President Francois Hollande presented a fresh fiscal outlook for the struggling French economy to 30 or more international business executives on 17 February.
The meeting included representatives from corporate staples such as Volvo, Intel and Nestle, in addition to financial chiefs from China and various Gulf nations.
France, the European Union’s second-largest economy, has experienced few positive fiscal trends during Hollande’s tenure. As a result, business leaders are seeing fewer opportunities in the country. France’s foreign direct investment, or FDI, plummeted 77 percent last year.
Hollande put forth a series of eight measures to increase interest in France’s economy. The President announced the most important measure was to simplify and streamline French business taxes to match systems in other countries — namely that of Germany, the EU’s largest and most prosperous economy.
“The objective is to ensure the stability of tax standards and mechanisms,” Hollande said.
“A business, whether French or foreign, that wants to invest will have a commitment from the administration that the tax rules will remain the same, and that will be a guarantee.”
Hollande added that he plans to join France’s two major international investment firms, “Invest in France” and “UbiFrance,” into one collective agency. This is another attempt to cut redundancies and follow suit with other EU countries.
To grant fresh innovative minds an easier path to France, Hollande said he will create a “talent passport” that will give foreign graduates and young skilled workers a four-year legal stay in order to become part of France’s workforce. This process will cut out a significant amount of complicated administrative bureaucracy.
Frequent visitors to France on business trips will also be automatically granted five-year visas, simplifying their passage in and out of the country.
More government money will be given to support foreign start-ups as well, Hollande said, noting that they will allocate 25,000-euro grants to qualified new business applicants.
Hollande tried to put positive spin on the decline in foreign investment, stating that France still plays host to an estimated 20,000 foreign companies that employ 2 million people.
And France’s economic outlook is not nearly as bad as most economists had anticipated. Insee, the French national statistics agency, reported in mid-February that the economy grew by 0.3 percent in 2013, a positive surprise for Hollande amid lagging support for his new fiscal policies.
Unemployment, though, peaked at 11.1 percent nationwide in December, the highest it has ever been. Hollande continues to maintain that the jobs outlook will turn around in the coming months.
In January he vowed to cut another $50 billion from public spending and $30 billion from firms’ taxes by 2017 in hopes that the latter will encourage employers to create more jobs with the saved funds.
But doubts remain among conservatives and business owners that Hollande will be able to make drastic reductions in expenditures, especially given support within his own party is already flagging. Advocates of more free-market policies also do not think Hollande’s proposed government regulations will do much to boost the economy.