Fiscal Cliff? France Has ‘Fiscal Mountain’: PPR CEO
The head of one of France's biggest companies has warned that France's problems dwarf those of the U.S. in an interview with CNBC.
Francois-Henri Pinault, chief executive of luxury goods company PPR, said: "When we talk about the fiscal cliff in France it's a mountain, it's much higher than a cliff. And when it comes to France the only solution that has been put on the table is tax raises, nothing about cutting expenses. So it's a completely different situation."
He criticized plans to tax the wealthiest at 75 percent, recently announced by President Francois Hollande's socialist government,and levies on dividends and capital gains which will come in 2013.
The hike in the higher rate of tax has already chased well-known French figures such as actor Gerard Depardieu to neighbor Belgium.Pinault said he had not decided whether to join them.
France, the euro zone's second-largest economy, is increasingly in focus amid concerns about its fiscal position. There have also been concerns about whether it is business-friendly enough after a high-profile row with Indian steel company ArcelorMittal – which the country's Industry Minister said was just the government acting like U.S. President Barack Obama. (Read More: French Socialist: We're Just Doing What Obama Does)
Pinault believes that the U.S.'s problems, including the"fiscal cliff" of tax and spending cuts due to come in next year, will be solved despite the current impasse in Congress. (Read More: The "Fiscal Cliff")
"You here in America are so practical. You alreadyhave the solution on the table," he said.
"The question is should you implement those solutions now ordelay them? I'm in favor of doing it now to go forward."
"In Europe we're still talking about what should be done. So it's a completely different situation," he added.
Pinault, one of the world's richest men, warned of the "impact on consumption" of the U.S. falling off the cliff.
PPR, which owns brands like Gucci,Stella McCartney, Alexander McQueen and Yves Saint Laurent as well as auction house Christie's, has performed relatively well during the recession, buoyed by the growing purchasing power of emerging markets consumers. The holiday season is "looking good" for PPR's brands so far, according to Pinault.
The head of PPR was unconcerned about the potential impact of a slowdown in economic growth in China, rapidly becoming one of the company's biggest markets with 22 percent growth in 2011.
"It (growth in the luxury goods market) won't be a straight line of course, but it doesn't endanger at all the potential," Pinault said.
He also confirmed that much of the luxury market in Western Europe was being driven by tourists from elsewhere rather than domestic consumption.
Reported by Maria Bartiromo, written by Catherine Boyle, CNBC.