The word “balance” in fact covers four nested circles, from the narrowest to the widest. The TRADE BALANCE: goods alone — the one in the title, the customs one, the one on the evening news. The balance of GOODS AND SERVICES: add tourism, transport, consultancy, patents. The CURRENT ACCOUNT: add income (wages, interest, dividends from abroad) and transfers. Finally the BALANCE OF PAYMENTS, which crowns the lot by adding movements of capital. Remember the reading rule: when you are given “the deficit”, ask which circle is meant — for France in 2025, the first is €69.2 billion and the third €11.6 billion.

Before subtracting, you have to know at what price you are counting. Customs publish exports “FOB” — free on board, that is the value of the merchandise as it leaves the country, transport not included. For imports, they publish TWO figures: the CIF value (cost, insurance, freight: what the merchandise cost delivered to our border) and the FOB value (the same, with transport removed). In 2025: €703.6 billion CIF, €683.9 billion FOB — nearly €20 billion apart for exactly the same cargoes. The official balance always compares FOB with FOB (assumption 2). Using the CIF figure would give a deficit of €88.9 billion that exists nowhere.

The balance is a subtraction: exports minus imports. Sign convention, to be learned once and for all: positive means a SURPLUS, negative a DEFICIT — the country bought more than it sold. Alongside it, statisticians use a ratio rather than a difference: the COVERAGE RATIO, exports divided by imports, expressed as a percentage. It answers “what share of my purchases do my sales pay for?”. Both say the same thing, and it can be proved in one line: X/M is below 100% exactly when X is below M, that is when X − M is negative. Coverage below 100% and a negative balance are therefore two ways of stating the same fact — never two pieces of information. As always, learn to turn both notations round, because the exercises rest on it: from a coverage ratio and imports you recover exports (X = coverage × M), and from a balance and exports you recover imports (M = X − balance — careful, a deficit being negative, subtracting it amounts to adding it).

Here is the proof missing from most treatments. You buy a German car for €30,000. Those euros reach the German manufacturer, who has only two possibilities. Either they in turn buy €30,000 of French products — and the exchange balances. Or they do not: then they place those euros in French government bonds, in shares, in property — or they simply leave them in an account, which comes to the same thing, since a deposit is a claim on a euro area bank. There is no third way out: the money does not disappear. So, mechanically, a current account deficit has as its counterpart an inflow of capital of the same order: French assets acquired by non-residents. (In principle the equality is exact; in practice the published accounts never quite balance — goods in transit, timing differences — and the Banque de France adds an “errors and omissions” line for that. Hold on to the idea: the deficit is financed, not evaporated.) A deficit is therefore not a loss, it is an EXCHANGE: the country receives goods today and hands over in return titles of ownership or claims on itself. Whether the country puts that financing to good use is quite another question — and it is the right one. Click each term: