France must work with other European countries to avoid replicating a mass exodus of millionaires from the UK reportedly triggered by tax reform, the French Economy Minister has said.
Roland Lescure told reporters in Paris: "Things need to be done ... on the taxation of ultra-rich individuals. But France cannot do it by itself."
"We have to do it together, at least at the European level, otherwise, we're going to race to the bottom," he added.
The country is walking a fine line as it seeks to boost its international reputation as an attractive destination, while also implementing deep budget cuts. President Emmanuel Macron, who cannot run for the position in next year's election, is seen widely as a lame duck at a national level.
Like other European powers, France has been seeking ways to reduce its widening budget deficit. One option pushed by politicians, particularly on the left, is to tax the ultra-rich, though the idea has found little support among influential cabinet ministers.
The budget adopted last week by the French Parliament after months of tense negotiations ultimately dropped a proposal to tax those worth more than €1 billion ($1.19 billion) at a minimum of 2 per cent a year.
Some French MPs wanted to toughen an exit tax eased by Mr Macron shortly after his election in 2018. The hope was that it would generate €70 billion in state income for the state. The proposal was also shelved by the government during budget talks.
Open door
The mere act of agreeing on a budget after several failed no-confidence votes in a fractured parliament is a "political tour de force", Mr Lescure said. "The French Parliament looks more like an Italian Parliament of the 1980s than French Parliament the way we know it.
"It's relief for ministers who spent the last four months discussing the budget, morning, lunch and night, to move on to other subjects that are also important," he added at a meeting organised by the Anglo-American Press Association held at his office.
Senior French officials appear to regard the situation in the UK, which left the European Union in 2020, as an example not to follow.
Recent reforms, including the abolition of a rule that allowed British residents with their permanent home abroad to avoid UK tax on foreign income and gains, encouraged thousands of millionaires to leave, it has been reported.
Last week, the Financial Times reported that Kurt Bjorklund, a leading dealmaker at one of London's biggest private equity firms, was moving to Switzerland.
Prominent leavers included Nassef Sawiris, the Egyptian tycoon; Shravin Mittal, the Indian businessman; John Fredriksen, the Norwegian-Cypriot shipping magnate; Richard Gnodde, the South African-born vice president of Goldman Sachs; and former Manchester United and England footballer Rio Ferdinand.
Mr Lescure said much has changed since 1981, the last time there was talk of a mass exodus of the wealthy from France following the election of socialist president Francois Mitterrand.
"If we do it by ourselves, we're going to have what is happening in the UK: we're going to have people fleeing and going elsewhere," Mr Lescure said, responding to a question from The National.
"And because we are talking about a small number of individuals, unlike the Mitterrand capital tax that was much wider, it takes about a week for them to leave France. And even if you say 'next year we're going to have an exit tax', they'll probably be gone by the time next year comes. So I think we need to work on this."
Surveys suggest the ultra-rich do not tend to leave France en masse. "Only 0.2 per cent of the top 1 per cent of French people emigrate each year, which is half the rate of the entire French population [0.38 per cent]," a study published by the Council of Economic Analysis, an advisory board integrated in the Prime Minister's office, found in December.
AI and nuclear
An early supporter of the French President, Mr Lescure is a self-described liberal social democrat and a fluent English speaker who spent most of his career as a senior executive of a Canadian pension fund.
Mr Lescure left his job in Canada in 2017 to pursue a career in politics. He was elected an MP before becoming minister delegate for industry in 2022, and Economy and Finance minister three years later.
France is pushing to convince EU countries to embrace European sovereignty in technology and defence as tensions with the US is high. But while winning a war of words is one thing, winning the "war of actions" is another, said Mr Lescure.
Stellantis, a car manufacturing group formed in 2021 by a merger of leading brands including France's Peugeot, Italy's Fiat and Chrysler of the US, announced last week it would drop plans to build giga factories in Italy and Germany. The EU has failed to deliver a “clear road map for growth," Stellantis chief Antonio Filosa told the FT in December.
Mr Lescure said delays in the electrification of vehicles had brought disruption to the automotive sector. He hopes to reverse that with an ambitious energy plan announced on Saturday to double the country's electricity-driven energy consumption to 60 per cent by 2030. Electricity represents only around 30 per cent of France's power, most of which is generated from nuclear and renewables.
The way forward is with "AI and data centres," Mr Lescure said. "In terms of foreign investment, France was the number-one destination for AI [last year] because we have low carbon volume energy that's relatively cheap and easy to plug," he said, in reference to France's deriving 70 per cent of its energy from nuclear power.
Some of that investment has come from the UAE, one goal being the creation of 1GW data centre dedicated to AI in France.
"Hopefully we'll have good news in the next few days about big industrial companies in France and Europe moving to more electrification," Mr Lescure said.
