France

2016 business cost index

90.5

Country ranking

6th / 10

France, GDP per capita: US$42,733 (2014), GDP growth rate: 1.3% (2015), Unemployment rate: 10.2% (Q4/2015), Inflation rate: 0.3% (2015)
Locations12016 indexRank12014 indexRank1
France90.5697.45
Marseille89.42695.446
Paris91.73199.489
1  Overall results for the country and cities. Rank for France is relative to 10 countries in both 2016 and 2014. Ranks for cities are relative to 111 cities in 2016 and 107 cities in 2014.
 
Sectors2016 indexRank22014 indexRank2
Digital services87.8795.45
R&D services77.6489.25
Corporate services84.1897.56
Manufacturing93.5798.85
2  Rank is relative to 10 countries in both 2016 and 2014.
 
Cost factors3
  • 19.8% currency depreciation against the US$
  • Above-average increase in total labor costs
  • Large decrease in leasing costs for industrial facilities
  • Abolition of fixed minimum tax based on gross receipts
  • Temporary investment incentive for depreciable asset purchases
3  Significant cost trends between 2014 and 2016.
 
Exchange rate sensitivity4IndexChangeRank5
20% appreciationUS$1 = €0.7397.0-6.56
20% depreciationUS$1 = €1.0986.3+4.27
4  "What if" sensitivity scenarios based on appreciation or depreciation relative to the US dollar.
5  Rank among 10 countries assuming equal appreciation/depreciation of all currencies relative to the US dollar.

Locations

National results for France reflect the combined results for two major cities: Marseille and Paris. Total business costs in Marseille are 2.3 percentage points lower than in Paris. Since 2014, suburban office lease rates in Marseille have risen sharply, as compared to a small decrease in office costs in Paris. Combined with higher labor cost growth in Marseille, these factors result in a narrowing of the 4.0 point cost advantage that Marseille held over Paris in 2014.
 

Sectors

Among the four study sectors, France’s national ranking ranges from eighth for corporate services to fourth for R&D services. France’s generous R&D tax credit system, which includes a refund option for unused credits, results in France having the lowest effective corporate income tax rate among all study countries in the R&D services sector.
 

Cost factors

The rise in value of the US dollar relative to the euro in 2015 is the primary driver of France’s improved cost index in 2016 and the significant improvement in rankings for the two French cities. The euro also lost value relative to the UK pound, allowing France to move ahead of the UK in the current rankings. However, other cost trends as noted in the table also contribute to France’s overall results in the current study.
 

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