How Will Pro-Business President Emmanuel Macron’s Agenda Impact Business in France and the EU?

by Morgan Lewis
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Morgan Lewis

New French President Emmanuel Macron intends to implement a pro-business agenda and give France the image of a country that is dynamic and well-integrated in the global economy.

On 7 May 2017, voters elected Emmanuel Macron as the new president of France. A virtual unknown three years ago, the new French president is a 39-year-old former Rothschild investment banker and was the Minister of the Economy under François Hollande’s presidency between 2014 and 2016. Last August, Mr. Macron resigned to run his own, newly created party “En Marche!” (On the Move!). In an unprecedented political campaign, the candidates from the two established French political parties lost in the elections, and President Macron was elected with 66% of the votes against Marine Le Pen, the euro-sceptic candidate.

President Macron is viewed as pro-business. The core of his agenda consists of reforming the French economy and French labour laws and strengthening the European Union. It is worth noting, however, that the ability of President Macron to implement his agenda will depend on the outcome of the next French Parliamentary elections to be held in June 2017, from which President Macron hopes to obtain a majority (or at least a coalition) to support his initiatives.

Reforming the Economy

President Macron defends an agenda of pro-business economic reforms. He indicated that he intends to accelerate some of his reforms by way of implementation via ordinances.

His program contemplates reducing social charges on labour and reducing the corporate income tax from 33.3% down to the European average of 25%. The scope of wealth tax that is applicable to the richest tax residents would also be reduced and cease to be applicable to assets which finance the economy (e.g., shareholdings or investments in securities). This wealth tax effectively would become a property tax whereby tax residents would be liable to pay taxes solely for real estate assets.

President Macron also intends to promote entrepreneurship. Among the measures to be implemented, entrepreneurs would benefit from unemployment welfare and tax relief.

Reforming the Labour Market

Although he did not announce the end of the current legal weekly limit of 35 working hours, President Macron wants to provide companies with greater flexibility on structuring working time and encourage negotiations between trade unions and employers on this topic.

Companies hiring low-paid employees would be supported and released from the payment of any social charges in respect of such employees.

President Macron also wants to encourage negotiations between employers and employees’ representatives on labour conditions. His aim is to engage in a redrafting of the complex French Labour Code and to define a more conducive framework of rights and obligations (legal working time, minimum wage, and professional equality, among others) which would apply to all companies and employees. Beyond that framework, priority would be given to negotiating agreements between employers and employees—whether on a sector basis or within each organisation.

President Macron also is eager to enhance good corporate governance by strengthening the powers of boards of directors and the representation of minority shareholders.

Strengthening the European Union

While Europe is facing a period of doubt in the wake of Greece’s financial crisis and the Brexit vote last year, the election of President Macron has been welcomed favourably by European Union supporters.

One main focus of the European Union is to level the playing field in taxation by encouraging tax harmonisation among European countries—especially in the Eurozone—to combat tax evasion and fraud. To that end, President Macron has indicated that he would support a “Buy European Act” under which companies operating mainly within the European Union would benefit from greater access to public procurement. In addition, he has called for the appointment of a common minister of economy and finances among the Eurozone countries.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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