JOUY-EN-JOSAS, France: French Prime Minister Manuel Valls launched a charm offensive on the corporate world yesterday, promising to speed reforms aimed at freeing up the economy and to make tens of billions of euros in tax cuts.
Valls declared that he “loves business” in what was the most pro-entrepreneur speech yet from the Socialist government of President Francois Hollande — who in his election campaign described finance as his enemy. The head of France’s employers’ group said the comments could mark a new era.
Responding to renewed pressure from the European Commission for France to pursue reforms, Valls said the government would try to lower the public deficit but warned that too much budget rigour could thwart efforts to revive economic growth.
Two days after Hollande evicted maverick economy minister Arnaud Montebourg in a government reshuffle aimed at re-affirming increasingly pro-business policies, Valls tried to reassure corporate leaders who had been often irritated by Montebourg’s interventionism and mixed government messages.
“Entrepreneurs, France needs you ... I love business, I love business,” Valls said to applause.
“The path back to growth is in supporting business,” Valls said, reaffirming a policy U-turn already announced by Hollande at the start of the year with about ¤40bn ($53bn) of corporate tax cuts and ¤50bn of public spending cuts to 2017. The Socialist party’s left wing has decried that policy, while business leaders — who gave Valls a standing ovation — said they needed more proof of it being implemented.
“I have a message for the new government: dare to carry out reform,” said Pierre Gattaz, president of the Medef employers’ federation. Referring to Valls’s speech, he said: “Perhaps people will say there was a ‘before” and an ‘after’.”
The French economy has failed to grow for two quarters in a row and, for all the rhetoric, data showed yesterday that morale in the manufacturing industry fell in August — evidence of a lack of confidence among investors in Hollande.
Separately, the jobless number reached yet another record in July. The Labour Ministry said the total in mainland France rose by 26,100 to 3,424,400, up 0.8 percent over one month and 4.3 percent over one year.
Paris has admitted it will not meet its deficit target this year and is unlikely to do so in 2015 but Hollande is hoping for leeway from EU officials in Brussels amid a debate in Europe about how to stimulate growth and reduce debts.
Earlier the European Commission urged Paris to speed up its reform plan, showing it was keeping up the pressure on Hollande after this week’s government crisis, provoked by three ministers who rejected budgetary rigour.
Reuters
