French PM highlights strengths of Paris financial centre
Paris, 6 July 2016
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Michel Sapin, Axelle Lemaire and I wanted to come and meet you – you who are influential players in the economic world, who come from every continent.
We came to talk to you about France. About this beautiful country, this great economic power. About everything we’ve been doing for our businesses for several years, to help them develop, conquer new markets, invest and recruit.
We’re also speaking to you in a very specific context: the British people’s decision to leave the European Union.
This decision – which France regrets but respects – created a shockwave for all European citizens but also, in a very concrete way, for many businesses based in the UK. They’re wondering about the consequences for their activities, thinking about a redistribution of their headquarters, research centres and production sites on the European continent. There’s already a plethora of articles in the press comparing the economic attractiveness of the various European capitals…
Today we’re providing solutions to those businesses which are wondering, which are waiting for answers in order to anticipate and prepare for the future.
In this new environment that is taking shape, we want an attractive France. It already is attractive – through its strengths, its infrastructure and the reforms we’re carrying out. And it’s going to become even more attractive.
Attractive as a tax haven, far removed from the real economy? No! Attractive to draw in new economic activity, draw in new skills, draw in and support the development of new businesses.
Why are we doing this? To go and seek out growth. Create new jobs and restore spending power. And so fuel our economy, and also consolidate our social system.
I’m aware of the debates. I have absolutely no problem saying that “social” and “economy” go hand in hand. It’s businesses that create the wealth which is then redistributed; and we therefore need successful, competitive businesses.
These Europlace seminars provide an opportunity to tell you about our ambition for this.
Paris financial centre
1. An attractive Paris financial centre
As stakeholders in the European and international financial system, you know that the Paris centre is strong and innovative.
Strong because it’s at the heart of Europe and the Euro Area.
Our goal is to strengthen this integration further. France advocates building a more ambitious capital markets union – i.e. a more stable financial system better protected from short-term jolts – and a Europe that retains control of its financial rules, its stock markets and its clearing houses.
The Paris centre is also strong because it’s geared to the real economy.
It’s a financial centre that helps finance businesses. We have major industrial groups that are among the world’s largest issuers of financial securities. The €310-billion market for short-term corporate securities has recently been simplified and made more accessible to foreign issuers.
We also have abundant savings, and asset management players at global level. All professionals and all forms of financial expertise are gathered together.
French funds were the first to obtain new approval as long-term European investment funds, providing finance over a long period to infrastructure and businesses. That’s also a sign that the financial markets authority is responsive to new practices, and I’ll take this opportunity to pay tribute to its work.
The Paris centre is strong and also innovative.
We want to build the financial centre of tomorrow, and make Paris the capital of smart finance.
To this end, our role is to ensure you have a tailored framework open to new ideas and to entrepreneurs ready to take risks. And your role… is to continue seizing every opportunity, as you’re doing today.
It was in Paris that the Euro PP, the Euro Private Placements system, was invented. In 2015 it enabled European businesses to be provided with more than €12 billion in finance.
It’s in Paris that the bulk of crowdfunding activity on continental Europe is concentrated, and we’re continuing to work to make this framework even more competitive.
We were the first in Europe to provide safe rules to enable funds managed by insurers and asset managers to lend directly to businesses.
It’s in French law that – for the first time in Europe – we’re going to set the legal and security conditions under which decentralized financial transactions can be carried out online – what’s called blockchain.
It was in Paris that the supervisory authorities, the Financial Markets Authority and the banking supervisor, the ACPR, made very strong commitments to financial start-ups.
Finally, Paris is on the way to becoming the benchmark centre in terms of green finance, sustainable finance. For example, a year ago Paris organized the first Climate Finance Day. It gave the financial sector an opportunity to get involved in the fight against climate change. France also plays a pioneering role when it comes to green bonds.
Paris and Ile-de-France region
2. A capital region with many strengths
France’s attractiveness is the Paris financial centre.
It’s also, chère Anne Hidalgo, chère Valérie Pécresse, its capital region, alongside the other regions, which all have distinct characteristics to highlight.
Paris and Ile-de-France are Europe’s leading digital cluster. They have more than 40 start-up incubators. And next year the Halle Freyssinet will host… the world’s largest incubator. We’ll no longer have anything to envy Silicon Valley for… on that point, at any rate!
And we’re ready to welcome many more businesses.
The supply of offices in the Ile-de-France region is already the highest in Europe. It’s organized around perfectly-connected clusters providing the full range of property products: the central business district in Paris; La Défense, Europe’s leading business district, which is undergoing a transformation; and the clusters of Saint-Denis, Saint-Ouen and Boulogne, which are developing.
We’ve decided to strengthen these clusters further. In 2016, an additional 900,000 square metres of office space will be provided – that’s equivalent to 60,000 jobs. Office stock will be increasingly revitalized and modernized in the coming years.
