France’s new PM outlines plans to improve economy

Government’s general policy statement – Fight against terrorism – Speech by M. Bernard Cazeneuve, Prime Minister, to the National Assembly (excerpts)

Paris, 13 December 2016

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Since 2012, the French economy has been improving. Our businesses are more competitive; 240,000 commercial jobs have been created in the last year and a half. Poverty and inequality have been reduced. Our measures have helped increase standards of living for the lowest-income households.

Those of the middle classes has been protected. I, in turn, want to continue the reforms embarked on by the governments of Jean-Marc Ayrault and Manuel Valls to improve our finances, restore our competitiveness, combat unemployment and build new rights for French people.

Reducing deficits means protecting our sovereignty and our ability to make economic choices. The deficit will go back below the 3% mark in 2017, as the European Commission has recognized. This hasn’t happened since 2008, but in order for this result to last, we must continue the action embarked on.

Strengthening the competitiveness of our businesses also means supporting growth and employment. Since 2012, through the impact of the Competitiveness and Employment Tax Credit [CICE] and the Responsibility and Solidarity Pact, €40 billion a year has been devoted to strengthening our production system. Businesses in the industrial sector have regained the level their margins were at in the early 2000s. And labour costs in industry are now lower in France than in Germany.

So the CICE will be strengthened from January onwards, with its rate increased to 7%. The normal corporation tax rate will gradually be reduced to 28%, first for Small and Medium-sized Enterprises – SMEs – and then all businesses. I remind you that this rate corresponds exactly to the average tax rate in the Euro Area.

We must also continue supporting businesses’ investments. That’s the remit of the Public Investment Bank we’ve created, whose success is unanimously recognized.

That’s why I’ll also be releasing €10 billion for investment, growth and competitiveness, in the third tranche of the Investing in the Future Programme. The programme will be organized more flexibly and will have to boost the most promising industrial sectors which have hitherto had little coverage, like agrifood, the security industries, tourism and sustainable development.

From this winter onwards, the government will also make proposals for more effectively supporting very small businesses and SMEs in the digital transition. Online resources and human support will be provided for businesses that would like to benefit from a diagnosis and fund their projects through state participation.

Combating unemployment will of course still be the government’s priority. As the President recalled a few days ago, our policy is beginning to bear fruit.

The number of jobseekers registered with Pôle emploi [governmental employment agency] has fallen by 101,700 since the beginning of the year, and the unemployment rate measured by INSEE [National Institute of Statistics and Economic Studies] has returned to its level of the end of 2012. This trend must be built on. One of the keys to a return to full employment is training jobseekers. So I’ve decided that the plan for an additional 500,000 training places, launched in 2016, will be extended for at least six months, to provide training to those who most need it. I’m convinced that the government, the regions and the social partners will be part of this effort. (…)./.

Published on 03/01/2017

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