The French economy is not reaping the benefits of re-locating service jobs to cheaper countries abroad because of the inflexibility of its own labour markets, a study by McKinsey Global Institute has found.

Although offshoring is a nascent phenomenon in France accounting for 4 per cent of total job losses between 2002-04 it is already causing huge political repercussions. Fear of délocalisation has gripped French voters and was one of the most commonly cited reasons for their rejection of Europe's constitutional treaty in a referendum last month.