New Year greetings to the business and economic community
Toulouse, January 13, 2011
SUPPORT FOR AVIATION INDUSTRY
Airbus is, first and foremost, the success of a great project. Who would have believed, when it was created 40 years ago, that Airbus would climb to the top level of world aviation and manufacture more than 500 planes a year? (…)
But Airbus’s success also shows that in a market economy, the State has a role to play in supporting great projects and encouraging innovation. There was a lot of controversy when I announced to Congress (1) that we were going to organize a “big loan”, at a time when France herself was in debt. (…) The problem of the loan is when you borrow to finance operating costs. When you borrow to finance investment, you create wealth and growth.
This big loan will enable us to release for you a package of €1.5 billion, which will make it possible to move forward on the new four-tonne helicopter, be ahead on engines for a new generation of planes – which cannot be financed solely with company funds – and work on new composite materials technologies. Because it’s not a question of congratulating ourselves on Airbus’s 40 years of success: it’s a question of being concerned about the 40 years to come. (…)
Industry has been a priority of the government’s action for three and a half years. No country will be able to cope without a strong industry.
And you can perfectly well have a strong industry and deep environmental concerns, but the day there’s no more industry in your regions, where will your children go to work? And the day there’s no more industry in your regions, where will service providers go to sell their services? Because industry is the main consumer of services. Of course we need gardens and green spaces; of course we must be able to build cleanly; but France must remain a land of production. And that’s true here in Toulouse with aviation, but it’s also true in Saint-Nazaire with shipbuilding. (…)
EURO/DEFICIT/EU ECONOMIC HARMONIZATION
Our growth last year will have been greater than 1.5%. That’s not enough, but it’s nowhere near what was predicted. The same people expected an explosion in unemployment in 2010. We have the figures on the first three quarters: the French economy created 75,000 new jobs. (…)
I’d like to say a word about Europe. The euro is a great European success. It’s a strength and it’s a protection. I hear some people say we must give up the euro and leave the euro. That would be madness.
France couldn’t stand up to the pressures of the world alone. Just think: this year we’re going to borrow €180 billion to finance deficits that are 35 years old.
Thanks to the euro, we borrow at a little more than 3%. At the beginning of the 1990s, we borrowed at 10%. Who can imagine we’ll pull through alone? And who can imagine the gravity of the consequences of dismantling the euro, which would immediately bring about the dismantling of Europe? (…)
The first lesson I draw from this is how necessary it is to restore the French public accounts. Ladies and gentlemen, it’s not a question of ideology, left or right, majority or opposition. The situation is simple: for 35 years we’ve been running a budget deficit. (…) If France wants to be independent, she must reduce her spending and deficits and pay back some of her debt. There is no alternative. And if France has survived, it’s precisely because we’re implementing that policy.
The deficit will stand at 6% in 2011 and 3% in 2013, but I hope we’ll go further and create a constitutional rule that makes it possible to set a target for restoring balance to our public finances. (…)
The second lesson is that we must go further, create an economic government for the Euro Area and move towards integrating our economic policies. We can’t share the same currency and have different economic strategies. It doesn’t work. We can’t be in a monetary union with competitiveness gaps opening up between the countries of the North and South. We can’t talk about economic integration without a convergence of tax systems. I deeply respect the independence of our Irish friends and we’ve done everything to help them, but they can’t continue asking for our help while their tax on company profits remains half the size of the one we have in France. It’s a question of common sense and logic. In monetary union, there has to be economic and fiscal harmonization.
Mrs Merkel and I will strengthen European economic integration and move forward in fiscal convergence. It’s a key project.
In a few days’ time I will receive the first President of the Audit Court, who has drawn up a report on the convergence of the French and German tax systems.
