"France needs its businesses", says Prime Minister

Speech by M. Manuel Valls, Prime Minister, at the MEDEF Summer University (excerpts)

Paris, 27 August 2014


The role of France’s prime minister is to come and meet the lifeblood of the nation. And therefore to come and meet business leaders and entrepreneurs. (…)

I know it’s the normal thing to pit the Left against the business world… It’s an old refrain. (…) Rather, let’s seek to cooperate and find paths that serve the general interest. That’s what shouldering one’s responsibilities means. And France’s situation demands it. (…)

The choice of this new government is a choice of clarity and coherence in the implementation of the economic guidelines laid down by the President.

The government has set to work to speed up the pace of reforms, to move our country forward. (…)

I. France needs its businesses

a. They’re the ones that create wealth.

(…) France needs you! France needs its businesses, all its businesses (one-person businesses, SMEs, start-ups, major groups), because it’s businesses which – by innovating, by risking their shareholders’ capital, by mobilizing their employees, by addressing their customers’ expectations – create value, and generate wealth that must benefit everyone. I love business. The vast majority of our fellow citizens work in it. Many flourish in it. Some – we mustn’t deny it – encounter problems in it. Sometimes suffering. But the fact remains that the French people are not mistaken. The institutions that top the opinion polls are SMEs and SMIs, even ahead of the police and the army.

b. They’re the ones that create employment

It’s businesses which create employment. How many of you are battling to protect jobs, motivate and reassure people, despite a gloomy economic situation. I’ve been saying this for years within my political family: there are no jobs without employers. That’s why it’s absurd to talk about a “gift to bosses”. A measure beneficial to businesses is a measure beneficial to the whole country. Businesses don’t belong solely to entrepreneurs or their shareholders. They also belong to the managers, to the engineers, to the technicians, to the workers – in short, to all the employees who give them life.

c. They’re the ones that enable innovation

It’s businesses that produce. (…) Businesses also mean innovation. (…) And we in France have the good fortune to have one of the world’s most dynamic breeding grounds for start-ups. (…)

d. They contribute to the development and cohesion of our regions.

(…) The establishment of a business is important for employment but also for the lives of a region’s inhabitants and for its dynamism. (…)

e. They’re the image and strength of France in the world.

Businesses contribute to France’s strength and image in the world. Our major groups, our cutting-edge companies, our brands (Total, L’Oréal, Carrefour, Accord, Alstom etc.) are known and admired the world over. And French people rightly consider them as part of our heritage.

Yes, France needs its businesses. It must be able to stand alongside you, support you, help you – particularly because global competition gives you nothing for free and because new markets are opening up. Other countries – especially the largest ones – don’t hesitate to support their businesses. We’re living in a market economy, in a globalized world… Yes, yes, in a globalized world. Some deny it, but it’s the reality. And so France mustn’t be an exception! Because when businesses win, it’s France that wins. (...)

II. We’re helping our businesses and will continue doing so: the purpose of the reforms embarked on

a. Businesses’ competitiveness and restoring their ability to invest.

The President has always had this strong belief, because we’ve had a competitiveness problem since the beginning of the 2000s. The facts are there: declining margins, an increasing trade deficit, a growing gap with Germany, which, by contrast, has managed to carry out the necessary reforms…

As early as November 2012, the Head of State decided to establish the competitiveness and employment tax credit (CICE), which is today fully operational. (…)

Then the Responsibility and Solidarity Pact – the 2015 tranche of which, I remind you, the deputies of the majority voted for in July – built on the CICE. (…)

In total, taxes affecting businesses have been reduced by more than €40 billion in four years. €40 billion so they can gain competitiveness, so they can invest, set out to reconquer market share and recruit staff. (…)

We’re going to get Parliament to adopt a bill setting out many simplification measures for businesses. Likewise, another 50 measures are being implemented in the building and construction sector, a vital sector for our economy that must be the focus of a real mobilization plan, which I’ll be announcing the day after tomorrow.

I’d like this simplifying action to be systematic, in every field. (…)

b. Fiscal stability

The clarity and coherence I was talking about are particularly valid for fiscal matters. In this field, we need stability and transparency. And the actions carried out – state reform, local authority reform and in particular this “impossible” reform of the regions that we’re currently carrying out, and reform of our health system – illustrate our determination to reduce public spending and therefore reduce deficits and taxes in a credible way. We won’t stray from this course! (…)

c. Continuation of the reforms

This determination is valid for fiscal matters, as it is for all the reforms we’re undertaking. Those reforms are expected. They’ll enable us to make our economy more flexible, more responsive. (…)

d. France’s attractiveness

Our economic policy also means restoring France’s attractiveness. It means, of course, promoting the tourism sector, which is essential for our economy and for which the Minister of Foreign Affairs and International Development, Laurent Fabius, is playing a fully active role. (…) It’s up to us all to promote France, to reiterate its strengths too, and not just the difficulties. (…)

e. But nothing is possible without an initiative for growth at European level.

(…) Investment has fallen sharply in Europe since the crisis. So the European Commission must commit to public and private investment. The €300 billion over three years announced by Jean-Claude Juncker on 15 July must be clarified.

Secondly, the euro is overvalued. This is bad for a number of your businesses. It’s bad for growth. I said this at the beginning of April, but I’m saying it again. The European Central Bank made a positive move at the beginning of June. Given the weak economic recovery, given the high level of the euro, given the risk of deflation in certain Euro Area countries, the ECB took action to support growth. The euro has depreciated by 6% since April compared to the dollar, with no direct market intervention. But we have to go further, faster, particularly because inflation is too weak. I have every confidence in the ECB in fulfilling its mandate of inflation close to 2% by using every means at its disposal. But time is short!

There must be a reduction of public deficits in Europe and particularly in France, I’m not disputing that. We’ve been living above our means for 40 years. And since 2008, our deficit has been above 4%. As for our level of public spending, it corresponds to 57% of the wealth we produce. Yet the pace of this reduction must be tailored to the current economic situation. It is exceptional, so it has to give rise to exceptional responses. The aim isn’t to dodge our responsibility by asking for the rules to be changed, letting the deficits get out of hand, exempting ourselves from carrying out the necessary reforms, or even pointing the finger at Germany. The aim is to look at things as they are: today, weak inflation, an absence of growth, when the crisis has been hitting for six years – those are exceptional circumstances. They must be taken on board. Making new savings to compensate for the effect of excessively low inflation and growth which still falls short would mean creating austerity, applying the brakes for all the countries of the EU. It would, in the end, mean jeopardizing the European project, a project which isn’t only a great market, but also a great venture.

III. What France expects of its entrepreneurs and its businesses.

a. Businesses must commit to jobs

Ladies and gentlemen,

This government is acting for businesses. The nation has agreed to make a significant effort. The French, who are also taxpayers, expect in return that business leaders and their representatives act responsibly. This expectation is legitimate. (…)

And the authorities, like our compatriots, will be particularly mindful. The French people wouldn’t tolerate – and they’d be right – dividends paid or top salaries skyrocketing. (…)

b. France needs committed employers

(…) You said so yourself, Mr Chairman. I quote you: France, and therefore its businesses, its trade unions, its employees, must “stop complaining and waiting, [but] move, take control, react”.

That’s the way we expect everyone to be thinking, to put France back on its feet. We must act responsibly, patriotically and with confidence in the future. (…)

France has so many assets. So many competitive advantages! It’s up to us, up to you to seize them to make our country succeed!

Published on 03/09/2014

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