France is a republic and democracy, ruled by the centrist Republic on the Move (LREM) in coalition with the centre-right Democratic Movement (MoDem).  President Emmanuel Macron has made reforms to the labour market a priority since his 2017 election and continued progress is likely over his term in office. However, growing public opposition to Macron’s reform plan - and the government more broadly - will likely slow down policymaking throughout his presidential term, set to end in 2022. This will continue to result in regular strikes and protests, particularly as the population increasingly feels the adverse economic impact of COVID-19. Far-right populism retains some traction with the electorate but is unlikely to have a significant impact on policymaking. 

After a steep decline in activity during 2020, the French economy is expected to return to growth, but the recovery will be very gradual and potentially prone to relapses. According to the IMF, real GDP will decrease by 8,2% in 2020 and grow by 5,8% in 2021. The government has relaxed fiscal policy substantially to support the economy, providing financial support to firms and households, as well as loan guarantees to businesses hit by the fall in activity. As a result, the fiscal deficit has risen substantially in 2020, but borrowing costs are expected to remain low as a result of extremely accommodative monetary policy. Macron’s administration announced on September 2020 the details of a EUR100-billion Plan de Relance, a stimulus package aimed at relaunching the economy, with a strong focus on green investment and job security.

Businesses will continue to face uncertainty in the coming months, as new infection spikes are likely to prompt the government to reimpose measures such as restrictions on business activities or movement restrictions. The reactivation of the economy will largely depend on the vaccination campaign, that is currentely being successfully carried out with a 33% of the population inoculated with at least one dose. Meanwhile, current levels of disruption in shipping and port operations will slow the ability of organizations to reconstitute supply chains as they enter recovery phases, while businesses resuming activity will face high public scrutiny and reputational risks regarding the duty of care and protection of staff.

There is a high risk of riots in the Paris suburbs over perceived police brutality and racial discrimination. Large organized protests, which had subsided during the COVID-19 virus-related lockdown, have resurfaced, driven by anti-racism solidarity rallies. The risk of protest-associated property damage and violence, particularly affecting security forces, remains high.

The risk of Islamist terrorist attacks in France is persistently high. Low-capability, lone-actor attacks involving vehicles, blades, and/or firearms are far more likely to succeed than sophisticated plots as they require a minimal amount of organization and little, if any, communication between different parties. Islamist militants will prioritize indiscriminate attacks against congregations of civilians or targeted assaults on security personnel.

COVID - 19 daily infections are the highest in Europe, but they are expected to sharply decline during summer thanks to the effectivity of the vaccination. 

The country offers a generally stable political environment for business. The election in May 2017 of Macron as president, at the head of his own newly formed centrist party, Republic on the Move (LREM), shook up traditional divisions in French politics. Macron was a minister in his predecessor François Hollande’s center-left government (2012-17), but the current administration is formed of politicians from both the center-left and center-right and figures from outside politics.

Successive governments have failed to make major reforms to the economy or bring down unemployment levels. Strong unions, public opposition, and a lack of political consensus blocked significant structural changes. President Emmanuel Macron made such reforms the cornerstone of his electoral program, including labor reforms and revisions to pensions and taxation law. However, the steep decline in his popularity and the prominence of anti-government protests, as well as challenges relating to the adverse economic impact of COVID-19 will likely slow down the implementation of pro-business policies.

In March 2020, Macron announced a delay to the implementation of some of the most contentious reforms and appointed Jean Castex, former mayor of the Prades municipality in the Pyrénées-Orientales department and co-ordinator of France’s COVID-19 lockdown exit strategy, as new prime minister on 3 July. The appointment followed Édouard Philippe’s resignation, after his victory in the municipal election in Le Havre. Cabinet appointments in Macron’s government reshuffle indicate likely policy continuity in the management of the economic recovery strategy and healthcare response to the COVID-19 virus outbreak. 

The gilets jaunes (yellow vests) has become an anti-government movement. The grassroots demonstration in November 2018 initially rallied against rising fuel prices and an additional fuel tax increase that was scheduled to come into effect in January 2019. However, the amorphous movement subsequently evolved to encompass wider socioeconomic grievances and disillusionment with the government. Protesters set up roadblocks on highways and roundabouts nationwide, and staged large-scale protests in major cities each Saturday, sometimes resulting in violence, vandalism, and looting. Despite some concessions, the government continued to struggle to defuse the protests, which only stopped as a result of government restrictions on gatherings related to COVID-19. However, protests are likely to resume rapidly once restrictions are lifted, with the adverse economic impact of COVID-19 likely to exacerbate previous tensions.

