government. Simplifying these support mechanisms is a prerequisite for improving the
effectiveness of public action aimed at SMEs and mid-market companies and is therefore a
Along with continued actions aimed at improving the French economy's competitiveness,
public interventions targeting the industrial sector must be more effectively targeted and their
governance strengthened. Moreover, their inclusion in the framework of European cooperation
is likely to bolster its effectiveness.
A - Target public support
1 - A nuanced appraisal of the PIA in industry (2010-2020)
Over the past decade, the innovation policy and its financial instrument, the investments
for the future programme (PIA), have been the main tools of industrial policy. Led by the
General Secretariat for Investment (SGPI), the PIA has been active across the entire
innovation chain, with the exception of the marketing and offer massification phases. Over the
2020 period, half of the PIA resources (€28.5bn of €57bn) were devoted to actions to
modernise businesses and promote research, with €15.7bn going to structural actions to
disseminate innovation.
In 2019, the PIA supervisory commission drew up a nuanced appraisal of its impact on
the industrial sector.
The PIA has supported the innovation and modernisation of French
industry's longstanding sectors (aviation, the automotive industry, nuclear, space) and
addressed market failings in the financing of start-ups. However, the authorities have not
always succeeded in preventing aid being captured by certain actors or repeated choices
favourable to industrial sectors resulting from major longstanding programmes (a phenomenon
known as "path dependence"), at the risk of neglecting other actors or sectors and failing to
anticipate technological disruptions. The PIA's effects on the production specialisation of the
economy, industrialisation and competitiveness therefore appear limited.
2 - Concentrate resources and regulate them through rigorous governance
Learning lessons from evaluations, the PIA 4 distinguishes two forms of public support
for innovation: "directed" and "structural". Innovation is "directed" when the authorities
determine beforehand the specific sectors and activities they want to support. Meanwhile,
"structural" innovation aims to support innovative actions that meet objective criteria,
regardless of sector. The second approach is based on the premise that the private sector is
better able to determine the sectors of the future than the authorities. The PIA 4 (2021-2025)
strengthens the sectoral and vertical dimension of its interventions by devoting €12.5bn
g €2.5bn in equity capital) to directed innovation. The resources allocated to structural
innovation, to finance the ecosystem of higher education, research and development, total
The priorities concerning the managed innovation of the PIA 4 were set based on the
report produced in february 2020 by a panel of experts chaired by Benoît Potier. According to
this report, by concentrating resources and decompartmentalising public and private
interventions through
"integrated acceleration strategies"
, France could play a leading role in
ten priority key markets by 2030. The key markets selected combine solid French technological
bases and provide answers to four major societal challenges (healthy and sustainable food
and global food sovereignty, health and well-being of citizens, ecological and energy transition,
and digital sovereignty). For 12 other key markets (batteries, recycling, etc.), the report
recommends implementing public support under a catch-up rationale. On 1
october 2021,
seven strategies were launched among the ten priority key markets and three strategies among
the twelve other key markets.
The Important Projects of Common European Interest (IPCEI) also contribute to these
strategies. Since the European Commission modified the framework of central government aid
in 2014, the IPCEI, which aim to keep the EU at the technological frontier through disruptive
innovation or catching up with large competitor blocs, have had a particular impact on industry.
Three IPCEI have been approved so far in the field of microelectronics and batteries. These
operations, which mobilise PIA credits, should enable factories and R&D activities to be
established in France.
Tableau n° 1 : important Projects of Common European Interest (IPCEI)
Source: European Commission
The rollout of support for the structural innovation of the PIA 4 has been entrusted to
Bpifrance. In this regard, 2019 saw the launch of the
plan, which aims to support
the creation of 500 start-ups per year, the growth and emergence of tomorrow's industrial
leaders and the development of innovation ecosystems (competitiveness clusters, clusters,
collaborative projects). Bpifrance is also overseeing the programme of technology transfer
acceleration companies (SATT) and the financing of incubators, accelerators or start-ups. A
partnership with France's National Research Agency (ANR) also aims to increase the
"transformation rate" of research work into innovation projects led by start-ups or industrial
The PIA 4 also includes a regional component, co-managed together with the regions,
that aims to finance innovation, the structuring of industrial sectors and vocational training.
