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Published on October 6, 2014
Speech by M. Manuel Valls, Prime Minister, at the Guildhall
London, October 6, 2014

(Check against delivery)

Mr Chairman,

Ladies and gentlemen,


A French prime minister in the City is an event. A socialist French prime minister in the City is a revolution! And I don’t doubt for a single moment that this meeting will spark a great deal of comment, especially in France.

But to come here to the Guildhall, to this symbol of the City, this place that has been destroyed several times but always rebuilt, this district which makes your capital a European and global business centre – what could be more natural?

I thank the City of London Corporation and the Lord Mayor for welcoming me.

I know the French word “cliché” is used in English, and I see this as an extra illustration of the power of the language of Molière; that the word “cliché” has been so successful may be because France has made it a speciality. In particular, a persistent cliché exists that the Left can’t stand business, and consequently that a socialist prime minister shouldn’t meet business people or financial institutions, let alone bankers.

Nothing could be further from the truth.

On the contrary, I consider my role, in the post I hold, to be to go out and meet economic players and all those people who create the wealth we need; otherwise no jobs or social progress are possible.

I’ve expressed this truth in France. I expressed it a fortnight ago in Germany. And I’m happy – thanks for your invitation! – to be able to express it strongly to you.

My presence here provides an opportunity to explain to you the reforms France is conducting, and also to tell you the truth about the future of the European project and the role Britain must continue to play in it.


1/ A France that is moving forward

Ladies and gentlemen,

I read your press; I watch and listen to what’s said about France. And I’m able to assess how much of it is caricature and how much truth. But I must admit that too often, in some of your newspapers, I see prejudice, bias and attacks! As if for some people, France and the UK needed to maintain this so-called rivalry…

But that doesn’t stop me telling the truth and examining the situation clear-sightedly, in the same way as I do with my compatriots, and the same way I intend to do with you this morning.

I’d like to tell you about a country. A country where public deficits are too high. A country whose industry has suffered for several decades.
A country where companies’ loss of competitiveness has been reflected in a continuous decline in their market share. What country am I talking about? France? The UK? Actually, both at the same time.

Yes, we’re facing the same challenges. But we’re evolving within different frameworks. France is in the Euro Area; that’s not the case with you. In France, taxes have increased in order to reduce our public deficit – €60 billion in four years: €30 billion between 2010 and 2012 under the Right, and €30 billion between 2012 and 2014 under the Left. That’s too much! I’ve said it. So taxes in France must be reduced, particularly those weighing on our businesses. I’ll come back to that. You’ve chosen not to increase them. And your public deficit is substantially higher than ours. But the economic recovery has picked up in your country over the past year. And that’s a good thing! Growth of 3% in 2014 is the prize for your efforts! Those are the efforts France must now make.

Today, in France, this prolonged collapse in growth is raising doubts and questions. And this lack of confidence also influences growth – because, as you know well, the economy and confidence are very closely interlinked.

Should we resign ourselves to this? Sit back?


France is a great country, the world’s fifth-largest economy and Europe’s second-largest. And I want to say especially today, at this time of international tension, that France has diplomacy and armed forces which carry weight. They enable us to act when it’s necessary. And even to act together, as is currently the case in Iraq.

France has many strengths. I’m thinking of its young people, of our positive and dynamic demographic. And I know we have the strength and the resources to revitalize the economy and put our country back on a sound footing.

To jump-start and reform France, to work for recovery: that’s my road map, my mission, the mission entrusted to me six months ago by the French President and the National Assembly, which has twice placed its confidence in me.

Reforming means knowing where you want to take the country. It means setting the course. It means doing what you say and saying what you do. So it means honouring your commitments.


The first commitment is to restore competitiveness to our companies.
That’s the purpose of the Responsibility and Solidarity Pact we’re implementing. An unprecedented effort of €40 billion over four years for businesses in France should enable us to lower labour costs, restore margins and allow our companies to invest, innovate, go out to win back markets and recruit. On 1 January 2015, there will be a nearly 10-point reduction in social security contributions for many businesses.

Some people call this supply-side policy. I don’t think the terminology is very important. What matters is the result. And I know this message resonates here in the UK, where pragmatism isn’t just an empty word. I’ve said in France that I love businesses. I even said it in German in Berlin, and the whole French press is expecting me to say it in English in your country. Well, they won’t be disappointed: I love businesses! My government is pro-business!


