French trade deficit hits a record high

Feb 7, 2012, 10:50 GMT

Paris - France's trade deficit widened to a record 69.59 billion euros (91.39 billion dollars) in 2011, an increase of 35 per cent on 2010, figures released Tuesday by the foreign trade department showed.

The value of French imports grew 11.7 per cent to 498.39 billion euros. The value of its exports, which have lagged imports for years, grew at a slower pace of 8.6 per cent to 428.80 billion euros.

Secretary of State for External Trade, Pierre Lellouche, tried to downplay the size of the deficit, telling Le Figaro newspaper it was 'not as bad as expected.' Last year the government had estimated the deficit would reach 75 billion euros but revised it down to 70 billion euros in mid-January.

The trade department explained the surge in imports in terms of the 'increasing costs of raw materials' - mainly a surge in oil prices.

Exports were powered mainly by food and drink and luxury goods.

The figures confirmed France's decline as an exporting nation, with the country's share of global trade nearly halving in the last two decades, from 6.2 per cent in 1990 to 3.6 per cent in 2011.

Among the few sectors where France is still competitive are food and drink, luxury goods and aerospace.

The home of Renault and Citroen is now a net importer of cars.

Exports to nearly all regions, including European Union countries, the United States, the Middle East, Africa and Asia, grew at a slower pace in 2011 compared with 2010.

France's trade deficit with Germany, its biggest trading partner, came in at 16.5 billion euros, up from 15.9 billion euros in 2010. It has also run up deficits with smaller economies, such as Italy and Belgium.

President Nicolas Sarkozy has blamed France's lack of competitiveness on the high cost of labour. Sarkozy, and contenders in April's presidential election, have all announced measures to 'reindustrialize France.'

In January, Sarkozy announced a number of measures aimed at making labour cheaper and more flexible.

The measures include a controversial 1.6-point increase in sales tax that would finance a decrease in employers' social security contributions.