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Addressing the balance of power

The first quarter is once again a time for making reviews, reading reports and establishing outlooks. Let’s start with the unemployment situation in France.   A mere 149,600 jobs were created in the country last year, though a slight rebound was reported in the last quarter after the early-year slump. 

Le Figaro writes at length about the topic, drawing on the definitive figures for 2018 published on Tuesday by the National Institute of Statistics and Economic Studies (INSEE). “A total of 149,600 salaried jobs were created last year, up 0.6% compared with +1.3% in 2017. For the year as a whole, the private sector created 160,300 jobs, half as many as in 2017 (329,600). In the public sector, job destructions accelerated, with the loss of 10,700 jobs.”   The decrease was limited by job creations at the end of the year, despite the yellow vests crisis. The creation of salaried jobs rose in the third quarter (29,100) and in the fourth quarter (53,600). With the rebound, the French economy reported net job creation for the fifteenth consecutive quarter.    The financial daily reports that job creation was strongest in the manufacturing and construction sectors. “According to INSEE, industry, which became a net job creator in 2017 for the first time since 2001, continued the trend in 2018, with 6,500 job creations in the fourth quarter and 9,500 for the year as a whole. The construction sector was also in good shape, with 6,300 jobs created in the fourth quarter and 25,600 for the full year. Meanwhile, employment in non-market services picked up at the end of the year (+7,300) but was down for 2018 as a whole (-5,700).”    But it is another report that has thrown the European Union into something of a panic – the first to be published by the European Commission on direct foreign investment in the EU. The document stresses the sharp increase in the appetite of emerging countries, particularly in certain strategic sectors.

The Thursday issue of Le Figaro poses the question: “Accused of being overly naïve relative to foreign powers, is the European Union finally beginning to see the urgency in protecting its interests? In his State of the Union speech in September 2017, Jean-Claude Juncker stressed that ‘Europe must always defend its strategic interests’, at the same time setting out a new European framework for examining foreign investment. The stated aim is to protect essential business activities coveted by large groups from outside the EU. ‘It is a political responsibility to know what is going on in our own backyard so that we can protect our collective security if needed,’ Juncker told the Members of the European Parliament.”   And now, “one and a half years later, the European Commission on Wednesday published its first report on direct foreign investment in the EU. The document ‘confirms a continuous rise in foreign company ownership in key sectors in the EU.’ Yet this attractiveness is not without risk. China, together with other emerging economies, is demonstrating increasing initiative in the acquisition of the jewels in Europe’s crown. This worrying observation ‘illustrates the need for effective implementation’ of an investment screening framework, says the Commission. According to the EU Commissioner for Trade, Cecilia Malmström, ‘We must be ready to act where our security and public interest are at risk.’”   Le Figaro continues: “On the face of it, foreign presence remains limited. In 2016 just 3% of all the European companies reviewed by the Commission were controlled or owned by non-European investors. But it is very much a case of not being able to see the wood for trees, as the businesses in question actually own over 35% of the total assets of the companies in the sample assessed by Brussels, encompassing some 16 million jobs. Foreign presence in European businesses has increased continuously in the last ten years, and while the Union’s ‘traditional’ partners such as Norway, the United States and Japan remain in the majority, new investors have made spectacular headway.”   And the growing ties between Rome and Beijing ratchet up concerns in this respect. The piles of reports balancing on desks are all about the balance of power.   Christian Moguérou

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