The second commitment is genuine budgetary discipline.
For too long – 40 years! – France has been living beyond its means. Reducing public expenditure – 57% of our GDP – is essential.

A €50-billion savings plan is envisaged over three years, €21 billion of it in 2015. That, too, is an unprecedented effort. Some people, who were still in power in France less than three years ago, criticize this effort for not being enough. And yet, at the time, they did nothing to improve the situation. They let the public debt get out of control.
When you’re in opposition, how easy it is to propose savings of €100 or €150 billion! So yes to reform, but no to moving backwards! We’re reducing public expenditure, but we’re maintaining our priorities: education, security, justice. We’re restarting house-building and protecting our health system, whose qualities you in Britain are the first to emphasize.

I mentioned the word “taxation”. And the truth is, there are now too many taxes in France. Yes, there’s a risk of discouraging people from wanting to be entrepreneurial and creative. And I know that this issue of French taxation gets particular coverage in London.

I know that our decision to tax very high incomes, at 75%, has provoked comment here, which sometimes distorts things. Many people forget to mention that this was only a temporary measure, for two years. This exceptional tax will no longer exist from 1 January 2015.

And yet, many people don’t have misconceptions. They know that France is a country which loves its businesses and which also loves its entrepreneurs. Entrepreneur – again, a fine French word and one which, moreover, your language has adopted. Furthermore, Xavier Niel, one of our most brilliant company founders, recently described France as a “tax haven” for business start-ups. That’s his choice of word. But I know that the man is intelligent! And perhaps he’s also thinking of the research tax credit, one of the most attractive in Europe. Moreover, I want to say this to you – reveal a scoop! – that journalists here will listen to carefully: people who have started up companies and sell their stakes are now taxed less in France than in the UK!


The third commitment is to implement the structural reforms which have been expected for so long but have always been put off.
An example illustrates this: territorial reform. At the end of this year, the number of French regions will go from 22 to 13! There are of course obstacles and opposition, but we have to overcome this conservatism!

In the same way, between now and November, we shall present a bill designed to lift the barriers which are hampering our economy and seriously affecting the spirit of initiative. This has to include proposals on Sunday working, in particular to encourage the opening of our department stores in tourist areas, simplification in businesses of what we call the seuils sociaux [social thresholds], a greater role for business agreements vis-à-vis the law and modifying regulations in several professions, etc. These are the major areas on which we are working and making rapid progress.


I’d like to end with a word about the importance France attaches to the issue of attractiveness.

Attractiveness for foreign investors; attractiveness for foreign companies’ headquarters; attractiveness for foreign skills.

Attractiveness for all those who want to come and set up in France. I want to say this to the Mayor of London: if the French are welcome in London, I can tell you that the British are even more welcome in France! And particularly in Paris, which remains and intends to remain the leading European capital for foreign companies’ headquarters!
And here, at the heart of the City, let me remind you: Paris is the number one financial centre in the Euro Area, and ranks seventh in the world. It has major strengths:

a high level of savings; the French people’s savings rate is 16%!
the presence of major French and international companies; Euronext represents 40% of the market capitalization of the Euro Area!
banks with cutting-edge financial technology. Representatives of French banks are among you today.

Increasingly greater Euro Area integration is an opportunity for Paris.

And I invite you, representatives of London’s financial centre, to come and invest in France. Our businesses need capital. France has a strong industrial fabric, a stable legal framework and an innovation policy which encourages start-ups. We are developing a particularly dynamic initiative, La French Tech. France ranks top in Europe for foreign investment in manufacturing. So, what are you waiting for?

Ladies and gentlemen,

My message is simple: France is on the move. It’s reforming. Of course, reforming isn’t always easy. But when there’s the will, when the objectives are clearly explained, then you can move forward.


2/ Acting to reform France, means acting for Europe.
We’re reforming France because this is what France needs.
Europe, too, needs reforms.

To put it simply: I believe the European Union is at a crossroads: that it’s at one of those historic moments which decide what the future will be.

We have before us a very clear alternative: to resign ourselves to veering off the path of history or, on the contrary, pull ourselves together to remain, in the face of tomorrow’s giants, a benchmark continent. A continent capable of exerting influence, not only on the economic, industrial, technological and scientific fronts. But also at diplomatic and military level. This is essential in order to confront the threats destabilizing the world. And, firstly, I’m thinking of the terrorist threat.

To exert influence, we Europeans must, first of all, stay united and strong; this means staying together. Europe is weakened when regionalism divides its nations. Our Europe has experienced too many ruptures to allow itself new ones. And, moreover, Scottish voters have just opted for the Union.

