France’s business elite is anxious about volatile politics, inexperienced policymakers, street protests and a possible wave of bankruptcies in the coming months, executives meeting in Provence said ahead of yesterday’s parliamentary election.
Corporate leaders gathered on Friday and Saturday in the southern city of Aix-en-Provence for France’s annual answer to Davos have been among the main beneficiaries of French President Emmanuel Macron’s pro-business reforms since he was first elected in 2017.
Far-right and left-wing parties want to roll back some of Macron’s reforms, ranging from raising the retirement age to scrapping a wealth tax on financial assets.
Photo: Reuters
Voters are set to derail his drive to ease taxes and other constraints on business when — as it is widely expected — they hand Macron’s party a decisive defeat in an election that polls suggest would give the far right the most seats in parliament.
“We are very concerned about what’s going to happen,” aerospace company Safran SA chairman Ross McInnes said. “Whatever the political configuration that will come out of Sunday’s vote, we are probably at the end of a reform cycle that started ten years ago.”
While business leaders tip-toed around the election topic in the public panels, they did not conceal their anxiety on the sidelines over the rise of the far right and the far left.
Photo: EPA-EFE
The far-right National Rally (RN) would likely fall short of an absolute majority, leaving other parties to figure out whether a coalition can be formed to govern, which is unprecedented in modern France and would likely be unstable.
“Nothing good ever comes from chaos. I don’t know what’s going to happen, but this is a country that has seen social unrest before,” the head of a large French industrial group said.
Business leaders voiced concern that politicians standing at the gates of power lacked experience steering the eurozone’s second-largest economy, while they also balked at the prospect that France’s already considerable tax burden could grow under the left-wing alliance.
The political uncertainty has already driven up France’s cost of borrowing as bond investors demanded the highest risk premiums over equivalent German debt in 12 years after Macron called the snap election last month.
Meanwhile, corporate investors in the real economy are also apprehensive about the political and economic outlook.
“We’ve continued to take investment decisions over the past weeks, including in France. But clearly if we had had to make a really major investment decision we probably would have waited to have better visibility,” private equity firm Ardian France chief executive officer Mathias Burghardt said.
With no sign the political volatility would subside anytime soon, the higher financing costs could soon feed through to French companies just as they are preparing to roll over ultra-low-cost loans from the COVID era at higher rates, executives said.
“That creates a scenario where we expect corporate defaults to continue to rise in France beyond what could have been if such a political disruption didn’t happen,” Allianz SE economic research head Ana Boata said.
Macron’s pro-business reform drive often jarred with voters, sparking sometimes violent street protests like the yellow vest movement of 2018, or marches last year against an overhaul of the retirement system.
Although he won a second term in 2022, Macron has also failed to connect with many voters, who see him as a product of the closely intertwined political and business elites that run the country.
The anti-immigration, euroskeptic RN has proposed to roll back Macron’s last year increase in the retirement age to 64 from 62 and cut taxes on energy, saying these measures would be paid for by slashing welfare spending benefiting immigrants.
The left-wing New Popular Front alliance’s tax-and-spend program would bring back a wealth tax and raise the minimum wage by 14 percent while also scrapping Macron’s pensions reform.
A minority government would be constrained by the risk of votes of no confidence, likely making it less able to move ahead with new legislation.
Beyond the possibility of a hamstrung government, business leaders also worried about the knock-on impact RN’s anti-immigrant policies are likely to have on France’s workforce.
“Demographics show us that we need to attract talent,” McInnes said. “This country has been sustained by immigration for 300 years.”
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort