In 2025,France’s budget for supporting startups and innovation will see a significant reduction. The France 2030 plan, a €54 billion multi-year initiative launched in 2021 to support innovation and include financial support for startups and larger businesses, will see its funding slashed from €7.3 billion in 2024 to €5.2 billion in 2025 ([1]).
This reduction comes amidst broader budgetary adjustments in France. The French government is planning to cut public spending by €32 billion and increase taxes by €21 billion in 2025, marking the largest spending reduction effort in the last 25 years ([2]). The 2025 budget aims to plug a significant hole in public finances with €60 billion worth of tax hikes and spending cuts ([3]).
Specifically, the Research Tax Credit (CIR), which allows companies to deduct certain investments in favor of innovation from their taxes, is also being reduced. This credit,one of the largest tax niches in France,amounted to €7.2 billion in 2022. The cuts are particularly concerning for startups, especially those in the Deeptech sector, which rely on these funds to support their progress ([1]).
these budgetary changes will impact the financial support available to startups and innovative businesses in France, potentially slowing down the pace of innovation and growth in the sector.
Interview: Impact of France’s Budget Cuts on Startups and Innovation
Table of Contents
Editor:
According to the recent article, France’s budget for supporting startups and innovation will see a significant reduction in 2025. Can you elaborate on the implications of this cut for the startup ecosystem in France?
Guest:
The France 2030 plan, a €54 billion multi-year initiative launched in 2021 to support innovation and include financial support for startups and larger businesses, will see its funding slashed from €7.3 billion in 2024 to €5.2 billion in 2025 [[[1]]. This reduction comes amidst broader budgetary adjustments in France, where the government is planning to cut public spending by €32 billion and increase taxes by €21 billion in 2025, marking the largest spending reduction effort in the last 25 years [[[2]].The 2025 budget aims to plug a significant hole in public finances with €60 billion worth of tax hikes and spending cuts [[[3]].
Editor:
How will these budgetary changes specifically affect the Research Tax Credit (CIR)?
Guest:
The Research Tax Credit (CIR), which allows companies to deduct certain investments in favor of innovation from their taxes, is also being reduced. This credit, one of the largest tax niches in France, amounted to €7.2 billion in 2022. The cuts are notably concerning for startups,especially those in the Deeptech sector,which rely on these funds to support their progress [[[1]].
Editor:
What are the potential long-term effects of these budget cuts on innovation and growth in the French startup ecosystem?
Guest:
These budgetary changes will impact the financial support available to startups and innovative businesses in France, possibly slowing down the pace of innovation and growth in the sector. Startups, particularly those in the Deeptech sector, depend heavily on government support to fund their research and growth activities. Reducing this support could hinder their ability to innovate and scale, thereby affecting the overall competitiveness of the French tech industry [[[1]].
Editor:
Thank you for your insights. How do you think the startup community in France is likely to respond to these changes?
Guest:
The startup community in France is likely to face challenges due to these budget cuts. However, it is also known for its resilience and adaptability. Startups may seek choice funding sources, such as private investment and international partnerships, to mitigate the impact of reduced government support. Additionally, there may be increased pressure on the government to reconsider its budgetary policies to support the growth of innovative businesses [[[1]].
Conclusion:
The upcoming budget cuts in France’s support for startups and innovation in 2025 are poised to have significant impacts on the startup ecosystem. The reduction in funding for the france 2030 plan and the Research Tax Credit (CIR) could slow down innovation and growth, particularly for startups in the Deeptech sector. The community will need to adapt and seek alternative funding sources while also advocating for continued government support.
