UK/France/tax/business – Hollande/growth pact

UK/FRANCE/TAX/BUSINESS

Q. – We’re going to talk about François Hollande’s growth pact, but, first of all, you could call this bad manners: on the sidelines of the G20, we heard David Cameron ironically saying: “when France sets a 75% top income tax rate, we will roll out the red carpet, and we will welcome more French businesses”. Does that make you laugh or does it irritate you?

THE MINISTER – It’s a form of British humour. My response to this comment by the British Prime Minister is that there are French bosses who are patriotic. In the battery of measures we’re going to adopt business-wide, there are measures which will encourage investment and give businesses an incentive to stay in France. As company heads, the French are just as patriotic as the British are in liking to maintain their distinct identity.

Q. – You have every confidence in French businesses…

THE MINISTER – Of course!

Q. – You don’t believe there’s tax competition, even within Europe?

THE MINISTER – We have confidence in them because, in the measures we’re going to adopt, as regards corporation tax in particular, there are measures which will encourage investment and innovation. It’s these measures which will also allow growth to be supported.

HOLLANDE/GROWTH PACT

Q. – The G20 is meeting in Los Cabos and, not surprisingly for anyone, Europe is in the hot seat. Do you understand that Europe’s procrastinations can be wearing and irritating for our G20 partners?

THE MINISTER – I believe there’s a collective responsibility in the crisis. The crisis didn’t simply originate in Europe. Europe is suffering it. It has some responsibility in the crisis, but it isn’t the only one that has to do some explaining, and you know that, during the presidential campaign, we advocated refocusing the European Union’s policy back on growth.

Q. – Yes, but things are dragging.

THE MINISTER – For a long time we said that measures had to be taken urgently and, as you know, we’re working on refocusing the European Union’s policy back on growth. Our hope is that, in the next few days, at the meeting taking place in Rome the day after tomorrow and at next week’s summit, we can urgently adopt measures which generate concrete growth.

Q. – In Rome, will specific measures be announced?

THE MINISTER – We’re working on these measures, we aren’t alone. You’re aware of President Hollande’s determination very proactively to refocus Europe on growth, through very concrete proposals – which we’ll also perhaps be able to talk about again – which show that another policy is possible. But we’ve obviously got to consider our partners. We have to build compromises because Europe has always been built in repeated stages.

Q. – At the end of last week, we heard Angela Merkel talking about “mediocrity”. Have François Hollande and Angela Merkel spoken on the phone since then?

THE MINISTER – François Hollande and Angela Merkel talk to each other regularly. You saw that François Hollande’s first visit, on the day of his investiture, was to the German Chancellor. There’s a regular dialogue between France and Germany. Moreover, as soon as I was appointed Europe Minister, my first visit was to Berlin, and I think –

Q. – It’s been noted above all that François Hollande had a meeting [in Paris] with representatives of the SPD [Social Democratic Party of Germany]…

THE MINISTER – Let me say a few words to you about the Franco-German relationship you’re asking me about, because it’s an important subject. If we want to build a new policy for Europe, if we want to redirect Europe onto the path of growth, we must be capable of being frank with each other. Differences exist between France and Germany; it’s in no way unusual for those differences to be expressed and to be expressed clearly. I don’t think you can reach any compromise unless you’re capable of backing up your points in clear language, otherwise you build compromises on sand. The fact that France and Germany – who may have differences on a number of subjects but also have converging views on a number of issues – speak very frankly to each other isn’t fundamentally unusual, after all, and mustn’t be over-dramatized.

Q. – Let’s go into the detail, if we may. Can you confirm that the growth pact to be proposed by François Hollande is €120 billion?

THE MINISTER – There’s a whole set of measures in this growth pact. There are measures relating, first of all, to the desire to get Europe moving along the path of investment. Europe must take concrete decisions; that means –

Q. – Is it a €120-billion pact?

THE MINISTER – I’m also going to give you a breakdown of this figure, which is coherent. There’s €55 billion in structural funds which could be reallocated to big European projects likely to create growth: green growth, transport networks, infrastructures useful to growth – including, by the way, in the so-called cohesion countries [Greece, Portugal, Ireland and Spain]. There’s a determination to recapitalize the European Investment Bank, which would enable us to invest €60 billion in these projects, and there are project bonds, which enable us to make €5 billion [of investments]. So when you add up all the potential the European Union offers, if you engage proactively in upgrading these tools, it makes €120 billion.

Q. – It makes €120 billion, but is there consensus on that project? Has the text been validated by the Germans? The impression has been that François Hollande is giving up on the issue of eurobonds, postponing the project until later. Can you confirm that point?

THE MINISTER – I’ll answer your question very specifically. First of all, as regards the investments we’re talking about, they’re one element of an overall plan, because in our strategy – which is also being discussed with our partners – there are measures on banking union, on the stabilization of the financial markets, and on the need to guarantee deposits and enable banks to be recapitalized. It’s all these measures that will bring about growth, not simply investments.

Q. – Is there consensus?

THE MINISTER – As regards the subjects we’re talking about, there is consensus on a number of issues: the recapitalization of the EIB, project bonds; there’s interest on the part of the Germans in the financial transaction tax; Mrs Merkel has taken a position; the key issue relates to the pooling of the debt, eurobonds…

Q. – And are you confirming that the subject has been postponed until later?

THE MINISTER – There’s a debate on that, in fact, which is continuing. (…)./.