10 MYTHS ABOUT FRANCE10 MYTHS ABOUT FRANCE

January 2008

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World’s 6th largest economic power at the heart of a 493 million strong consumer market

3rd leading destination worldwide for FDI, after the U.S. and the U.K. in 2006 (UNCTAD)

World’s 5th largest exporter of services and exporter of goods

Myth #1: “Once a world power, France is now on the decline.”

Reality:

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Myth #2: “The French are always on strike.”

Reality: Low number of strikes in the private sector

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50

60

70

80

Spain ItalyUSA

France

NetherlandsGermany

Japan

Average working days lost due to strikes per year per 1,000 inhabitants (2000-2004)

Data source: ILO Yearbook of Labor Statistics 2006 - IMD 2007

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Myth #3: “The French are lazy.”

Reality: French managers work average of 48 hours per week

Average number of hours worked per week (full-time)

Data source: Eurostat, Working time data, Series EFT, 2008

49.7 49.148h 47.8 47.5 47.4 46.8 46.6

44.2 44

41.9

3638404244464850525456

Germ

any

Belgiu

m

France

Italy

Spain

Nether

lands

EU-27

Denm

ark

United K

ingdom

Sweden

Norway

Managers and corporate executives Labor force

France ranked 3rd in the world for hourly productivity behind the U.S. and Norway in 2007

(Source: ILO)

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Myth #4: “France is not business friendly.”

Reality: Lower employment costs for executives

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Myth #5: “The French brain drain”

Reality: France is a brain-gainer

Only 3% of French researchers are settling abroad: the lowest rate in Europe.

France attracts more graduates than it loses; only the USA and Canada can compare.

The most aggressive research tax credit in the EU

Patent and translation costs reduced by 20%- 40% with the London Agreement (also called the “Accords de Londres”- October 29th, 2007)

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Myth #6: “France is deeply conservative and incapable of reform.”

Reality

Incentive measures valuing hard work applied August 21st 2007:

Reduced social charges on overtime for companies (“TEPA” law)

Social charges tax exemption and removal of taxes on overtime for employees ( “TEPA” law)

Other measures expected in 2008:

Labor law simplified with a single contract

Possible buy-back of remaining “work-hour reduction” days

Facilitation of working Sundays

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Myth #7: “French taxes are stifling.”

Maximum income tax rate reduced to 40%, like in the UK.

Capital gains from sales of shares are totally exempt from tax once the securities have been held for 8 years.

Maximum overall tax will drop from 60% to 50% of an individual’s total revenue, including direct, national and local taxes, as well as CSG and CRDS contributions, for taxes paid in 2007. ( “TEPA” law– August 21st 2007)

Applicable households will also be able to take advantage of an increase from 20% to 30% on the tax deductions related to the value of their principal residence, as well as deduct 75% from their wealth tax (ISF) to invest in small-and-medium-sized enterprises up to a set limit of €50,000 per year.

Research tax credit 2008: 30% of yearly R&D expenses, up to a limit of €100 million. (Finance law 2008)

Reality: A more competitive fiscal system & reforms scheduled in 2008

NEW MEASURES

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Myth #8: “Investors are fleeing France”

Reality: Paris ranks 2nd for the location of companyheadquarters in 2007

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Tokyo

Paris

NYC

London

Beijin

g

Seoul

Toronto

Mad

rid

Zurich

Houston

Munic

h

Osaka

Rome

Atlanta

Source: Fortune « Global 500 companies » 2007

18,000 foreign subsidiaries based in France which employ some 2.3 million workers

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Myth #9: “French economic patriotism is nothing

but protectionism.”

Source: Balance des Paiements - Banque de France

40

41

42

43

44

45

46

47

2002 2003 2004 2005 2006

Reality: Foreign investors hold 46.2 % of the companies listed on the CAC 40 at the end of 2006

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World’s Top 200 companies (based on profits, earnings, and market value)

Source: Forbes 2000, 2007

Reality: 14 French companies are among the world’s top 200

Myth #10: “France is all about food, fashion and wine.”