Prime Minister outlines French government policy

General policy – Speech by M. Manuel Valls, Prime Minister, to the National Assembly (excerpts)

Paris, 16 September 2014


At this moment of truth for France, I and my government team are seeking your vote of confidence to continue our action – and this, bearing in mind the exceptional developments in Europe’s economic situation. It is characterized by weak growth and a worrying risk of deflation which is casting doubt on our most prudent forecasts – I’ll come back to this. I’ve set myself this task: clarity, coherence and truth vis-à-vis Parliament and thus the French people. (…)

The importance of the moment compels all of us here to measure up to the scale of events.


The international situation is fraught with danger. (…)

To begin with, the world is facing a terrorist threat whose scale and evolution are totally new. This very day, in Syria and Iraq, yesterday’s tiny splinter groups are poised to take over states and all the accompanying resources, with the sole aim of stepping up their ability to act and their use of terror.

As I speak to you, 930 French and foreign nationals in our country are involved in terrorism in Syria and Iraq. As you know, they are a major threat to France.

France – the Head of State, its diplomacy, its armed forces – is fully mobilized to address this security challenge, which has to be the early 21st century’s biggest. It completely shoulders its responsibilities, those given it by history, those of a permanent member of the Security Council. It is assisting Middle Eastern Christians and minorities who are victims of the terror. It is working on a comprehensive response at home and abroad. This is the vital objective of the plan to fight the jihadist networks, which is being put forward to you at the moment. It’s also one of the vital objectives of the conference on Iraq, organized yesterday in Paris. At these moments, faced with these threats, on these issues, there needs to be national unity. I don’t doubt that there will be.


There’s also the economic crisis, of course, which has been hitting Europe and France for six years. It shatters all certainties and fuels every malaise: social malaise, democratic malaise, identity malaise. The economic crisis doesn’t boil down simply to figures and indicators: it disrupts lives, everyday lives, points of reference, families, working-class areas, rural areas and the bonds uniting us. I understand people’s impatience, doubts and anger. These are legitimate when unemployment is so high and has been for such a long time. But in the face of this, what approach must we adopt? One of feverish activity? Drastic change? Zigzagging? Giving up? No!

Governing means resisting. Governing means holding the course. Governing means reforming. Governing means speaking the truth. Governing, ladies and gentlemen deputies, means seeking a vote of confidence, especially when it’s difficult. I’m requesting your vote of confidence in order to continue our economic policy. I’m requesting your vote of confidence because my government’s policy is guided by the values of the Republic, values the left holds dear – the nation, the principle of equality and justice –, which speak to all French people. Everyone on these benches knows that France and the Euro Area are confronted with an exceptional situation. Growth isn’t picking up again. And on top of this, there’s virtually no inflation, which no one had anticipated. For 2014, as far as we’re concerned, very weak inflation of 0.5% and just as weak growth of 0.4% will lead to lower public revenue than expected.

This summer, we made a clear choice: no tax hikes or extra budget savings. It’s a political choice. It’s an economic choice, because we don’t want to enter a downward spiral. It’s a social choice, because the efforts demanded of French people – for years now – are already considerable.

So we’re adapting the pace of deficit reduction to this situation. Consequently, the government departments’ deficit should be in the region of 4.4% of GDP this year. Our goal is to bring it back down to 4.3% in 2015.

But nothing must divert us from our commitment to make €50 billion in savings in three years, including €21 billion in 2015. We must get public spending under control. Its excessively high level has for years sustained the increase in the deficit and debt. And as we all know, there’s a range of options to make spending more efficient. Spending cuts rather than tax increases! We’re easing fiscal pressure because taxes, by mounting up since 2010, have reached an intolerable level for the French people. A first step aimed at four million households was taken at the end of summer. And we’ll be continuing this in 2015: in this way, six million households will benefit from lower income tax.

This decision also takes on board the consequences of the Constitutional Council’s decision on employee contributions.


The pace of deficit reduction in Europe must also be tailored. This means using the full flexibility of the Stability and Growth Pact. Supporting growth in Europe also requires a tailored monetary policy.

Five months ago, on this very rostrum, I was denouncing the consequences of too strong a euro. There were very heated reactions, but today I see this idea has gained ground. Things are moving! We’ve made them move! It’s this government that has made them move in Europe! The European Central Bank’s decisions have enabled the euro to fall by 10 euro cents against the dollar. When applied to all our export companies, this fall represents tens of thousands of jobs protected. It’s necessary to go even further, because there’s an urgent need. The Euro Area is starting to fall behind the rest of the world.

The ECB President himself, Mario Draghi, has said he’s ready for other types of intervention to support growth.

He’s also recommended that national structural policies be accompanied at European level by a comprehensive demand-side policy. These positions are the ones the French President has constantly championed since 2012. The IMF, the OECD, many economists, business leaders and Europe’s unions are saying nothing different, so we must listen to them. It’s through investment that Europe will return to solid and sustainable growth.

Jean-Claude Juncker has announced a €300-billion plan for investment over three years. Announcing is one thing; putting it into practice is another. So we’re working with our partners to get powerful action from Europe on infrastructure, major projects, digital technology, and training for young people.

Ladies and gentlemen deputies, let’s acknowledge how far we’ve come!

This action of reordering Europe’s priorities is vital because, as we can clearly see, the European project is under threat from all sides, in every country – from mistrust, from populism, from the rejection of this great adventure that has united peoples and guaranteed peace.