As well as reforms to business, Macron has enacted security legislation to end the state of emergency that was in place from November 2015 to November 2017. Macron's government is also highly committed to maintaining France’s position as a key player within the EU, while remaining one of the strongest advocates for the EU being a key geopolitical player globally. 

France is considered a Full Democracy in the 2020 Democracy Index, developed by The Economist Intelligence Unit (EIU), where the country ranks 20 out of 167 countries scored.

The country ranks 26 at the 2019 Human Development Index developed by the United Nations Development Programme.

France generally offers a strong operating environment for businesses. The main concerns for businesses are: high levels of bureaucracy, high labour costs, and powerful labour unions. Given President Emmanuel Macron’s liberal and market-oriented reform agenda, labour unions – along with the gilets jaunes (yellow vests) movement – are likely to stage protests and strikes throughout Macron’s term, leading to periodic disruption for businesses.

While corruption presents a low-level threat for businesses, scandals over nepotism and tax evasion have blighted high-level politics. The 2017 presidential election saw early frontrunner François Fillon’s popularity plummet after allegations emerged that he had paid members of his family for work that they did not carry out for him while he was a parliamentary deputy. Macron vowed to take a hard line on political corruption, beginning with a ban on elected officials employing relatives. High-level corruption among current and future politicians will likely decrease, though this will be a gradual process and historical corruption allegations are likely to continue to surface sporadically in the coming years. Public works and the defense industry are considered the most affected by corruption.

At present, excessive bureaucracy presents a particular problem, particularly in relation to the antiquated tax system, and companies may encounter delays in dealing with the authorities. Tendering processes are generally straightforward, but can be bureaucratically cumbersome. Foreign companies are unlikely to experience discrimination, though some local companies may seek to benefit from informal contacts with the authorities or other enterprises. Macron’s government is taking steps to boost the country’s competitiveness.

International environmental organisations such as Greenpeace, Friends of the Earth (Amis de la Terre) and Extinction Rebellion (XR) operate in the country. Environmental protests have increased in frequency since 2018, indicating rising public awareness of climate change-related issues and, as a result, greater scrutiny of governments by civil society. The mainstream environmental activist movement will continue to grow alongside public awareness of climate change-related issues, including amid COVID-19 which is viewed by the movement and its sympathisers as an opportunity to bolster sustainability and push for “green” legislation. Regular protests will continue to occur in major cities. Most actions by environmental groups remain non-violent, with some groups relying on stunts, blockades and other acts of civil disobedience to draw attention to their causes. These will primarily target government agencies, as well as energy-intensive industries or those perceived as exploiting or damaging the environment. Subcontractors working on projects or for companies perceived as being harmful to the environment will also be increasingly targeted. Incidents of vandalism cannot be excluded, as seen through the occupation and vandalism of a major financial company’s office in the capital Paris in February 2020, but will remain the exception rather than the rule.

Industrial action in France is frequent and well organized, often hampering business operations. The transport sector is frequently affected, with the most significant delays and cancellations in the one-year outlook likely to occur in the rail and aviation industries, as well as potential road blockades by truck drivers, rail workers, and other protest groups. In response to contested government reforms, trade unionists could also attempt to target oil refineries and depots with blockades or cut the power supply to symbolic assets. Transport infrastructure in the capital is likely to be improved by the "New Greater Paris" project, due to be completed by 2030.

Overall, France ranks 32 out of 190 countries scored at the 2020 Doing Business Index by the World Bank and 23 out of 198 at the 2020 Corruption Perception Index by the Transparency International Organization.

France has led international efforts to counter financial crime and tax evasion although these remain issues. Gang crime remains prevalent in southern French cities, such as Marseille and Grenoble. Corsican mafia groups operate in both Corsica itself and southern French cities. France is exposed to the trafficking of firearms from the Balkans, although since the uptick in terrorist attacks in 2015, greater efforts have been taken to stem their flow.

Large organized protests have resumed after temporarily subsiding because of restrictions imposed during the COVID-19 outbreak. Protests with a high risk of violence and attracting up to hundreds of thousands of participants are common in France, particularly in Paris, Lyon, Bordeaux, Lille, Nantes, Toulouse, and Montpellier. The police are likely to respond with tear gas to disperse crowds, particularly if demonstrators throw projectiles. The most likely trigger for riots in suburban areas is perceived police brutality or discrimination against members of minority ethnic groups. 