Responding to the recommendations made by the Court in 2016, the authorities are
encouraging the merger and closer connection of competitiveness clusters with other local
structures and predict an overall reduction in central government funding for the operation of
these structures and funding per project of a European scale.
Lastly, the French President announced on 12 october 2021 the "France 2030" plan with
€34bn in funding over five years, €30bn of which will go to grants and €4bn to equity
investments made through Bpifrance. The corresponding expenditure, half of which will be
devoted to decarbonising the economy and half to financing the projects of emerging actors
driving innovation, will complement the PIA 4, the sectoral priorities of which the "France 2030"
plan is also taking up by expanding them.
The approach of the PIA 4, which involves implementing acceleration strategies that are
intended to be cross-cutting and decompartmentalised, with regular assessments being made,
is promising. However, it also poses a challenge, as the governance of industrial policies in
France remains deeply characterised by a vertical rationale of sector management by large
groups and the public sector. The goal of developing new industrial sectors of the future, and
ultimately increasing potential growth, will only be achieved by ensuring the quality of
investments. The focus on a limited number of cross-cutting priorities and challenges must be
continually examined by the authorities. To avoid certain actors capturing public support for
the technological solutions they offer, public support must be managed by a collegial
governance system that is as independent as possible and utilises a variety of expertise.
Lastly, to limit the risks of failure and inefficiency, which are always present when it comes to
making technological bets, the assessment procedures must be bolstered during execution
(en route) so that certain actions can be reoriented or interrupted.
3 - Support the industrialisation phase of start-ups, SMEs and mid-market companies
The industrialisation phase (construction of demonstrators or factories), which requires
equity capital contributions, is risky for industrial start-ups, SMEs and mid-market companies
This key stage in their development suffers from market failings that affect private financing
mechanisms, resulting in the risk of start-ups being taken over early on or being directed
towards a licensing model that rules out the development of production activities in France.
Bpifrance's 2021-2025 strategic plan sets out the goal of creating 70 to 100 factories of
industrial start-ups and promoting contact between industrial start-ups and SMEs/mid-market
companies so that the production of objects invented by start-ups reaches the industrial phase
Tech and Fab
initiative). The corresponding actions draw on support for structural innovation
from the PIA 4. However, the industrial projects company (SPI) created in 2015 by Bpifrance
to provide equity capital and support the creation of industrial production capacities remains
limited in scope. With €800m in funding (including the European Investment Bank's
contribution), it has conducted just 16 transactions since 2015, with the amounts ranging from
-140m. The "France 2030" plan should strengthen Bpifrance's means of action, in
accordance with terms that are yet to be specified.
The support provided in recent years to start-ups has not yet had a significant impact on
industry. As such, institutional investors, which committed in 2019 following the Tibi report to
devoting €6bn to business financing, have a marked preference for the
digital economy rather
than for industrial start-ups. Investment funds' low appetite for industrialisation projects can be
attributed to the significant financing needs (capital and working capital) they generate. These
projects also involve high development risks and a fairly long ROI period (seven to ten years),
which puts them at a disadvantage compared to projects in non-industrial sectors. Lastly,
financing through corporate venture capital (CVC), which involves one company investing in
another, either directly or through an investment fund, is not extensively developed in France
in industry compared to other European countries.
B - Manage industrial policy more effectively
1 - Recent progress in the governance of industrial policy
Interministerial management of industrial policy has been gradually strengthened
reorganisation of the National Industry Council (CNI) and the establishment of strategic sector
committees (CSF), which the Court showed in a 2017 assessment to be uneven, have made
it possible to structure and strengthen dialogue with the authorities and encouraged concrete
progress (SME accelerators, training schools). The industrialists at the head of the CSFs were
assigned objectives defined per contract, based on a projects rationale. Eighteen sector
contracts were signed between 2018 and 2020. These are designed to meet five priorities:
innovation, digital transformation, international expansion, development of employment and
skills, and support for SMEs. The CSFs are also involved in decarbonising industry, developing
the hydrogen sector and identifying critical sectors. The creation of the Interministerial Council
for Innovation, chaired by the Prime Minister since 2021 and involving 11 ministries, aims to
strengthen the capability for the cross-cutting steering of innovation policy and the strategies
of the PIA by drawing in particular on the SGPI.
Progress has also been made with the reorganisation of the Directorate General for
Business (DGE), which resulted from a lengthy process of reforming the former Ministry of
Industry. The economic intelligence and security function has been grouped together and
strengthened in conjunction with the General Directorate of the Treasury (DGT), particularly
on the control of foreign investments. Deconcentrated services, the workforce of which has
been decreasing since 2019, have been refocused on assisting ailing businesses, developing
strategic sectors and supporting innovation. The "Industrial Territories" initiative, implemented
at the end of 2018 to relaunch industrial policy by drawing on territorial industrial ecosystems,
should enable improved coordination of public interventions. Its implementation will need to be
Lastly, evaluations of public action in the economic field have developed around France
Stratégie, with the national productivity council, the committees for the evaluation of the
emergency support plan and the recovery plan, the National Commission for the Evaluation of
Innovation Policies (CNEPI) and the PIA supervisory committee.
However, the mechanism for dialogue between industrial companies and the authorities
still has limits. The role of emerging players (SMEs/mid-market companies, start-ups) could be
further strengthened, as the over-representation of large companies in CSFs is likely to
increase the risks of public resources being poorly allocated.
2 - Synergies between public actors still insufficient
Having been mainly carried out by the Ministry of the Economy with regard to cross-
cutting policies (framework conditions, supervision of Bpifrance, digital sector), in liaison with
the SGPI for the PIA, the APE and Bpifrance regarding public shareholding, industrial policy is
still not extensively integrated with sectoral policies. The fragmentation of skills across
ministries (defence, transport, health, agriculture, energy, environment, research, economy)
can be detrimental to the cohesion of actions.
Some of them have the means to successfully play an important role in industrial policy,
for example in the defence and aviation sectors. Conversely, other ministries are not equipped
to conduct an industrial policy. This is especially the case in the health sector.
In addition, the methods of implementing certain regulations sometimes seem to
underestimate the challenges of industrial development (health, energy) and the budgetary
resources for industrial policy remain dispersed within central government.
Enhanced coordination of energy policies, research and innovation, foreign trade and
sectoral policies must be put in place. This must integrate the assessment of sectoral
regulations and the activity of independent regulatory authorities, in order to strengthen central
government's strategic steering capability and the synergies between the various policies.
This enhanced cooperation can be achieved in several ways
A first solution would
consist of accentuating the cross-cutting coordination capability of the various directorates in
charge of industrial policy. The alternative would be to undertake an administrative
reorganisation, based on the principle prevailing in other countries, with a ministry of the
economy independent from the ministries in charge of finance and public accounts and in
charge, as applicable, of energy policy, foreign trade or research and innovation policy. In any
event, the priority must be to develop the essential synergies with energy and innovation
policies, given their impact on industry.
3 - Define a stable strategy, identify the means and measure its results
Over the last decade, every two to three years the authorities have announced industrial
plans and strategies, referring as appropriate to the objectives of sovereignty or national
independence, strategic autonomy, market failure remediation, support for industrial
restructuring and its territorial impact. These objectives are associated with means indicators,
but rarely with results indicators, and their increasing number leads to a juxtaposition of means
and mechanisms.
