Today's Date:

Paris-Europlace Financial Forum on the theme of “Europe’s financial markets and the French presidency” – Speech by Mme Christine Lagarde, Minister for the Economy, Finance and Employment (excerpts).

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The way I want France to open up to the outside world

The first battle France must wage is on globalization.  The policy President Sarkozy defined is clear:  opening up without naivety, with due regard for our interests.  Open our eyes to the world when the world opens its doors to us.

This method already proved its worth a few months ago with the merger of Euronext and the New York Stock Exchange.  Paris was able to benefit from the opportunities offered by the globalization of finance, going along with the process of reorganizing the regulated markets, and anticipating the Markets in Financial Instruments Directive (MiFID), now transposed into French law – I’m pleased to tell you that the final legislation was this morning published in the Journal Officiel.  This major NYSE-Euronext merger took place without Paris losing out.  Accepting challenges doesn’t mean giving up every guarantee.

I. Breaking with the past

Since Nicolas Sarkozy's election, we've started moving in the right direction again.  The Bill I'll be supporting next week before the National Assembly is designed to restore the full meaning to the value of work, particularly by making it easier to work overtime (exemption from tax and social contributions).  We want work to pay and merit alone to be rewarded:  for the most underprivileged, on the minimum welfare benefits, this means strong financial incentives to getting back to work;  at the other end of the scale, for bosses, this means greater control of the "golden parachutes" so that their leaving bonuses aren't disproportionate to their companies' performance.

The Bill on Work also contains elements to encourage entrepreneurs, managers and all the talents of the business world to set up in France and in Paris, or simply to stay here.  I tell those of you leaving to seek the keys to a tax paradise in distant parts, "Come back it's no longer purgatory, here".

The tax cap¹ will be reduced from 60 to 50%, and from now on will include the CSG² and CRDS³.  So the State won't be able to take more than half anyone’s income.  The Bill also provides for a cut in the French wealth tax (by up to €50,000) to encourage people to invest in SMEs or donate to foundations.

The Bills on university autonomy and minimum service on public transport networks, soon to be put before Parliament, should also make France more attractive.  A France where people can think and move!

We shall go still further in the coming months.  Under President Sarkozy and the Prime Minister's authority, I shall launch the tax reform, which has to deliver results in four areas:  work, production, investment and sustainable development.  With greater flexibility in our labour law we'll also be able to move towards a "single contract", which is both more efficient and makes employees' career paths more secure.

Aside from these concrete measures, we need to support and encourage a change of mindset.  If I may say so, our role here is as political as it is moral.  To redefine the French way of life and dispel the continuing contempt – seen from the time of the aristocrats of the Ancien Régime to that of today's speechifiers – for work.  I want to tell you, like Guizot [prime minister under King Louis-Philippe] nearly two centuries ago:  get rich!  Work harder, and you will increase employment.  Earn more and you will increase purchasing power.  Spend more, and you will boost growth!

Macro-economic guidelines

To succeed, we must also not lose sight of our macro-economic fundamentals.

This is why the government's ambition is:

-       on one hand, to boost growth, particularly by stimulating purchasing power (cut in tax on loan interest) and increasing competitition in the goods and services market.  President Sarkozy has tasked a commission to work under the Prime Minister’s authority, chaired by Philippe Séguin, modelled on the Rueff-Armand Commission General de Gaulle set up at the beginning of the 60s, to identify the impediments to growth so as to remove them as quickly as possible;

-       on the other, to improve public finances to eliminate the budget deficit and bring the national debt back down to 60% of GDP by 2012.  This will involve an extensive reform of the State.  The cost and effectiveness of all public policies will therefore be reviewed.

II. Attractiveness of the Paris marketplace

Over and above these essential measures for our country, I want to conduct a policy to increase the attractiveness of Paris as an international financial centre. For me, this is a political, economic and strategic issue.  The financial industry is a high technology industry with nearly a million jobs and contributing around 4 to 5% of national wealth.  In many spheres it has acknowledged strengths:  asset management, our NYSE-Euronext share trading platform, derivatives (mainly equity products), and our excellent financial mathematics courses which make French the second most used language on the trading floors.

In addition, Paris has always been a city highly valued by investors for its skilled workforce, its transport network and quality of life.  That struck me particularly when I lived in Chicago and saw Paris through the eyes of a foreigner.

So I was hardly surprised to read recently in an Ernst & Young report that, in terms of the number of employees of multinationals, Paris is second in the world, behind Tokyo but ahead of New York and London.

Nevertheless, in a context of heightened international competition, we need to be more vigilant than ever in promoting the financial industry in our capital, and reducing the number of French bankers Eurostar takes from us every Sunday evening…  This is why as soon as he was elected, President Sarkozy organized a round table you took part in, which will lead among other things to finalizing a strategic action plan to increase the attractiveness of the Paris marketplace.

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Conclusion

Ladies and gentlemen, believe me, I am very happy today to be Minister for the Economy, Finance and Employment to support my country's big "comeback" on the world stage.  It had seemed to me, over the past few years, that time was rushing by without us and leaving us on the sidelines of modernity.  At our new president's instigation, we are taking back control of our destiny.  In a way, for us all, it’s our "Time Regained".

Ladies, gentlemen, [in English:] France is now open for business.

Thank you./.

¹       bouclier fiscal which limits total tax liabilities to a specific percentage of a taxpayer's income

²       contribution sociale généralisée – supplementary social security contribution in aid of the underprivileged

³       contribution au remboursement de la dette sociale – tax to help pay off the deficit in the French social security budget