Measures implemented to curb the spread of COVID-19, including stringent restrictions on movement, in March-May 2020 have resulted in unrest in various municipalities located on the outskirts of major cities. Incidents have involved vandalism in the form of burning street furniture and vehicles, as well as the targeting of security forces with projectiles and improvised mortar devices launching fireworks. Officers also reported being “ambushed” by residents in some areas. Moreover, weekly anti-government protests have increased the burden on already stretched police forces, which have been subject to criticism for their heavy-handed approach towards gilets jaunes (yellow vests) protests. COVID-19 will increase the socioeconomic vulnerabilities of residents of low-income suburbs, and further instances of rioting and unrest are likely in the future, but the threat of riots in most of the country will remain low. Large businesses are generally not present in these areas and are unlikely to be targeted by violence or vandalism, with any anger being directed against the government and security forces specifically.  

War risks on French soil are minimal given the country’s favorable relations with its neighbors. The government increased the defense budget for 2020 by EUR1.7 billion to EUR37.5 billion to increase its military capability. France maintains a strong military presence, and capacity to intervene, in its former African colonies. The stated goals of the French intervention center on preventing humanitarian disasters, disrupting terrorist networks, restoring territorial integrity and national sovereignty, and consolidating political processes leading to democratic elections. France will continue to play a prominent role in the fight against global terrorism and is a key player in the campaign against the Islamic State in Iraq, Syria, and Libya.

France’s banlieues are areas of low-cost housing on the outskirts of major cities, which are home to many migrants from France’s former African colonies and often have relatively high unemployment and crime rates. Residents of these areas can feel excluded from broader French society, fostering societal tensions. Tensions occasionally spill over into localised social unrest and rioting. These are mostly driven by strained relations between police and youths in low-income areas that can stem from accusations of excessive police violence and from reported increased targeting of minority youth by police forces in aggressive stop-and-search operations. Policies focusing on assimilating rather than integrating immigrants have further added to tensions, and continue to fuel political debate, including over whether they contribute to radicalisation.

France has seen a series of terrorist attacks in recent years and further Islamist extremist terrorist attacks are likely. There is a high likelihood of attacks by Islamist militants using blades, firearms, or vehicles, as seen in the July 2016 Nice attack. Co-ordinated, marauding attacks such as those in Paris in November 2015 are less likely and would be rapidly neutralized given the greater preparedness of security forces. With 20,000 individuals suspected by the French authorities of having been radicalized, security forces are overstretched and unable to comprehensively mitigate the heightened threat despite having been granted greater powers and additional funding in 2015. Attacks against Muslim individuals and assets have been steadily increasing and tend to spike following jihadist attacks.

Overall, France ranks 66 out of 163 within the 2020 Global Peace Index by the Institute for Economics and Peace.

France is currently among the most cyber-attacked countries in the world according to Kaspersky cyber threat map.

No vaccinations are required to enter the country.

France ranks 11th out of 195 within the 2019 Global Health Security Index, a project of the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHU), developed with The Economist Intelligence Unit (EIU).

France has a temperate climate with four main climatic regions. In the west, the climate is oceanic and humid, with mild winters and relatively cool summers. The climate in Alsace, Lorraine, along the Rhone corridor, and in mountainous regions (the Alps, Pyrenees, Central Massif) is semi-continental with harsh winters and hot summers. In the north (Paris and Central Region), winters are cold and summers hot. The south of France enjoys a Mediterranean climate with mild winters and hot summers.

The risk of flooding is relatively high; 5 to 7 percent of France's territory is located in flood zones. In November 1999, flooding in areas of Aude and Pyrénées-Orientales departments left some 30 people dead. Strong winter storms, such as Xynthia in February 2010, also occasionally strike the country. This storm brought violent winds and very high tides, which generated unprecedented flooding, leaving some 40 people dead, principally in the Vendée, Charente-Maritime, and des Côtes d'Armor departments. In October 2015, floods in the southeast of the country killed at least 18 people. More recently, in February 2017, the French Meteorological Institute - Météo France - issued red alerts for several departments, including Charente, Charente-Maritime, and Gironde, due to severe wind.