At France’s Davos, French bosses laud impact of new president

French President Emmanuel Macron arrives for a joint news conference with Australian Prime Minister Malcolm Turnbull at the Elysee Palace in Paris

By Michel Rose and Mathieu Rosemain

AIX-EN-PROVENCE, France (Reuters) – Top French company bosses who have for years lamented their country’s slow pace of reforms offered glowing praise this year at an annual summer gathering in Provence for the first steps taken by newly elected President Emmanuel Macron.

Sixty days after Macron became France’s youngest-ever president, the chief executives gathered in the southern town of Aix-en-Provence said they had sensed a radical change in the country’s image abroad.

“The whole world admires France today. There is renewed confidence, optimism about the country,” Patrick Pouyanne, the head of oil major Total, <TOTF.PA>, France’s largest company, told reporters.

“What I expect from this government is that it maintains this confidence, this optimism, so the French start spending more and companies start investing.”

Although Macron’s government has yet to pass any concrete measures, it outlined its action plan in policy speeches last week, and has begun talks with unions to pass an extensive reform of French labor regulations.

“I think this new president and his government are making an extremely positive start,” Isabelle Kocher of gas utility ENGIE <ENGIE.PA> told Reuters at the summit often referred to as a “mini-Davos”.

“They are changing France’s image abroad, I see it everywhere I go, it’s really striking and has happened very quickly,” she said.

“France went from being labeled the sick man of Europe to being seen as the savior of Europe,” a politician who sits on the board of several French companies said at one of the cafes lining the town’s sunny streets.


If the government’s announcement last Tuesday that some tax cuts would be delayed – including exemptions to a wealth tax and the introduction of a flat tax on capital income of 30 percent – did not draw much criticism in public, it had some bosses bristling in private.

One participant in the conference’s exclusive late-evening cocktails told Reuters he heard a CEO tell a Finance Ministry official that Macron should do away with his 50 billion euro investment plan and cut taxes instead.

“We don’t want to pay more taxes later,” the French CEO said, according to the witness of the scene who spoke on condition of anonymity because the conversation was private.

“There are some debates about the government’s tax measures, if they’ll be done now or if it’ll wait because it has no money,” UBS’ <UBSG.S> head of French operations, Jean-Frederic de Leusse, told Reuters.

On Sunday, Finance Minister Bruno Le Maire seemed to suggest the delays were still the subject of discussions in government.

But when pressed, French CEOs who in previous gatherings complained loudly about a tax burden, which was the EU’s heaviest last year, refused to blame the government.

“Let’s not start criticizing,” Total’s Pouyanne said. “Let’s give them a bit of time. If there were a magic potion, it would have been used a long time ago.”

The chief executive of the country’s flagship airline, Air France-KLM <AIRF.PA>, concurred.

“Like all decision-makers, the government has to deal with contradicting demands. Respecting a certain number of European rules, so that our partners can take us more seriously, is important,” Jean-Marc Janaillac told Reuters.

“If the price we have to pay is a slightly delayed time frame, that doesn’t seem to be a major inconvenience for me compared to its advantages,” he added.

France’s top central bankers agreed the government was right to prioritize deficit reduction over tax cuts so that France can, for the first time in a decade, bring its deficit below the European Union’s 3 percent of GDP ceiling.

ECB Executive Board member Benoit Coeure said France’s respect for the rules would help discussions the government hopes to launch about common budget measures in the euro zone.

“We’re all for tax cuts, but let’s not equate reform with immediate, unfunded tax cuts,” Bank of France Governor Francois Villeroy de Galhau told the conference on Sunday.

“We’ve already paid a heavy price for this kind of liability on the future.”

(Additional reporting by Gwenaelle Barzic and Leigh Thomas; Editing by Catherine Evans and Peter Cooney)