The strategy of public investment in the industrial sector deserves to be defined in a
stable manner and accompanied by result indicators. It is also important to more effectively
interconnect the various tools of this strategy, namely
PIA interventions, Important Projects of
Common European Interest (IPCEI), the development of market financing for the
industrialisation phase, investments in modernising the industrial base for the dual digital and
energy transition and the doctrine of intervention by the APE and Bpifrance. In an observation
to the minister dated 14 october 2021 on the implementation of the investments for the future
programme, the Court more broadly called for a reflection on central government's overall
strategy in terms of investment support.
The total amount of financial support to industry was put by France Stratégie at €17bn
to €20bn in 2019, including central government aid relating to the pensions of public
companies, equity interests, loans, repayable advances, guarantees and exemptions from the
TICPE. Over 80% of the total comes from cross-cutting measures financed by central
government: reductions in social security and fiscal charges, the research tax credit (CIR), tax
expenditure (energy), aid for innovation, equity interests, loans, reimbursable advances and
guarantees. Sector ministries, local authorities and European funds finance other
interventions. Resources devoted to industry are now higher, particularly given the reduction
production taxes (€10bn, including €3.7bn for industry) and the commitment to the recovery
plan and the "France 2030" plan, announced following the pandemic, the credits of which are
integrated into the
"Investments for the Future"
mission, renamed
"Investing for France in
from 2022.
Despite the scale of the resources mobilised, there is no budgetary document
summarising central government's financial effort concerning industrial policy. The latter is
divided between programmes which, in 2021, fell under the missions
"Economy, higher
education and research"
"Investments for the future"
"Recovery plan"
"Loans and
advances to individuals or private organisations"
, as well as sector ministries and the central
government shareholder.
Central government must also coordinate its action with that of local authorities (regions
and metropolitan areas). Their interventions form part of the regional schemes for economic
development, innovation and international expansion (SRDEII) provided for by the law of 7
august 2015 on the new territorial organisation of the Republic (known as the NOTRé law) and
the strategies of "intelligent specialisation" for European funds. Before the pandemic,
according to France Stratégie and Régions de France, the regions devoted an average of 6.1%
of their budget to economic action (€2.6bn in 2019 and 2020), up 30% over ten years. Regional
investment support totalled €1.6bn in 2019, €563m for industry, commerce, crafts and services
and €165m for i
A Central Government-Regions Committee was set up in 2019 and a framework
agreement on the territorial and partnership implementation of the PIA 4 was signed in january
2021. This cooperation between central government and local authorities should be deepened
as part of a strategic dialogue focusing in particular on the IPCEI, the PIA acceleration
strategies and the "France 2030" plan. The goal could be to specialise the respective
interventions of central government and the regions to make them more understandable and
bolster their effectiveness. As such, the 2021-2027 planning of European funds (ERDF) could
aim to strengthen the regions' actions in favour of competitiveness clusters, productive
investments (digitisation) and financial instruments (regional funds).
All in all, the industrial policy strategy that the Court calls for should be based on a public,
exhaustive and consolidated annual census of support for industry, an improved assessment
of this support and a streamlining of industrial policy tools, as large numbers of these tools can
act as a hurdle to their effective dissemination into the production landscape.
4 - Update the doctrine of the central government shareholder in the industrial sector
According to the OECD, France has both a high index of public ownership of companies
and a high degree of central government intervention in companies' activity. Formalised in the
Council of Ministers in 2014 and clarified in 2017, the central government shareholder doctrine
through the Central Government Shareholding Agency (APE) and Bpifrance
consists of
providing priority support to strategic businesses in terms of sovereignty, those participating in
public service missions or of national or local general interest and companies in difficulty, the
disappearance of which could pose a systemic risk.
The central government shareholder is an actor in industrial policy through its direct
holdings in large industrial groups (defence, aviation, energy, transport, the automotive
industry, telecoms) and its equity capital interventions through Bpifrance. The APE intervenes
directly in certain sectors (defence, nuclear, transport) with a long-term holding horizon, where
applicable as a majority shareholder. Bpifrance favours minority shareholdings in SMEs and
mid-market companies, as a sensible, patient and long-term investor.