And work has just begun on the Greater Paris Express. Ultimately, it will mean an additional 200 kilometres of metro line and 50 new stations better connected with Paris, with each other and to airports and TGV [high-speed train] stations. In total, €35 billion of investment which the government is embarking on with the region – an agreement we’ve just consolidated with its president.
Improving connection with airports also means creating a dedicated line: the Charles de Gaulle Express, which will be operating in 2023 – it came a step closer at this morning’s Council of Ministers meeting.
Finally, together with local authorities, we’re building 10 international hubs that will support the provision of offices and housing. We’ve simplified and eased procedures to ensure construction is speeded up.
3. A France being reformed
France’s attractiveness, finally, means a more favourable economic environment. To that end, we’ve embarked on an unprecedented reform drive.
First of all, €40 billion in labour cost reductions, through the provisions of the Responsibility and Solidarity Pact.
In 2013, we initiated a “simplification shock” (1) to facilitate the work of people who are innovating, people who are working. We’ve done a lot. But a lot still remains to be done to get rid of pointless regulation and, wherever possible, free up potential activity.
We’re supporting investment, through the BPI [Public Investment Bank], continuing the exceptional fiscal measure of increased depreciation, putting the R&D tax credit on a long-term footing and broadening the Investing in the Future programme.
Last week, the President announced that these measures, which are working – increased depreciation but also the CICE [Competitiveness and Employment Tax Credit] and the SME recruitment bonus – will be strengthened or continued.
And we’re completely modernizing our labour market. The labour bill is a major reform. It will be adopted. It will provide our businesses with greater visibility and flexibility, which will make them more responsive. We’re banking on confidence, at grassroots level, for entrepreneurs and employees.
The results of this policy speak for themselves:
economic growth exceeded forecasts in 2015 (reaching 1.2%). INSEE [National Institute of Statistics and Economic Studies] predicts 1.6% growth for 2016 in France and the Euro Area;
businesses are seeing their mark-up rates return to pre-2008-crisis levels;
this is enabling them to invest (5.3% more over the past 12 months) and take on staff: 200,000 jobs were created in the private sector over the same period. And this was clearly the goal of the [Responsibility and Solidarity] Pact: to enable businesses to invest and take on staff!
Catering for foreign businesses
4. A more attractive France
The French economy is attractive. The President and I want it to be even more attractive so that talented foreign and also talented French people who wish to return are better catered for. And we want to move quickly.
So I’ve decided to establish a single entry point for all foreign businesses wishing to set up in France. I’d like work to be started next week so it can be implemented this autumn.
This service – coordinated with Business France, in conjunction with the City of Paris, the Ile-de-France region and the Greater Paris Metropolis – will provide a comprehensive service for companies and their employees. It will answer their questions about property, the issuing of residence permits, children’s schooling etc. – things which, as we know, greatly influence a decision about where to go and work and where to locate one’s business.
I want to be very clear on this: we shall open as many international sections in schools as necessary so that all children can attend lessons in their mother tongue if they wish.
This one-stop shop will also have to make it possible for businesses and individuals to gain information easily, in their own language, about tax measures which affect them.
Let’s face it: simplicity is not a characteristic feature of our tax system… The Tax for Business service, which is becoming increasingly important, will fulfil that objective. But we must also provide individual answers quickly. This is a prerequisite in order to give those wanting to come or return to France greater visibility and security.
France has committed itself to an unprecedented effort to make businesses more competitive. This trend will be increased.
This requires, first of all, lowering corporation tax. We axed the special surcharge on corporation tax this year. And the normal tax rate for businesses will gradually be reduced to 28%. The President pledged this in 2014, in the framework of the Responsibility and Solidarity Pact.
We also want the inpatriate scheme to become the most favourable in Europe.
So this scheme will be effective for eight years, compared with five today. And inpatriation allowances will be exempt from income tax. This is a gesture of confidence from France towards those who want to come and work, innovate and create jobs in France, and help heighten our country’s impact on the world.
Because this is about France’s prosperity and future, we need a collective effort. We’ve already modernized and capped the office premises development charge. Beyond this, I would like there to be a discussion initiated with the local authorities in the summer to look at the possibility of temporary additional exemptions when it comes to local tax on businesses and offices.
We’re taking action to make the French tax system more transparent and more convergent with those of our European neighbours, because eventually, our wish is to arrive at a common tax system for businesses in the Euro Area, because the Euro Area can’t be a place where competition is based on the lowest bidder; on the contrary, it must make itself stronger by promoting convergence between its member states.
Ladies and gentlemen,
France has so many strengths: its infrastructure, its skilled workforce, its brainpower, its engineers, its health system, its social protection and its quality of life.
France is a land of innovation, the European country where the most businesses are created.
Because France is a great country, and because it fully intends to remain so, we’ll always welcome those who want to create, innovate and produce wealth.
In a nutshell, now more than ever is the time to come to France! That’s the message I wanted to get across to you today./.
(1) a series of measures to simplify administrative procedures, cut red tape for businesses and boost growth.