The victory of the left-wing party alliance means the end of Macron’s business-friendly policies in France. Will the super-rich soon emigrate?
Will there soon be a wave of relocations by the rich in Europe? The reports of the last few days certainly suggest this. In Switzerland, entrepreneurs like Peter Spuhler are thinking out loud about leaving the country because of the upcoming Juso initiative on inheritance tax. In Great Britain, the newly elected Labour Party has alarmed rich foreigners living there with new tax plans. And in France, where the left-wing party alliance recently won the parliamentary elections, the richest could face a whole series of tax increases.
The Nouveau Front populaire, the name of the alliance of the four largest left-wing parties, entered the elections with a whole series of promises: French people should retire earlier, receive higher wages and spend less on food and fuel. It is already clear who will raise the money for this extensive social program: those who benefit most from it.
The alliance plans to reintroduce the wealth tax that Macron abolished and to tax income more heavily. Fourteen different tax rates will apply, with the highest taxing annual income over 400,000 euros at 90 percent. According to the Left’s proposal, those who want to pass on their money to their heirs should only be able to do so up to a set maximum amount. This should also be taxed more heavily.
Asset managers fear exodus
The plans have put France’s wealthy residents on alert. According to a report by the news agency Bloomberg, asset managers fear an exodus of their clients to countries with lower taxes such as Dubai, Singapore or the United States. “Those who can leave will leave,” says the president of an asset management firm to the agency. A partner in a legal consulting firm says her firm is receiving many inquiries from bankers who came to the country after Brexit and now want to move on.
Both the left-wing alliance and the Rassemblement national, the right-wing nationalist party of Marine Le Pen, explicitly targeted France’s richest people during the election campaign. Resentment towards high earners has increased across the country in recent years. Even though the Gini coefficient, which measures inequality, has hardly changed, large parts of the population have the impression that President Macron does a lot for companies and little for the people.
Macron did a lot for wealthy French people
Indeed, over the past seven years, Macron has courted wealthy French people in various ways to keep investing and creating jobs. In 2018, a year after taking office, his government limited the wealth tax so that it only applies to real estate and introduced a flat 30 percent tax on interest income. Macron also maintained the controversial Dutreil Pact, which makes it possible in certain cases to drastically reduce inheritance tax for family businesses.
The reforms had an impact: under Macron, foreign investment in France has increased significantly, which has also increased the number of millionaires and billionaires living in the country. According to this year’s UBS Global Wealth Report, the number of dollar millionaires in France is expected to rise by 16 percent over the next five years.
The richest invest a lot of money in the country
The richest Frenchman, and also one of the richest people in the world, is Bernard Arnault, head of the luxury group LVMH. His fortune is estimated at over 200 billion dollars. Arnault is considered the epitome of the elite in France – but also a busy investor who is very interested in technology and supports up-and-coming French companies. Because of the high tax burden in his home country, he has previously threatened to take Belgian citizenship.
In second place in the rich list is L’Oréal heiress Françoise Bettencourt Meyers, the first woman to own more than 100 billion dollars. She recently benefited from the rise in L’Oréal shares, which climbed to a new record high this year. The cosmetics group generated sales of 41.2 billion euros in 2023 and employs 3,000 people in France. The Bettencourt Meyers family foundation is the largest private foundation in France.
One of the most famous French rich people is the shipping entrepreneur Rodolphe Saadé, who is always in the headlines because of the enormous growth of his container shipping company CMA CGM. He accompanied Macron on numerous trips abroad. Xavier Niel is also a well-known name in France: the telecom billionaire, who also owns the Swiss provider Salt, is known for his numerous investments in the technology sector, with which he primarily supports start-ups.
How many of Macron’s reforms are ultimately reversed and which of the left’s tax demands prevail will depend on the outcome of the government formation. The president has called on the parties to form a broad majority of the political center to exclude both the far right and the far left. If this happens, some left-wing demands would probably be watered down.
The French employers’ association Medef is nevertheless warning of the effects of a government with left-wing participation. The uncertainty among entrepreneurs is already making itself felt, said chairman Patrick Martin in an interview with the newspaper “Les Échos”. Decisions about investments, jobs and real estate deals are being postponed, and the procurement of venture capital is being interrupted. “We have entered an ice age.”