By Katya Puyraud, co-founder, Euro Start Entreprises
For those UK businesses concerned with imports and the availability of foreign workers, a more business centric France has a significant allure.
Businesses, markets and leaders alike all breathed a sigh of relief when the results of France’s first round of elections became clear. Centrist Emmanuel Macron had taken the predicted first place alongside far-right Marine Le Pen. With the majority of voters expected to shun the Front National leader, Macron’s victory looks assured.
The perception is that Macron will be at the very least a more stable influence than Le Pen, and at best could be the ideal moderniser for both the European Union and France.
As Brexit proceeds across the Channel, its influence will be key: for the EU’s approach to negotiations, and potentially for UK and Irish businesses. A reformed France could put Europe’s third-largest economy front and centre of business locations to move to after Brexit.
In every sense, Macron’s electoral success has come out of left field. The former investment banker was a part of President Hollande’s socialist government; first as an advisor during his electoral campaign, then as Minister of Economy, Industry and Digital Affairs.
Macron was best known for his confrontational stance on France’s traditional working week and worker protections, seeing them as outdated and stifling competition. His ‘Macron Law’ had big goals but had to be watered down to pass through Parliament, and still managed to slog through many months of inaction and worker protests.
Having been seen as Hollande’s protégé, Macron’s decision to leave the party abruptly came as a shock, as did the movement he soon created, En Marche! (On the March!). While his bid to create a ‘third way’ in French politics drew hundreds of thousands of supporters, the perception of Macron as a turncoat made enemies within his old party as well as in the opposition.
Macron’s victory owes much to his persona: as a fresh-faced, left-leaning pragmatist, he has drawn comparisons to the likes of Justin Trudeau in Canada.
Supporters have warmed to his modernising, EU and immigrant-friendly rhetoric, seeing him as a palatable alternative to left and right-wing firebrands. Critics say his policies are weak, and point to his history in banking as miring him in the same elitism he claims to rail against.
Over his few years in the French political spotlight, Macron has established himself as a dissenting voice and an outsider looking to upend the system. These are all words business interests usually hate.
However, the instability of change may be exactly what France needs. While the economy is still rugged, growth has been minimal over Hollande’s term, with flagship policies such as the top band ‘super tax’ failing to take hold.
Macron’s chief promise has been to enact sweeping changes designed to promote French business. Some of these sound almost Thatcherite: take the privatisation of troubled government owned assets, such as the national rail network, where the French government spent €650m on unnecessary new trains last year to prevent a factory closure.
Others are considered to be long overdue. The sacrosanct 35-hour working week would be up for review, as would the extremely generous severance packages and union influence, which stop companies from firing workers.
As Brexit proceeds across the Channel, its influence will be key: for the EU’s approach to negotiations, and potentially for UK and Irish businesses
Government pensions that are often seen as far more lucrative than those of private companies would also be on the chopping block.
Macron is also a moderniser in other senses. As a Digital Economy Minister he was a champion of La French Tech, and would seek to invest heavily in new French industries and startups.
French tech investment exceeded $2bn last year, and continues to grow at a rapid rate. Macron may cast a jealous eye to London’s fintech sector, and other startups that might be considering a move.
Macron looks certain to win the vote for the presidency, but the fate of his new political party is less assured. En Marche still has to field candidates across the country, and many are likely to come from outside the current political system.
While this can be seen as an asset, it should be considered that Macron’s election is an historic break from the norm. France does not usually look outside of the established parties, meaning there’s a strong chance that both right and left wing MPs will be elected in opposition to him.
Macron may be President, but without a Parliamentary majority, he will lack the support to enact many changes. He is not wholly popular with the political establishment, and a coalition of warring parties wounded by the election is likely to let him know about it.
Even while Macron was in government, he faced a titanic struggle to push through a reform package, including the big change of letting some shops open on certain Sundays.
France is also not the only country looking to tempt British businesses away. The UK’s closest European neighbour, and with an extremely competitive business landscape, Ireland is obviously well situated to capitalise on any big exits. Barclays has already moved some of its operations to Dublin, with 50 other firms reportedly considering a switch.
Other countries have also rushed to offer competitive terms, however. Frankfurt has emerged as a prime destination in growth-heavy Germany, while Luxembourg offers obvious appeal for some banks and insurance firms, as proved by AIG’s recent move.
France may have the perfect leader to appeal to the finance sector, but it will be late to the party.
There is at least an immense impetus for change in France, more so than any time in recent French – or European – history.
The EU is considered to be at a crossroads, and Angela Merkel faces her own competition for power with a general election in Germany.
The UK’s closest neighbour, and with an extremely competitive business landscape, Ireland is obviously well situated to capitalise on any big exits
This presents a perfect opportunity for the rise of a new European figurehead, who can unite countries and strengthen the Union.
Macron will hope to keep the ball rolling and push through changes based on populist sentiment in both France and continental Europe.
Brexit may also be seen as an opportunity. While many businesses are tentatively remaining in the UK, weighing up their options, others have already divested small numbers of staff to European capitals. In the immediate aftermath of Brexit, Paris announced plans to accept business applications in English, among other minor concessions.
As a fluent English speaker, Macron made a play of visiting London’s financial sector in his election campaign, promising that he wouldn’t punish Britain for Brexit were he elected. Indeed he took some flak from opponents in France for making a speech in English, when he was ostensibly campaigning for France.
If he does give with one hand, however, he will be looking to take with the other. With first hand experience in both banking and tech, Macron is likely to have his eyes on these two jewels in the UK’s crown.
France already offers generous tech visas for non-EU workers, as well as incentives for high-earning employees coming to work for French companies. Macron will almost certainly make a concerted effort to improve these benefits, as well as reducing red tape for startups.
How many would leave at this juncture is another question. The larger blue chip companies with foreign interests are sitting fairly comfortably, as they can capitalise on the weakness of the Pound.
British industry and tech may find it hard to resist the pull of a charismatic leader who knows what they need to succeed.
Photo: OFFICIAL LEWEB PHOTOS
About the blogger
Former journalist Katya Puyraud is the co-owner of Euro Start Entreprises, specialising in company formation in France and the rest of the EU.
Since 2007 Euro Start Entreprises has helped budding digital nomads, entrepreneurs and expanding SMEs to open their companies in over 30 countries worldwide.