We must pursue this path which France and the United Kingdom have been travelling together since you joined the European adventure in 1972.

I’m closely following the debates exercising the British public. I’m aware of the decision-making events over the next few years when you could find yourselves expressing your views on your destiny and your future. And I tell you calmly and sincerely: France wishes to see the United Kingdom stay in the European Union. This morning I told your Prime Minister David Cameron this; this afternoon I’ll tell Ed Miliband.

Being a member of such a Union is an advantage. It also confers responsibilities. And it’s for the United Kingdom to know the place it wishes to have and the role it wishes to play.

I’ll take a relevant example, since I’m speaking in the heart of the City: the financial rules. Since the onset of the crisis, Europe has taken some giant steps in this field. It has created common authorities to supervise banks, insurance companies and pension funds. It has forced the banks to build up their capital. It has put rules in place to contain pay, strengthen transparency and protect investors.

Today, with the implementation of banking union, Euro Area member states and countries wishing to engage closely with it are going further. So over time, Euro Area financial markets will be even more integrated. The rules will increasingly common ones.

What then, in the future, will be the role of London’s financial centre? I want to say this clearly, since I know you will understand me: the United Kingdom, and especially the City, would lose a lot by turning its back on Europe. The choice is yours.

There is, however, one choice which we can and must make together: to reform Europe, to bring growth, competitiveness and jobs back to the heart of its priorities.

The Euro Area can’t be the only area in the world where there’s no growth. This is why there has to be a monetary and exchange rate policy which stimulates our economies. In particular an over-high euro is affecting growth. The ECB has taken an important step. The euro has fallen by 10% since April. It’s a welcome nudge in the right direction.

But there must also be a boost to investment. The needs are immense. In the digital economy, where we haven’t managed to create European champions capable of rivalling the American giants. In the energy sector, where all our countries are facing the challenge of the ecological transition. This is, moreover, a sector where the French and British have so much to do together. I have especially in mind our joint investments in nuclear energy, with the extremely important project of the new generation reactors at Hinckley Point.
And in infrastructures, a sector in which our two countries have succeeded in carrying through major projects like the Channel Tunnel.
Boost investment in Europe: this is what the new Commission has to get down to doing. Its president, Jean-Claude Juncker, has proposed a €300-billion plan. This plan, which has to attract public and private investment, now needs to be implemented as soon as possible.

Boosting growth in Europe in no way means giving up our genuine budget discipline. Controlling public expenditure and cutting deficits remain imperatives. But we also have to take account of the exceptional situation the European economies find themselves in. It isn’t just France. And this is in fact the message I conveyed to the German Chancellor at our meeting in Berlin. The absence of growth and absence of inflation are making deficit reduction more difficult.
Consequently, we need to adapt the tempo so as not to slip into austerity. France isn’t asking to evade its obligations. Obligations which, in the first place, are choices it’s making for itself. France simply wants application of all the flexibility mechanisms provided by the treaties.

Reforming Europe also means simplifying it – making its action more transparent, bringing it closer to the peoples, to fill this democratic vacuum people have been talking about for decades without ever really taking the appropriate measures. Europe must focus on the essential. Therein lies Europe’s great challenge!

* *

Ladies and gentlemen,

I hope I have convinced you of one thing: France is moving; it’s preparing the future; it’s putting its faith in businesses. My government is pro-business!!


I know the very special relationship linking Britain to its French partner. This relationship gains sustenance from our common history, the ordeals we have gone through together. In this year of the commemoration of the two world conflicts, I know the British and French are, once again, perceiving the intense ties which have united them, thoughout history. And London, Britain, for the French, will always have this whiff of freedom. London is the home of the Free French !

I know that Churchill and de Gaulle had this slightly crazy project of bringing France and Britain even closer together – their reasoning triggered by the ordeals. Now, admittedly, we have our idiosyncracies, our qualities and our faults. But personally I believe in the strength of these ties uniting us. They are economic, diplomatic and cultural too.
When over 200,000 French nationals live in Greater London – including, admittedly, many talented footballers! – it’s clear proof that our destinies are linked.

Nor am I forgetting the leadership¹ - how about that, an English word!
– our countries share in the military sphere in Europe. This partnership on defence is a real asset.

Once again, we can, we must act together for our two countries, for Europe and for the world.

Thank you and I suggest we begin our dialogue phase./.

¹M. Valls used the English word “leadership”.

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