Minister rejects anti-France ‘falsehoods’

©Reuters

Arnaud Montebourg, France’s firebrand industry minister, has accused the country’s growing band of economic critics of peddling “falsehoods” about its hostility to business and its ability to compete globally.

In an interview with the Financial Times, his first with the English-language media since becoming a minister in May, he insisted that France was “a lot more open to foreign investors than the US and Germany” and stressed that the UK was in “even bigger difficulty than France over its budget deficit”.

Mr Montebourg, a leftwing former trial lawyer with a flair for the theatrical, says he wants to set the record straight on what he describes as a “negative campaign” against his country which is creating “a growing gap between the perception of France and the reality”.

France’s reputation for economic competence suffered two fresh blows last week. First, a US tyre company boss, Maurice Taylor of Titan International, told Mr Montebourg it would be “stupid” to invest there and criticised French industrial workers for being lazy, overpaid and unproductive. Then on Friday Olli Rehn, the EU’s economic chief, told France it must implement structural reforms to fix its “major competitiveness challenges” in exchange for a postponement on budget deficit targets.

But brandishing a stack of economic data to support his claims of France’s attractiveness to foreign money, as well as a letter of support from the boss of Coca-Cola’s French operations, Mr Montebourg says: “It is important that the press sticks to the facts because it is the press that is read by investors. And if you look at the facts, they speak for themselves.”

He cites a survey carried by Ernst & Young last year that listed France as the most attractive country in Europe to foreign industrial investors, outstripping even the UK. The ratio of foreign investment to GDP, he points out, was 39 per cent in France last year, according to the UN Conference on Trade and Development, compared with 23 per cent in the US and 20 per cent in Germany.

Mr Montebourg also gives short shrift to last week’s partial endorsement of Mr Taylor’s complaints by French bosses who, while agreeing on the country’s “anti-business” culture, dismissed his claims of poor productivity.

“To say France doesn’t love the economy and doesn’t love its companies: that is a falsehood,” Mr Montebourg says. “We have a tradition of welcome in our country for foreign companies that goes back a long way, including when JPMorgan came here in 1868.”

Mr Montebourg is an avowed opponent of laisser faire liberalism – “It has driven the people to a state of hopelessness,” he says, citing economists Joseph Stiglitz and J.M. Keynes. For that reason. some French chief executives see him – and his high public profile – as part of the problem.

He has used the post to launch scathing attacks on Lakshmi Mittal, the owner of steelmaker ArcelorMittal, and the family shareholders and managers of PSA Peugeot Citroën, the ailing carmaker.

“Some people in Paris like to show off and sound clever in a way that goes back to Versailles,” says one chief executive of a leading French manufacturer who prefers to remain anonymous. “But these kinds of attack do real damage internationally and also stoke sometimes violent anti-business feelings in France.”

Mr Montebourg is unrepentant, saying that the European Commission, Belgium and Luxembourg had all joined him in castigating Mr Mittal’s plans to cut European capacity. He accuses the steelmaker of being “overindebted, degraded, and making all of its territories in Europe pay too high a price for his 2006 takeover of Arcelor which was effectively a hostile leveraged buyout”.

On Peugeot, he insists his criticism is legitimate when “the French state has been forced to guarantee about €7bn for its finance arm because of decisions that were not taken by its leaders in the past”.

On France’s ailing competitiveness, Mr Montebourg points to the government’s new €20bn tax credit for business, which he claims will reduce by 6 per cent the onerous social charges imposed on French employers. He also points to the “historic” deal between French companies and trade unions, struck in January but still needing to go through the legislative process.

French bosses have welcomed the measures as a good first step, though some such as Jean-Dominique Senard at Michelin say they do not make up for the tax grab on business by François Hollande’s government last year.

Again, Mr Montebourg is unapologetic. “There is no country which is fixing its public finances that is avoiding increasing its taxes,” he says. “The US with its fiscal cliff has a programme of high taxes. The UK, which is in even bigger difficulty than France over its budget deficit, is not escaping tax rises. Every country that has lived beyond their means has to do this.”