France knows how to support companies during a crisis; it moves quickly and the word is getting out, even as far away as the United States. Within days of each other, two major American financial media outlets published analyses praising the relevance and responsiveness of France’s industrial policy.
A New York Times article opens with the saving of Brittany-based faïence producer HB-Henriot and applauds the speed with which the French government acted in a time of crisis. The rescue measures were particularly effective, especially for medium-sized job-creating companies. In short, France was able to provide “timely, temporary and targeted” support, in the words of French Finance minister Ms. Christine Lagarde who is quoted in the article. This approach has led France to recover from the recession faster than its European neighbors.
France’s inward investment results for 2009 were announced on March 9, 2010 by French Finance Minister Ms. Christine Lagarde and the Regional Development Minister, Mr. Michel Mercier: 639 job-creating foreign investment projects in France were decided upon last year, generating 29,889 jobs.
With project numbers higher than in 2007, and nearly as high as in 2008, the results offer a measure of France’s economic attractiveness in a period marked by a sharp decline in foreign investment flows throughout the world.
The global economic crisis has had a variety of effects on investment in France:
Tax relief of more than 20% on average
The abolition of the local business tax in the French government’s 2010 budget represents one of the most important tax reforms of recent years in France. Overall, businesses stand to gain significantly from this reform, as the current tax burden on companies established in France will be reduced by €6.3 billion (before the effect on corporate tax is taken into consideration). In 2010, the introductory year, these tax cuts will be even larger (€12.3 billion).
In practical terms, the cost to companies of making productive investments will be reduced by more than 20% on average for an investment made over 10 years. For industry, tax relief will amount to 32%, while for SMEs the benefits of this reform are even more tangible: companies with a turnover of less than €3 million will see their tax bill reduced by 50-60% (source: French Ministry for the Economy, Industry and Employment).
