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Tuesday, October 16, 2012

French Businessmen Are Revolting...

Unfortunately for France, they are voting with their feet. The Telegraph reports that French businessmen are beginning to flee France (at least, those with the resources to do so. I'm sure others are stuck there and will face the consequences).
“The situation is very serious. Some business leaders are in a state of quasi-panic,” said Laurence Parisot, head of employers’ group MEDEF.

“The pace of bankruptcies has accelerated over the summer. We are seeing a general loss of confidence by investors. Large foreign investors are shunning France altogether. It’s becoming really dramatic.”

MEDEF, France’s equivalent of the CBI, said the threat has risen from “a storm warning to a hurricane warning”, adding that the Socialist government of Fran├žois Hollande has yet to understand the “extreme gravity” of the crisis.

The immediate bone of contention is Article 6 of the new tax law, which raises the top rate of capital gains tax from 34.5pc to 62.2pc. This compares with 21pc in Spain, 26.4pc in Germany and 28pc in Britain.
. . . An alliance of private organisations in France has issued a protest entitled “State of Emergency for Business”, warning that confiscatory tax rates threaten lasting damage to the French economy.

Mrs Parisot said the policies border on economic illiteracy: “The idea of aligning taxes on capital with those on wages is a profound economic error. It is scandalous that the French have been left in such economic ignorance for years.”

French business has called for “competiveness shock” of business tax cuts to claw back lost ground against Germany. Instead, it faces an extra €10bn (£8.1bn) of business costs from the budget unveiled in September.

. . . French economic growth has been near zero for the past five quarters. It may have tipped into recession over the summer as the malaise spread from Italy and Spain, according to Banque de France. ... Unemployment has been creeeping up, reaching a post-euro high of 10.6pc. The fear is that a fiscal shock in 2013 will tip the economy into a sharp downward slide.

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