Interview, Other
France’s Economic Environment for 2021
- GDP decline is projected to close at approximately 7% for December, with the full-year figure trending between 8.5% and 9%, while recovery to 2019 levels is anticipated sometime during 2022, contingent on the sanitary situation and UK variant uncertainties.
- Travel, culture, and hospitality sectors are expected to continue exerting a strong drag on the economy while partial lockdowns remain in effect.
- Corporate default trends are anticipated to remain significantly below 2019 levels due to effective measures taken to cushion the virus shock.
- France is forecast to experience a lower GDP decline than Germany in 2019, with Italy a close third, while Spain and the UK are expected to face double-digit declines.
- Approximately 40% of the $130 billion in state-guaranteed loans are anticipated to have been channeled to small businesses with fewer than 10 employees.
- Business creation is trending at record levels of 80,000 businesses per month, a volume not seen in a long time.
- Fundraising for innovation in 2020 recorded a record year with over €5 billion in French tech funding, representing a 7% increase from the previous year.
- The first group of 70 entrepreneurs is expected to kick off the 10,000 Small Business program in March.
- The French entrepreneurial ecosystem is expected to receive increased attention and confidence following Goldman Sachs support during troubled times.
- In industries hardest hit by the crisis, focus is expected to pivot from liquidity building toward strengthening credit metrics, reducing leverage, and adjusting capital structures.
- Corporate clients are expressing a strong appetite to move the needle by thinking through strategic options.
- M&A activity is expected to see more elevated strategic levels by the French corporate community in 2021 following an 8% increase in 2020.
- Significant growth in the French IPO market is expected to come from continued corporate carve-out activity to create optionality in portfolios.
- A significant pickup in tech IPOs is expected as a strong pipeline of high-quality companies gets prepared.
- The rise of alternative vehicles, such as SPACs and blind pools, is expected to become a driver of growth for the French market as the U.S. phenomenon spreads.
- Headcount in the Paris office is expected to double again over the next three years following a doubling over the past three years.
- The Paris office is expected to increasingly serve as a hub to support continental European clients across a range of activities rather than solely serving French clients.
- Goldman Sachs is expected to relocate to a new office building next year with a capacity to host 300 to 350 seats.