Over the 2015-2019 period, Bpifrance increased its interventions in industry (medium to
long-term loans and equity capital interventions through partner funds). During the pandemic,
the central government shareholder, in its various components, invested in funds to support
the automotive, aviation and nuclear sectors and in a fund for sovereign investment in listed
companies (LAC1). The central government shareholder doctrine should be updated given the
investments made during the pandemic in respect of the objectives of strategic autonomy and
sovereignty. Indeed, the future of these investments needs to be clarified and there needs to
be greater consideration of supply chain vulnerability issues.
C - Leverage European cooperation
As a whole, the European Union is currently stalling technologically. The US and China
have a hegemonic position in the digital economy. Their supremacy in this area is measured
in terms of the number of patents filed and market share, which they consolidate by heavily
investing. The risk of Europe stalling now also extends to sectors where it was traditionally in
a strong position, such as space and the automotive industry.
Faced with this observation, the European industrial strategy for 2030 aims to maintain
an industrial base by succeeding in the digital and ecological transitions, while developing
disruptive innovations to increase the high-tech industries' share of European specialisation. It
leverages public-private partnerships, value chains ("industrial ecosystems") and funding for
R&D and disruptive innovations.
1 - Strengthen the use of European funding for innovation
The EU and European countries are looking to develop strategic industrial sectors
through innovation policies. They are also rolling out actions to strengthen the competitiveness
of European industry.
Over the 2021-2027 period, the European Union's research and innovation
Horizon Europe has €95.5bn in funding, including €53.5bn dedicated to the theme
"Global challenges and European industrial competitiveness".
It includes the possibility of
supporting the innovation chain through to the phases of development and deployment on the
industrial product market, via the European Innovation Council (EIC), which aims to finance
start-ups and SMEs with potential for European and international growth. The implementation
of this Commission aid mechanism, which has around €10bn in fundi
ng over the 2021-2027
period, was preceded by a pilot launched in 2018, under which French businesses have
achieved good results. Indeed, France is placed first in the ranking of beneficiaries of this
The launch of "Horizon Europe" marks a significant increase in the resources devoted
by the European Union to innovation and its industrial impacts.
It follows on from the "Horizon
2020" programme, which had less funding (€80bn, €17bn of which dedicated to a goal of
"Industrial primacy"
in certain technological fields
ICT, nanotechnologies, materials,
manufacturing processes, space) and did not cover the last phase of the innovation chain
(bringing to market). As Europe's second-largest economy, France ranked third by number of
interests in the Horizon 2020 programme, behind Germany and Spain, and by amount of
subsidies (€7.5bn, or 11.1% of the programme), behind Germany and the UK. It must set itself
the goal of improving this ranking, which involves increasing the operations supported and the
amount of corresponding subsidies.
However, differences remain on the design and implementation of industrial policy, which
stems from a responsibility shared between Member States and the EU, unlike more integrated
policies. These could weaken the dynamic that seems to be getting under way in the energy
and health sectors. Numerous calls for a European agency based on the model of the US
Defense Advanced Research Projects Agency (DARPA) have been made, as well as, as
mentioned by the Blanchard-Tirole report, for a European innovation agency to foster the
ecological transition, a European scale being essential in order to gather the necessary
resources. The European Commission has taken several initiatives in this direction, although
their governance, their risk-taking policy and the amounts of public and private funds that can
be mobilised seem far removed from international examples of success in this area. In practice,
these different projects remain open.
2 - Ensure conditions of fair competition between Member States
The framework for industrial policy action was defined in the European treaties at the
start of the 1990s. Industrial policy is a responsibility shared between the EU and its Member
States, within the limits of common internal market and competition policies. It aims to
the conditions necessary for the competitiveness of European industry"
in three areas: the
definition of a framework favourable to the development of companies, particularly SMEs, the
development of cooperation between companies and the utilisation of the industrial potential
of innovation and technological R&D policies.
