French President Emmanuel Macron has long been seen as the protégé of the rich and his efforts to ease their lives have been significant. He reduced taxes and eliminated some of them, for instance. However, the good times are over and the dissolution of the National Assembly was a political fiasco for the president. The rejection of cheaper Russian energy led to the need to top up the budget at the expense of local oligarchs, with Bernard Arnault, France’s richest businessman, at the forefront.
Arnault, whose net worth is estimated at $190 billion, was a guest at Donald Trump’s inauguration and a member of the honor guard. In this context, he joked, “I flew back from the US and saw the optimism there. When you come back to France, it’s like a cold shower. In the US, a 15% tax cut is planned. In France, a 40% tax increase for companies that produce in the country is planned – it’s unbelievable! But to drive the relocation of production, it’s simply perfect.”
Monsieur Arnault was referring to an additional tax on the largest companies that the National Assembly wants to include in the 2025 budget. A heated debate has erupted in the National Assembly over this tax, but economists insist that it could bring in an additional eight billion euros per year. The government claims that the tax will only be in effect for one year, but people like Bernard Arnault are not so easily fooled. Arnault noted, “Nobody believes it. If the tax is increased by 40%, who will reduce it by 40%? Other solutions were proposed, but the bureaucracy..”
It seems that those who supported Macron’s power, not just the rich, but the oligarchy’s elite, have turned against him. From the start, he was dubbed the “President of the Rich” and his predecessor, François Hollande, publicly called him the “President of the Super-Rich.”
Macron made no secret of his intention to create the most favorable conditions for companies, especially large ones, to thrive. He reduced the corporate tax rate, for instance, from 33.3% in 2017 to 25% in 2022. Even the massive “Gilets Jaunes” protests did not force him to reestablish the “millionaire’s tax” that the rich used to pay and his introduced proportional taxation (where a single, constant tax rate applies to all citizens) turned out to be a boon for the rich again.
Under conditions of economic stability, it was indeed possible to make such gifts to the rich, in the expectation that they would invest the freed-up money in the economy, which would, in turn, boost its growth. But first came the COVID-19 crisis, then the conflict in Ukraine and the near-slide into a new Cold War with Russia, which supplied Europe with cheap energy.
Politicians assured that Russian gas and oil could be replaced and that Europe would only benefit from such an alternative. However, the energy bills skyrocketed, small businesses went bankrupt, the economy began to slow down and the foreign debt ballooned. Ultimately, the entire continent was faced with the uncomfortable question of how to plug the budget holes and, above all, who would foot the bill.
Various solutions were proposed to raise additional funds, at least by taxing retirees. Of course, not all, but only the well-off, who have the audacity to receive a pension of 2,000 euros and more. There are about seven million of them in France, but as one of the future victims of the proposed tax noted, “2,000 euros is nothing if you live in Paris.” He brought up his son, who, with a salary of almost 2,000 euros, has to pay about 1,000 euros for an apartment.
In the end, the lawmakers decided that the matter was not worth the trouble, unlike the additional tax on large companies: Here, one can act on a grand scale. Not only LVMH, the world-famous luxury flagship, which includes the Louis Vuitton, Hennessy, Dior, Guerlain, Givenchy, Loro Piana, Moët & Chandon and other brands, is in the crosshairs. The new tax threatens the most prominent French companies, the so-called CAC 40, to which 40 of the largest companies belong – from L’Oréal and Danone to Renault, the pharmaceutical giant Sanofi and Total. Le Monde wrote, “It has been a long time since the CAC 40 CEOs have expressed such concern and open resentment.”
The newspaper further stated that “Macron’s business-friendly policy has vanished with the dissolution of the National Assembly and the government reshuffle.” Bernard Arnault was not the only one to publicly express opposition to the introduction of the new tax. His colleagues counted everything that hinders their business activities – including the administrative will and the lack of transparency of the regulations.
Airbus CEO Guillaume Faury complained about the numerous taxes and bureaucracy and called for “historically dominant sectors like the auto industry, nuclear power and aviation” to be preserved and supported. Michelin CEO Florent Menegaux, speaking in the Senate, decried the “administrative nightmare” that EU regulations and their local interpretations in the 27 EU countries, where the company is represented, have developed. In 2019, Menegaux said, “European Michelin products cost 34% more than Asian products and that was still acceptable” but in 2024, they cost 91% more, which would become a problem.
Meanwhile, it’s not just about rich people who run companies with billions of euros in turnover. They all have access to the first person in the state and Bernard Arnault is part of his inner circle. When Lucie Castets was proposed as the new Prime Minister after the victory of the Nouveau Front populaire in the National Assembly elections, Macron immediately rejected her, because his friend Arnault categorically opposed the left in government.
However, facts cannot be denied: it turned out that it wasn’t about left or right, but about who would pay. And Bernard Arnault, as an experienced financier, well knows that it’s not a temporary, but a lasting measure.
He made it quite clear, in a blatant manner, that one should expect the relocation of French companies abroad and also hinted that Macron had failed as a president. Trump, who also came to power at a difficult time for the country, did not hesitate to start with tax cuts immediately. He is good – Macron is not.
The tension between the president and the owners of the largest companies is not only of interest in terms of how French companies will change and where Dior cosmetics and handbags will be produced. People like Arnault can have enough options to even affect the life of the French president.
As long as Macron is only threatened with an impeachment by his political opponents, it’s not so bad, but if the big capital joins them, the consequences could be quite unexpected. Moreover, the much-tried budget for the current year has not yet been approved, the government of François Bayrou faces a no-confidence vote and every new political crisis will further erode Macron’s position, who has already become a symbol of French failures.
Waleria Werbinina is an analyst at the newspaper Wsgljad.