Head of France's Medef business lobby sees signs of business slowdown
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Transcript
00:00 Charles Pellegrain joins me. He's at that MEDEF meeting.
00:04 Charles, did the government manage today then to reassure the business community?
00:10 Well, they definitely tried to pull all the stops here.
00:16 For instance, Emmanuel Macron gave a video address
00:19 and that was the first time he spoke to that meeting since his election in 2017.
00:25 So there was a sense that this was a year where he needed to step in.
00:29 From the get-go, Elisabeth Born, when she took to the stage
00:33 for an interview in front of a crowd of hundreds of business leaders
00:37 here in the Hippodrome de l'Enchant next to Paris,
00:41 her first lines and her first answer was to say that
00:44 this government is a pro-business government
00:47 and has been a pro-business government since 2017
00:50 and will continue to be so,
00:53 reaffirming the Macron government's commitment to supply-side economics,
00:58 meaning that the goal of the government is to liberate
01:01 the strength and forces of the private sector
01:05 in order to achieve its objectives in terms of full employment
01:09 or its objectives of a re-industrialization of the French economy.
01:16 Business leaders will have wanted to hear a bit more reassurances on some specifics here,
01:22 specifically one type of employer payroll contribution in French called the CVAE,
01:29 which the government had promised to scrap entirely next year,
01:33 but that in the end it will stagger that cancellation
01:37 until 2027, until the end of the mandate.
01:43 That was seen as a bit of a bad surprise,
01:47 especially for small and medium enterprises here in France
01:50 that are especially vulnerable to changes in fiscal policy like this.
01:55 So definitely a lot of reassuring words from the French government,
02:00 but the business community will want to see more deeds.
02:04 Anne, I mentioned tax at the top,
02:08 give us a sense as to why this issue of taxation is in the spotlight right now.
02:15 Absolutely, the tax increases are being rumored
02:19 and this cancellation of the employer payroll contribution is part of that conversation.
02:28 The reason why there are rumors of tax increases, discussion of tax increases,
02:33 is because there is more pressure now, more than ever,
02:36 for the French government to redress, to rebalance its public accounts,
02:39 especially after the years of stimulus spending that we saw during the COVID pandemic
02:45 and now, especially last year as well, the stimulus and the protections that were afforded
02:51 with the energy shock that we saw with inflation and with the invasion of Ukraine last year.
02:57 The government spent a lot of money and government debt has ballooned to over 3 trillion euros.
03:03 So there is an urgent need to redress these accounts
03:07 and that obviously will go through a reduction of government spending.
03:12 The government said, Elizabeth Bond spoke of a reduction of 3% in volumes of government spending,
03:18 but there is also discussion of maybe ways to increase taxes.
03:22 But Elizabeth Bond reaffirmed that she won't and this government won't increase taxes
03:29 either for businesses or households.
03:32 Now, how else are they going to be able to rebalance the books of the French government and the French state?
03:39 That's what it will try to figure out as the parliament attempts to pass its budget law for 2024.
03:46 Charles Pellegrin at MEDEF. Thanks very much.
03:49 [BLANK_AUDIO]