France intends to become one of the leading green nations in Europe, as announced by Economic Minister Bruno Le Maire on Thursday, August 24th. One of the country’s primary goals is to encourage investments in the green industry.
“We have moved past the inflation and energy crises, and now we’re entering a phase of recovery and recuperation. We’re realigning our economic policies in the right direction,” Le Maire explained to journalists and businesspeople during a visit to the Fournier kitchen appliance factory.
In his eagerly followed speech, the minister outlined a range of economic objectives aimed at ensuring a balanced budget while also providing opportunities for investments in industrial decarbonization and innovations. Following the pandemic and the subsequent energy crisis, France’s debt and inflation rates significantly increased.
“Our economic outcomes are impressive,” emphasized Le Maire. Since 2017, the French economy has outperformed Italy, Germany, and Spain, he added, pointing to the creation of over 2 million new jobs.
He underscored the need for a “supply-side policy” and rejected the idea of choosing a different political approach. “Taxing businesses and citizens to achieve greater redistribution? That’s out of the question.”
Regarding debt reduction:
France is among the EU’s most indebted member states, reporting a debt level of 111.6% of its Gross Domestic Product (GDP) in April 2023, compared to an EU average of 91.6%. Its deficit of 4.7% of the GDP also exceeds the 3% limit set in the EU treaties.
For Le Maire, rapidly reducing the debt is paramount – he aims to decrease the debt level to 108.3% by 2027.
On the aforementioned Thursday, he announced public spending cuts of 5 billion euros to achieve this target. This includes the termination of “price protection” for gas and electricity, introduced at the onset of the Ukraine war to cap energy prices.
Le Maire also announced the abolition of tax benefits granted for buying properties solely for rental purposes. Reports suggest that the removal of tax incentives supporting environmentally damaging activities is also being considered, including the currently lower tax rates for taxis buying fuel.
To ensure that “everyone pays back what they owe to the state,” there will be an intensified crackdown on “social” and tax fraud. However, a plan first introduced by the government in May raised concerns that it might not go far enough and avoid a serious confrontation on how to combat tax havens.
The minister also confirmed there will be no tax hikes. Several specific production taxes, among the highest in the EU, are set to be reduced by 2027.
Debt reduction “requires difficult and brave decisions, and the government must lead by example,” stated Le Maire.
Regarding the green industry:
Le Maire reaffirmed that once approved by the parliament, the French green industry law should be implemented as quickly as possible.
The draft aims to support the establishment of new production sites in sectors like green hydrogen, batteries, wind energy, heat pumps, and solar cells, and to define decarbonization measures for existing facilities, including a special tax discount of 500 million euros.
The law also intends to invest a portion of the French populace’s saved money into green projects by introducing a new tax-free “Climate Future Savings Plan” with more favourable interest rates than current state-sponsored plans.
This will be complemented by new training programs focusing on the green industry, while labour market and unemployment insurance reforms continue, aiming for full employment by 2027.
“We have become a nation of opportunities and should have a long-term collective objective: to become the EU’s leading green economy,” emphasized Le Maire.
Regarding sectors classified as critical and strategic, the minister stated he would “expand the industries subject to [foreign investment] control, particularly activities in the extraction and processing of critical raw materials.”
In 2019, France passed a law to more effectively monitor foreign investments in economic sectors deemed critical for public order, national security, and defence.
Where restrictions are in place, investment flows must first be approved by the Ministry of Economy.