We must make taxation a tool for our country’s competitiveness. Although I understand the differences in competitiveness between China, India and France, I can’t understand the difference in competitiveness between Germany and France. It’s too serious for us. (…)
With the euro crisis, here in this magnificent company, when the euro increases by 10 cents, it costs your business €1 billion. How can you ask the workmen, technicians and engineers to be more competitive and see this competitiveness declining because there’s a system of monetary dumping? Just as strongly as I defend the euro, I will fight to ensure the euro’s parity enables European businesses to be competitive. As G20 President, France harbours the ambition of reforming the international monetary system. I can say the same thing about the regulation of commodity prices, which is an absolute necessity – otherwise we’ll see hunger riots. (…)
The crisis we’ve experienced has speeded up the changes in the global economy. Today we’re seeing the affirmation of new global powers, namely China, India and Brazil, and those countries want their share of economic wealth, and that’s natural. (…)
If we want to keep our jobs and if we want our young people to have jobs tomorrow, if we want to preserve our social model, we must keep our place as the world’s fifth-largest economy. In order to achieve that, we must completely abandon the devaluation of work.
Abolishing tax on overtime, ending the 35-hour week. There too, it’s not a matter of ideology. (…)
Our people’s employment rate must be increased. I’m thinking particularly of older people. We’ve abolished early retirement in the public sector and exemptions from job-seeking, extended the right to draw wage and retirement benefits concurrently and encouraged the recruitment of over-55s. And it’s excellent news: the rate of employment of people aged 55-59 has increased by 4% since 2007.
We’ve finally reached the European average. How can you say to people: work more because you’re going to live longer, but at the same time you’re no longer worth anything at the age of 55? It’s a scandal! It’s a social and economic scandal. (…)
Of course there’s the problem of youth employment; I’ve said what I think about job-sharing. But one figure is overwhelming: why are there more young people on the dole in France? Because only a third of young French people aged 16 to 20 are doing work-based learning, whereas two thirds of young Germans are doing work-based learning.
You understand: two thirds of young Germans are doing work-based learning and one third of young French people are doing work-based learning. The route to follow is simple; we must put the bulk of our resources into developing work-based learning. (…)
Finally, we’re going to continue the reforms. We’ve abolished the local business tax, mobilized the FSI [Strategic Investment Fund, French sovereign wealth fund], mobilized the greatest resources for the OSEO [body providing help and financial support to small French businesses], financed competitiveness clusters and increased the number of entrepreneurs. The self-employment statute is a success. You must realize that, in the first 11 months of 2010, 577,000 new businesses – half a million – were created in France. It’s an increase of 14% compared to 2009 – 600,000 self-employed people. (…)
We’re going to go further in simplifying life administratively for our businesses. And there, too, I want us to create a common area of shared and harmonized taxation with the Germans, so as to be stronger. We’re going to continue the R&D tax credit and competitiveness clusters. I’d like us to mobilize our country’s abundant savings more, to support the creation of activities. French households have a savings rate of between 16% and 17% - one of the highest in Europe. Rather than investing this money in schemes which I’ve got nothing against but which are a little dormant, we need it to finance the activity of our businesses and industry. (…)
That, ladies and gentlemen, is what I wanted to say to you: reaffirming the value of work, modernizing our universities, financing our centres of excellence, freeing up our initiatives, strengthening the competitiveness of our businesses – there are no other solutions for France. I’d like there to be easier ones. I’d like to be able to tell you: work less, you’ll earn more and France will get by. But there’s a time when the country must make choices, and it’s my duty to convey those choices. When I see the magnificent success of your business, I tell myself we must believe in France, her industry, workers, engineers and executives.
We’re not doomed to decline, but we’re aware of what formulae work, what strategies succeed: reaffirming the value of work, improving our competitiveness, reducing our public spending and ensuring everyone can do well.
Ladies and gentlemen, let me tell you that the year that’s beginning in your region, your town, your factories is a lucky year. From the bottom of my heart, I wish you and all those you love the very best.
And above all, may 2011 see success for France and the French.
(1) Joint meeting of the National Assembly and Senate