The definition of the "framework conditions" for business development falls to European
Union Member States, which are responsible for implementing the structural reforms and
measures able to improve the competitiveness of their businesses. The establishment of an
environment favourable for businesses also requires stronger coordination of the Member
States' economic policies to reduce the macroeconomic imbalances in the eurozone and the
associated differences in competitiveness.
Following the relaxation of the framework for central government aid for implementing
Important Projects of Common European Interest (IPCEI), in 2019 the Commission launched
work to simplify public financing of the digitisation of the economy and the ecological transition.
The launch of large-scale recovery plans following the pandemic has accelerated this process.
The development of the Recovery and Resilience Facility (RRF), a pillar of the European
recovery plan, had to be preceded by a "targeted" and transitional review of the framework of
central government aid.
However, Member States are still competing to host large-scale industrial projects on
their territory. To this end, they are making commitments to provide financial support and
simplify administrative authorisation procedures.
Before the pandemic, France devoted the equivalent of 0.85% of its GDP (or just over
€20bn) to central government aid. It was behind Germany, which allocated €53bn, or 1.54%
of its GDP, including environmental aid, innovation research aid, employment aid (social
security exemption) and regional and sectoral aid, but was clearly ahead of the UK (0.51%),
Italy (0.35%) and Spain (0.31%).
In view of the competitiveness challenges involved with the conditions of fair competition
and the dynamics of industrial policies within the eurozone, competitive analysis and economic
intelligence gathering on the various instruments implemented by Member States in the field
of industrial policies needs to be enhanced.
3 - Reduce the vulnerability of supply chains by drawing on the European internal
In may 2021, thanks to the update of its industrial strategy, the Commission confirmed
the priority placed on strengthening the internal market, the dual digital and ecological
transition of the economy and the European Union's
"open strategic autonomy"
. This last
orientation is based on an emergency instrument aimed at responding to shortages and
attacks on the free movement of goods and services in the event of a crisis. It has also given
rise to the development of a map of European dependencies. Particular attention was paid to
the most sensitive value chains ("ecosystems").
The work carried out shows that, of 5,200 products analysed, the EU depends heavily
on foreign suppliers for 137 products from sensitive ecosystems. These represent 6% of the
value of the European Union's total imports. More than half correspond to products from China,
Vietnam and Brazil. 34 products have little potential for diversification and substitution by
European production, namely chemicals and raw materials for energy-intensive industries and
health, representing 0.6% of the value of total imported products. The EU therefore has
dependencies in six areas seen as strategic: raw materials, batteries, pharmaceutical active
ingredients, hydrogen, semiconductors, and cloud and advanced technologies.
Public interventions aimed at fostering the relocation of some of these productions can
be very costly and inefficient. For example, this is the case with very low added-value goods,
the production costs of which on French territory are high and for which there are alternatives,
meaning that France's strategic independence can be guaranteed (creation of stocks,
diversification of suppliers, security of supply). This type of intervention only makes sense
when there is no alternative strategy.
Faced with the acquisitions of industrial actors, which may have weakened decision-
making centres and employment, and the rise of China, the FDI control policy has gradually
been strengthened in France and the EU. However, according to the OECD both are some of
the most open environments for foreign investment. France has also developed an economic
security policy that aims to more effectively protect its strategic companies and technologies
from the risks of acquisition or hostile intervention by a foreign company. Nevertheless, the
implementation of this policy is coming up against the attrition of the production base of French
industry, which sometimes leads to an absence of French buyers for threatened companies. It
also suffers from a lack of national investors to support the growth of young businesses.
