French bosses rally around Juncker’s 300 billion investment plan

L'Université d'été du Medef, à Jouy-en-Josas, 29 août 2014

Regular critics of the European Institutions, French business leaders are nevertheless interested in a 300 billion euro investment plan promised by the incoming Juncker Commission.

“Soon there will be a Europe of entrepreneurs.”

This hope-filled assertion from Pierre Gattaz, president of Medef, the Movement of French Enterprises, reflects employers’ interest in Europe, but also the ongoing criticism of the business community of the EU.

Business, political and trade union leaders exchanged their points of view at the Medef Summer University on Friday 28 August.

Trust in politics a major issue

The issue of trust appeared as a leitmotiv. “It is a psychological matter, but entrepreneurs need to feel confident in order to make an investment. The fact that first the Prime Minister Manuel Valls, followed by the finance minister, Michel Sapin, say that they love companies, is very important for our morale” says the director of a Franco-Belgian SME. 

Ulrich Grillo was more skeptical and did not hesitate to sneer at the speech of Manuel “Blair” Valls, whilst welcoming its merits.

“It seems that there is more trust between the politicians and the economy here, and that is the best thing that can happen to France,” said Grillo, the president of the Federation of German Industries (BDI).

Consensus for ambitious European investments

But it is the question of European investment above all else that appears to reflect corporate expectations.

“There are two European policies that escape criticism. They are the policies of support for research and of support for the internal market,” said Louis Gallois, president of the Peugeot supervisory board. But to really support entrepreneurs, the former Commissioner-General for investment believes that it is time to hit the accelerator on European investments.

“Europe is the weakest area of economic growth in the world. Public deficits are partly to blame, even if it is the lack of growth that is holding back debt repayments. But given the very low interest rates, it is very much in Europe’s interest to invest heavily now. These investments can only be profitable, and whether they are in electrical interconnection or digitisation, the infrastructures will benefit hugely with economic growth.”

Indeed, Ulrich Grillo believes that the digital and energy sectors have a growth potential of 300 billion euros in the next 3 years.

EIB deemed too cautious

Whilst recognising the 300 billion euro investment project announced by Jean-Claude Juncker, Louis Gallois advocates a doubling of the European Investment Bank’s capacity. 

“The EIB must be less cautious and less sensitive about protecting its triple A status,” Gallois said.

The head of Air France, Alexandre de Juniac, also highlighted investment in Europe’s infrastructure. “The problem with European projects is that they are long, expensive and they go off course. The intentions are good, but the fulfillment is troublesome,” regretted the director of Air France, who is more forthcoming with criticism than with praise for the contribution of these projects to the EU.

He particularly regrets the fact that monetary policy has “become a taboo subject in Europe”.

“It is a powerful tool, we should not hesitate to use it,” believes the president of the top European airline, who feels that a strong euro gives him a competitive disadvantage.

Call for an investment plan worth 2% of European GDP

Bernadette Ségol, secretary general of the European Trade Union Confederation (ETUC), also insisted on the scale of the envisaged investment plan. The Trade Union Confederation, which welcomed the president’s working document presented last June to the European Council, is also calling for a large-scale investment plan, representing 2% of European GDP, over 10 years. Last June, the French President advocated an investment programme worth 1,200 billion over 5 years, which represents 2% of GDP for the period.

“Of course it costs money, and all the countries have to cooperate, but this plan will allow Europe to follow a path of ‘sustainable reindustrialisation’. It is possible!”

However, this view is not necessarily held by the majority of business leaders, who have demonstrated their sensitivity to the idea of France returning to the European macroeconomic stage.

“We need price stability, certainly. But above all we need a Franco-German partnership that works and we need France to defend her positions. Today France is absent,” lamented Annette Palacio, former Spanish minister for Foreign Affairs, who was applauded by the audience.

The new French government, appointed on Tuesday 26 August has taken a new, more social-liberal direction.Replacing Arnaud Montebourg with Emmmanuel Macron at the Ministry of the Economy has reassured the business community, who sees in this former banker a potentially sympathetic ear.

The Prime Minister Manuel Valls received a standing ovation at the opening of the Medef Summer University on Wednesday 27 August, during a speech in which he professed several times to 'love companies'.

 >> Read: Manuel Valls renews his support for the Franco-German axis

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