Could President Hollande’s anti-business stance drive companies away from France?
YES
Bill Witherell
The bitter dispute between the French government and the steel company Mittal reflects its contradictory attitude towards business. Francois Hollande’s post-election actions have had an anti-business flavour that appealed to his socialist support base. But in response to the International Monetary Fund (IMF) warning France over its low competitiveness, Hollande introduced new measures to encourage business and innovation. They are a step in the right direction, but fall short of what is needed. The Mittal affair reflects poorly on France’s attitude towards the private sector. It may be seen as a special case with a difficult history, but it could deter foreign investors from locating in France. It is unclear whether it will lead firms already established in France to move. But if Hollande fails to take the IMF warning seriously, France will continue to lose business to its neighbours. Threats of nationalisation can only add to this.
Bill Witherell is chief global economist at Cumberland Advisors.
NO
Adrian Leach
The business of relocating is not as simple as it first appears. Many multinationals are actively considering relocating their headquarters to the UK now a more favourable tax regime is available. And understandably, Mittal may well consider moving some divisions of its business into the UK, and relocating key personnel at the same time. However, relocation isn’t a simple case of saying “Au Revoir Belle France” and “Hello Great Britain”. Determining a location for a headquarters, with access to a mix of suitable residential areas and good commuting and transport links, requires careful consideration. Add in the blend of schooling needs, family language capabilities, cultural differences and second family income, and the project becomes even more complex and potentially costly. But if the sums are right, Mittal won’t hesitate in relocating to the country that provides the best business environment.
Adrian Leach is business development director at HCR.