If you want a view of what a socialist president means for family businesses in France, given Francois Hollande’s recent elevation to the post, then speak to two barons.
Baron David de Rothschild, chairman of the Rothschild Group, and Baron Ernest-Antoine Seilliere, chairman of Wendel, have had first hand experience of socialist presidents. Their two businesses were nearly destroyed by socialist presidents/governments in France. Indeed, Rothschild’s banking business was pretty much destroyed by the presidency of Francois Mitterrand. Baron David only rebuilt Rothschild’s financial business in France after Mitterrand had left public office.
But being barons, one might conclude that they wouldn’t be particularly popular with socialist/left-leaning governments. After all, France has always had a rather jaundice attitude towards aristocrats – 250 years ago they guillotined many of them during the revolution. Whether run by aristocrats or not, family businesses don’t sit comfortably with socialist governments. They represent multi-generational capitalist centres of power, often employing non-unionised workers. And like aristocrats, they perpetuate a hereditary transfer of power and capital. At worst, they are to be done away with; at best, taxed more.
Of course, in these post-ideological times, they are no longer done away with. But taxed more, yes. And this must be the worry for all family businesses in France in the months and years ahead with Hollande at the helm.
On top of the well-publicised threat of raising income taxes for higher earners – a 75% rate for those earning more than €1 million a year has been mooted – the increasing of France’s wealth tax is possibly the biggest worry for family businesses. Hollande wants to raise this and some business owners are concerned that he might even remove the loophole for long-term business capital. There is also talk of an estate transfer tax rise. With the French economy showing no more than anaemic growth, money will have to be found somewhere to pay for the country’s enormous budget deficit, especially if Hollande wants to move away from austerity and follow a growth strategy, as he has said.
As one big family business owner in France told CampdenFB about their concerns towards the new president: “Either [a rise in the wealth and estate transfer taxes] will cost a fortune for family business ownership and may jeopardise the sustainability of their model.”
The brain drain that has been happening for some years in France might now be about to accelerate, affecting family businesses as well. That will only be detrimental for the country’s long-term recovery.