Europe’s commitment must meet people’s expectations. This requires sincere and stringent dialogue between France and Germany. We’re not asking for any easy options. France alone decides what it must do. But the agreement between our two countries is essential for boosting growth and restoring real ambition to the European project. Germany is a great nation that we respect. I’ll be meeting Chancellor Angela Merkel next week. The message of France, the message of Europe’s people, must be heard. Germany must fully shoulder its responsibilities. So we, France and Germany, have an historic shared responsibility.


Ladies and gentlemen deputies,

The main weakness in our economy is our companies’ loss of competitiveness. (…)

That’s why, through your votes, you triggered the competitiveness and employment tax credit in December 2012 and then, a few weeks ago, the Responsibility and Solidarity Pact, announced by the President on 14 January. These measures are starting to bring results. On 1 January next year, labour costs will fall by some 10 contribution points for many companies, and there will no longer be any social security contributions at minimum wage level.

But let’s be clear, because here too there’s a duty to be truthful: these measures will take time to fully bear fruit. Yes, we must stand by all our businesses, our entrepreneurs, our SMEs, our SMIs, our small-scale industries, our traders – because ultimately it’s businesses that create wealth and employment. And with global competition giving nothing away for free, why should we be the only large country not to help our companies innovate and go off to conquer new markets?

But companies aren’t shareholders alone. They’re workers, employees, managers, engineers working together. Helping our companies isn’t an ideological choice, it’s a strategic choice for France! I’ve never stopped saying this since my first general policy speech right here, and wherever I’ve spoken, because this choice must be made by everyone.

Yes, the nation is making an unprecedented effort of €40 billion over three years. But this effort requires everyone to shoulder their responsibilities. The pact isn’t a way of increasing dividends or top salaries. The pact is there to create a climate of confidence and give companies room for manoeuvre again – they need it – and it must be translated into investment, recruitment, training and young people’s apprenticeships.

The social partners decided, only a few days ago, to discuss this at the level of each branch. (…)

In a few weeks’ time I’ll be chairing the new monitoring committee on public subsidies. It will involve the social partners and parliamentarians. And I’d like us to confirm then, together, that none of the major professional sectors is failing on employment or our young people. (…)

Putting our economy back on a sound footing also requires direct support to our industry. I believe in the visible hand of the state.

Our state has its role to play in a market economy. And that’s what it did in the case of Alstom, and many of you, on all benches, applauded its action to rescue that great French company!

The state acts by helping globally competitive French leaders emerge in strategic sectors. In the fields of the future TGV [high-speed train], intelligent textiles, green chemistry and big data, France has strengths. That’s true for the energy transition, which is a major – and urgent – step forward for the protection of our environment, but also a tremendous engine of growth for sustainable, non-relocatable jobs. It’s the focus of a bill that you’ll be examining at the beginning of October. And the future is also digital technology, of course, on which a major consultation is beginning, also prior to legislative work.

Finally, the state must act by directing French people’s savings towards the real economy and encouraging the funding of innovation. The R&D tax credit, the future investment programme and the BPI [Public Investment Bank] have proven their worth.

Investment: if there’s one word to remember, it really is that one, because it’s the key to recovery. A country that invests less or no longer invests will find no role for itself in globalization.


Putting our economy back on a sound footing means helping our companies, our industry, our agriculture, our research, our universities and our scientists. It also means supporting the social and mutually-supportive economy; it represents a tremendous source of jobs.

Putting our country back on a sound footing also means carrying out the necessary reforms – starting, of course, with the government departments. We’ve just embarked on a review of the state’s missions. It will involve local authorities and users, individuals and businesses, not forgetting, of course public employees themselves. We’re reforming the state. We’re reforming public companies, as we’ve just done successfully with the rail reform. We’re also reforming the local authorities.

Ladies and gentlemen deputies, you’ve already voted for the move from 22 to 13 regions. So what seemed unfeasible yesterday is in the process of being accomplished today. These new, larger, stronger regions are necessary to address the challenges of town and country planning and development. (…)

Ladies and gentlemen deputies, reforming also means freeing up all this country’s creative energy and simplifying standards. The growth bill will enable us to simplify formalities, procedures and French people’s everyday lives. It’s not a law that stigmatizes. It’s not against the regulated professions; it acts to provide them with the legal tools to modernize. It will stimulate investment by making the legislative and regulatory environment more transparent and more stable. It will also contribute to France’s attractiveness worldwide, with shops in tourist areas opening on Sundays and in the evenings. (…)

Regarding employment policy, it’s possible to give companies flexibility and a higher profile while improving the actual rights of their employees. We’ve shown this over the past two years, through several laws emerging from an agreement between the social partners. As you know, new negotiations have just been embarked on regarding so-called thresholds. By the end of the year, a route must be found allowing real industrial dialogue within companies in proportion to their size, without hindering their growth. Economic progress and social progress are very closely linked.

A more effective employment policy also means stronger support and more personalized and even stringent follow-up for job-seekers, who must nevertheless not be stigmatized: no one aspires to become unemployed or remain so. A new, tripartite agreement between the state, UNEDIC [independent employment agency] and the Pôle emploi [government employment agency] is due to be signed by the end of the year: it will have to improve the Pôle emploi’s action by ensuring that it’s more familiar with companies’ needs and makes full use of the digital sector’s potential.

It’s also imperative for us to encourage apprenticeships, which have been on the decline over the past few years.

Galvanizing companies is essential: even when there’s less recruitment as a result of the crisis, there must be more training. At the end of the week we’ll be meeting the social partners and the regions to revitalize apprenticeships. And if any obstacles get in the way of our apprenticeship policy, we’ll remove them!

Yes, we’re reforming, and we’re going to continue to do so. But reforming doesn’t mean breaking. Reforming doesn’t mean moving backwards. (…).

Published on 18/09/2014

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