D - Rise to the challenge of the digital and environmental transitions
1 - Major ground to make up in the digital transition
Automation and robotics are on the rise in certain manufacturing sectors (automotive,
electrical, electronics and metallurgical). However, French industry is still behind on the whole
in terms of the number of robots, despite a breakthrough in 2019. Although there is a high rate
of investment in the manufacturing sector, the digital transition in French industry, based on
the use of data from digitised and optimised industrial processes (known as
"industry 4.0, smart
manufacturing, industry of the future"
), has yet to be initiated on a large scale. A bad
combination of production factors, the unsuitability of the skills of assets and financing
difficulties could explain the delay observed.
Public programmes on the digitisation of industry have also suffered from some
instability. However, the stimulus plan currently being implemented marks a significant
budgetary effort (€0.9bn) compared to the previous period.
2 - The decarbonisation of industry: a challenge still to be taken up
Industry accounts for nearly 21% of national greenhouse gas emissions. In 2020,
emissions from the sector, primarily linked to chemicals, non-metallic minerals and metallurgy,
totalled 80 MtCO2. These have been reduced by 45% since 1990.
The current rate of industry decarbonisation, at around 1.4% per year between 2013 and
2019, is insufficient to achieve the emission reduction targets stated in the national low carbon
strategy (SNBC): complying with the target set for 2030 requires this to be increased to 4%
per year. The recent strengthening of European targets will require further increasing the rate
of industry decarbonisation.
Part of the target can be achieved by investing in existing technologies (electrification of
processes, improved energy efficiency, recovery of carbon-free heat). The corresponding
investments are receiving financing from the recovery plan (€1.2bn). However, the industry
decarbonisation trajectory can only be kept on track by using technologies that require strong
industrial innovation. Research must therefore speed up to foster the emergence of
technologies that are still in their infancy. The "France 2030" plan intends to strengthen the
resources devoted to this.
Industry decarbonisation also requires an economic incentive to adopt low-carbon
technologies. As such, a carbon price increase trajectory must be defined and implemented
through taxation or emission permit trading systems, combined with the establishment of a
carbon adjustment mechanism at EU borders. This transition will come at a cost for industrial
companies, particularly electro-intensive businesses, which are extensively concerned and
receive aid in this regard. It will also prompt reallocations of activities and jobs, which should
be anticipated.
While EU Member States are implementing differentiated strategies, the pace of the
transition and the associated public interventions (taxation, carbon pricing, innovation aid)
must be coordinated at a European level. The question of continued public support following
the end of the recovery plan must be asked in light of this necessity.
The deindustrialisation that France has seen over the last 20 years has weakened its
economy, its jobs and its foreign trade. The pandemic has shown that this has also affected
its strategic autonomy and its sovereignty. Important steps have been taken over the last ten
years to reverse this trend. Until now, their main purpose has been to halt the deterioration of
the French economy's cost competitiveness. These measures must be continued and
supplemented by determined efforts to address the structural handicaps that affect the
economy's non-cost competitiveness. The main challenge in this respect is to ensure the
dissemination of research into the industrial landscape by promoting financing for the
industrialisation of innovations and by investing in skills.
Beyond that, the authorities should endeavour to set priorities for targeted sectoral
policies in limited number, to respect them over time, without increasing the number of
announcements of new plans, and to include their action within a renewed governance that
makes it possible to more effectively integrate research, innovation, industrial development
and energy transition concerns.
The Court has carried out a great deal of work in recent years on which it has drawn, in
particular the following publications:
The implementation of the investments for the future programme,
référé, july 2021;
The investments for the future programme: an asset to consolidate, a specific role to
more effectively define,
final observations report, october 2021;
Public aid for business innovation. Enrolment fees in public higher education, a system
to consolidate,
communication to the National Assembly's finance, general économy
and budgetary control committee, april 2021;
The implementation in France of the Juncker plan,
référé, february 2020;
The general management of companies,
référé, march 2017;
The policy of competitiveness clusters,
référé, july 2016;
The central government shareholder,
thematic public report, january 2017;
Public policy on industrial quality,
référé, august 2013.
The publications of the Court of Accounts
are available at