In New York, Macron tried to reassure Wall Street bankers about France’s finances

by Michel Rose and Nupur Anand

NEW YORK/PARIS (Reuters) – In New York last week, President Emmanuel Macron spoke at the United Nations on the state of the world. But his time will also have allowed him to meet with major American investors and address a topic more specific to France: the state of its public finances.

The head of state held a meeting for more than an hour with some of the biggest names on Wall Street, including Goldman Sachs Chairman John Waldron and Blackstone Director Stephen Schwarzman, to address their concerns about the joint strict economic text in France.

During this meeting, set up in one week by the Elysée and held when he arrived in New York on September 24, Emmanuel Macron was questioned in particular about a possible tax increase in France, while there were already rumors on both sides of the Atlantic. , said three sources who were present at the meeting.

“He explained that there is still a slowdown in Europe and that there was a need to consolidate public finances as such. He also explained that what needed to be done was a very targeted and temporary tax increase, according to himself. of the partners reported to Reuters.

This source said that the president had mentioned “ways” and believed that the effort should be basically based on reducing consumption.

A second participant confirmed that Emmanuel Macron “spoke openly about possible tax increases”.

A week later, the Prime Minister, Michel Barnier, formalized in his general policy speech the government’s plan to demand a “concentrated” and “temporary” effort from the richest French and big businesses.

For a third participant in the New York meeting, the fact that the head of state, a former investment banker, was proactive with investors was “rather intelligent”.

The aim, by preparing the ground with opinion leaders in global finance, was to avoid an overreaction of the markets to tax increases, which marks a turning point for Emmanuel Macron, for whom they were taboo until until then

While France’s public deficit threatens to reach 6.1% of gross domestic product (GDP) in 2024, much higher than the goal at the beginning of the year, the fear at the top of the State is an explosion of financial markets.

Foreign investors hold around 50% of France’s total public debt, a much higher rate than in other eurozone countries including Italy, Spain and Germany.

Worrying signs have already appeared on the markets in the last few weeks, as France is now borrowing at higher rates than Spain, which was previously ranked among the countries Hardest “cicada” in the euro zone.

Michel Barnier himself announced on Thursday night on France 2 that his “concern” was a “financial crisis”, as happened in Italy a few years ago, or in England. “

Emmanuel Macron knows well the investors he met in New York, most of whom have participated in the “Choose France” conferences organized by the Elysée over him the past seven years. Many have increased their presence in France, especially since Brexit.

During the exchange, they also questioned the president on artificial intelligence, the European regulatory context, as well as investments in nuclear energy, according to two sources.

(Reporting by Michel Rose in Paris and Nupur Anand in New York; French version by Blandine Hénault, editing by Sophie Louet)