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French business chief slams 2014 budget

Patrick Kovarik | AFP | Getty Images

Despite the pro-business tone of France's 2014 budget, the country's largest business lobbying group said the proposals presented by the government on Wednesday were a blow for competitiveness, growth and jobs.

"We've got a problem with this French budget," Pierre Gattaz , the head of France's Mouvement des entreprises de France (MEDEF), told CNBC, following the government's budget presentation, which announced 15 billion euros ($20.2 billion) of spending cuts and 3 billion euros of tax increases.

Although the tax hikes will mainly hit households and consumers – via higher sales taxes and social insurance contributions -- the budget also included a new levy on operating profits and a 75 percent tax rate on salaries of more than 1 million euros, to be paid by companies rather than employees.

(Read more: Fears France's budget will hit its economy)

Ostensibly, however, the budget appeared to be an olive branch to French businesses that had been riled by the socialist administration's earlier plans to increase business taxes. It included a 10 billion euro tax credit for businesses to reduce the cost of labor and become more competitive, which was meant to outweigh the impact of the tax rise.

MEDEF's Gattaz was unconvinced the changes would help businesses grow, however. "This budget is not going in the right direction," he said, speaking from Paris on Thursday morning.

"We cannot support more [taxes]. Companies already support a lot of taxes, on the labor side and the operational side. For the moment, we have the lowest margins in Europe. The companies I represent are in a complicated situation- they don't have enough margin to innovate or invest or to hire people. This is really the problem we have."

(Read more: French budget 2014: business to win?)

He added that the government was in fact creating more of a burden for businesses already weighed down by red tape and administrative taxes.

"They are going to create a new tax on EBITDA (earnings before interest, taxes, depreciation and amortization), which is something that is not acceptable for us because they are going to tax investments and this is not good for the economy."

(Read more: François Hollande admits French taxes are 'too much')

Speaking to reporters after presenting the budget, France's finance minister Pierre Moscovici defended it, saying it would reduce the cost of labor for companies and put France back on the path of growth. "This government is leading an economic policy which is serious and reformative in a structural way," he said.

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt

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