France is set to become one of Europe’s leading green countries, Economy Minister Bruno Le Maire announced on Thursday (24 August), adding that boosting investment in green industries – while controlling public spending – is one of the top priorities of the country will be.
“The [inflationary and energy] the crisis is behind us; The times of reconquest are at hand. “We’re getting back on course with our economic policy,” Le Maire told journalists and entrepreneurs on Thursday during a visit to the French kitchenware factory Fournier.
In a much-anticipated speech, the minister laid out a set of economic priorities needed to both balance the balance sheet and provide scope for investment in industrial decarbonization and innovation amid a three-year pandemic and energy shocks that are skyrocketing national debt and inflation.
“Our economic results are bulletproof,” he told businesspeople, claiming the French economy has outperformed those of Italy, Germany and Spain since 2017, while adding over 2 million new jobs.
Sticking to a “supply-side policy” is the right way forward, Le Maire claimed, refusing to pursue any other policy path. “Using taxes to oppress corporations and citizens to achieve better redistribution? Certainly not”.
cut public spending
France is one of the most indebted EU member states, accounting for over 111.6% of GDP in April 2023, compared to a euro area average of 91.6%. The deficit is also 4.7% of GDP, well above the 3% threshold enshrined in the EU Treaties.
“Accelerating” debt reduction is Le Maire’s top priority – the minister wants it back down to 108.3% by 2027. On Thursday, he announced 5 billion euros worth of public spending cuts to meet those goals, including a complete end to the gas and electricity “shields” first introduced at the start of the war in Ukraine to stop the limit energy prices.
Le Maire also announced the end of a current tax break granted to the purchase of real estate for the sole purpose of renting it out. According to several media reports, work is also underway to eliminate tax breaks that encourage “brown” practices, such as lower tax rates on fuel purchases for taxis.
Finally, to “ensure that everyone pays the state what they owe”, measures to curb “benefit fraud” and tax fraud are intensified. However, a government plan first presented in May had sparked fears it did not go far enough and prevented any serious discussion about how to deal with tax havens.
Meanwhile, the minister confirmed that there would be no tax increases. A number of specific production taxes, where France is among the highest in the EU, are set to be reduced by 2027.
Reducing debt levels “requires difficult and bold decisions and the government has to lead by example in this regard,” Le Maire said.
France’s debt reduction targets raise the issue of austerity
Economy Minister Bruno Le Maire presented the government’s debt reduction targets for the period 2023-2027, aiming to cut them by four percentage points after years of heavy spending. However, the opposition warns that this will mark the start of austerity measures in Europe.
green industry
Le Maire also confirmed that the country’s “Green Industry” bill would be implemented as soon as possible once approved by Parliament.
The law aims to support the creation of new sites in the fields of green hydrogen, batteries, wind power, heat pumps and solar panels and to establish measures to decarbonize existing plants, including through a special tax credit of 500 million euros.
The bill also plans to divert some of the savings of the French people into green projects by creating a new tax-free “Climate Future Savings Scheme” with cheaper interest rates than existing government-sponsored schemes.
This is to go hand in hand with new training programs aimed at green industries, while continuing labor market and unemployment reforms to reach full employment by 2027.
“We have become the nation of opportunity [and] “It must have a common goal in the long term: to become the EU’s first green economy,” stressed Le Maire.
As for the industrial sectors considered critical and strategic, the minister announced that he would “enlarge the sectors that fall within the scope”. [foreign investment] Controls, especially in the extraction and transformation of critical raw materials”.
France passed a law in 2019 to more effectively screen foreign investments in economic sectors considered critical to public order, national security and defence. Where restrictions apply, investment flows must first be approved by the Ministry of Economy.
[Edited by János Allenbach-Ammann/Nathalie Weatherald]
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