French trade gap narrows in November, but record looms

PARIS: France's trade deficit narrowed sharply in November as Airbus exports rose but it remains on course for a record annual trade gap in 2011, stoking worries about competitiveness as President Nicolas Sarkozy seeks a second term in an April election.

The deficit narrowed to 4.4 billion euros ($5.59 billion) in November from 5.6 billion euros in October, seasonally adjusted figures from the customs office showed. The October figure was revised down from the 6.3 billion euros originally reported.

Despite the improvement, France's deficit so far for 2011 is still wider than the annual record of 56 billion euros seen in 2008, with an accumulated deficit of 64.9 billion in the first 11 months of 2011.

Trade Minister Pierre Lellouche told Reuters last month that the deficit would hit a new annual record of 70-75 billion euros in 2011.

Exports rose 3 percent in November to 37.4 billion euros, while the level of imports remained stable as Airbus shipped 30 aircraft for 2.25 billion euros, up from 23 for 1.4 billion euros in October.

While France's trade balance has flirted with record deficits over the last year, Germany has been posting record exports, highlighting the decline of French competitiveness against its larger northern neighbour.

Data on Monday showed German exports jumped 2.5 percent in November, widening the trade surplus to 15.1 billion euros and suggesting fourth quarter growth in Europe's bulwark economy may be stronger than expected.

With French exports losing market share on international markets and unemployment claims at a 12-year high, lack of competitiveness has become a key topic ahead of the two-round election on April 22 and May 6.

Sarkozy's government announced plans last week to shift the cost of companies' welfare contributions onto consumers by hiking sales taxes, a move aimed at making French firms more competitive against rivals in emerging markets.

The government is presenting the planned sales tax increase as a way of making foreign producers importing goods into France help bear the cost of financing the welfare system, which is mainly financed by French companies.