French Prime Minister before the Cologne Chamber of Commerce and Industry (IHK)
11 January 2019

Address before the Cologne Chamber of Commerce and Industry (IHK)

The Prime Minister travelled to North Rhine-Westphalia (Germany) to attend the annual dinner of the Cologne Chamber of Commerce and Industry. This was an opportunity for him to explain to German business leaders the reforms being rolled out by the French Government and to present the upcoming changes.

Check against delivery

Sehr geehrter Ministerpräsident,

sehr geehrte Bürgermeisterin,

sehr geehrte Geschäftsführerinnen und Geschäftsführer, meine sehr geehrten Damen und Herren,

“Man ist nicht ernst, wenn man siebzehn Jahre alt ist.” Vielleicht kennen Sie diesen berühmten Vers des französischen Dichters Arthur Rimbaud, der ursprünglich aus der Region Ardennes stammt. Der Zufall – ein glücklicher Zufall – wollte, dass ich diese mehr oder weniger sorglose Zeit in Bonn erlebte. Die Stadt, die von 1986 (neunzehnhundertsechsundachtzig) bis 1988 (neunzehnhundert-achtundachtzig) mein Zuhause war. Die Stadt, in der ich mein Abitur absolvierte. Erfolgreich, da ich mit siebzehn Jahren doch schon recht ernst war. Die Stadt, dank der ich die deutsche Kultur kennenlernen durfte. Dank der ich die deutsche Sprache erlernte und Einblicke erlangte in die deutsche Literatur und Architektur, für die der Kölner Dom ein atemberaubendes Beispiel ist. Die Stadt, dank der ich auf eine äußerst konkrete Art und Weise erfahren durfte, was es bedeutet, Europäer zu sein. Gewiss, Franzose. Aus der Normandie, selbstverständlich. Aber auch, was es bedeutet, Europäer zu sein. Man könnte sagen „In Bonn wurde ich zum Europäer“. Ich freue mich, dreißig Jahre später in das Friedrich-Ebert-Gymnasium zurückzukehren. Einen Ort, aber auch eine Atmosphäre wiederzuerkennen. Bekannte Gesichter zu sehen. Dabei denke ich an den ehemaligen Schulleiter des Friedrich-Ebert-Gymnasiums, an frühere Lehrer und insbesondere an meine damalige Deutschlehrerin, der ich hoffentlich heute Abend zur Ehre gereiche. Außerdem hatte ich das Vergnügen, mich mit meinen brillanten Nachfolgerinnen und Nachfolgern auszutauschen. Dieses jährliche Abendessen, zu dem Sie mich freundlicherweise eingeladen haben, ist der wohl bestmögliche Abschluss eines intensiven und bewegenden Tages. Ein Tag, der für mich im Zeichen der Dankbarkeit, für das, was Deutschland mir, dem jungen Gymnasiasten aus Frankreich, gegeben hat, und im Zeichen der Freundschaft steht.

In einer Stadt römischen Ursprungs – denn soweit ich weiß verdankt Köln seine Entstehung dem berühmten Germanicus – berichte ich Ihnen wohl kaum etwas Neues, wenn ich Ihnen erzähle, dass das Wort « Januar » - oder zumindest das französische Wort „janvier“ - vom römischen Gott « Janus » abgeleitet ist. Der Gott der Anfänge, der Enden und der Entscheidungen. Entscheidungen haben wir in Frankreich 2018 einige getroffen. Tiefgreifende Entscheidungen. Weittragende Entscheidungen.

And to talk to you about these decisions, I'm going to switch into French. For I am well aware, Ladies and Gentlemen, that beginning my speech in German was not only a challenge for me, but it was also hard-going for you.

The choices I have mentioned – which have been made in France, were announced during the President of the Republic's campaign in 2017 and have since been put into practice – are the choices of competitiveness and attractiveness.

That the French economy needs to be competitive goes without saying, and it would be absurd, pointless and, almost insulting, frankly, to explain to you the potential merits of trying to enhance an economy's competitiveness.

But our sense, and the President of the Republic's view, is that part of the solution – only part of it, mind – to France's struggles involves increasing, restoring the competitiveness of the French economy.

And to enhance our competitiveness, we have decided to take steps in at least three key areas.

The first, and this is essential – it is essential in France, essential in Germany, it is essential for the whole of Europe – is intelligence. The essential source of our economies' competitiveness – and this is true for Germany and France alike – is our collective intelligence; this is already considerable, that much is clear. This intelligence calls for ongoing efforts across the training spectrum, from education to apprenticeship and from higher education to vocational training. This is why we have chosen in France, in a coherent, swift, yet steady way, to transform the education system, by making schooling compulsory for children from 3 years of age, from next year; by reforming our high school graduation certificate, the baccalauréat – which was and still is an important institution for French citizens, but which needed to be able to change to be more in tune with the needs of our time; by overhauling access to university so that French high school students are given better guidance in making their higher education choices and so that we do something about the situation, which has been the case in France to date, where there is a high failure rate at the start of the university study cycle. On the choice of apprenticeship: during my first official visit to Germany in 2017, after meeting with Chancellor Merkel, I chose to visit an institution where the principles prevailing in Germany in terms of apprenticeship were put into practice; and which are, evidently, incredibly inspiring examples for France. This is why we have set in motion such a radical reform of our apprenticeship system, to enable the economic sectors, businesses and business-driven organisations to define their own needs and implement the procedures, selections and investments for developing this apprenticeship, which is absolutely necessary if we are to enhance the competitiveness of the French economy. Such efforts regarding intelligence and training never have much to show over the short term – and it is not impossible that they do not even have an effect over the short term. But they are the driver of our long-term competitiveness, they are the driver of our long-term wealth, and I would even say that they are the driver of our way of life over the long term.

The second area in which we have chosen to invest heavily or, to be more exact, to act extensively in a bid to develop the competitiveness of the French economy, is basically everything to do with the economic environment. And this involves an overhaul of the tax system, with immediate measures as well as pledges, foreseeable over the years to come. Take, for example, the significant cut in the corporate tax rate which, over the next five years, is set to fall from 33.3% (which was higher than the European average by a fairly wide margin) to 25% by 2022 for all French companies. Over and above these technicalities related to tax, to lowering the tax burden on companies, we have also sought both to simplify and reduce capital taxes, again with a view to encouraging both French and German entrepreneurs to invest in our country, where they will be able to find attractive tax conditions, a skilled labour force and opportunities to produce under advantageous conditions, conducive to accessing a dynamic market.

The third area, and this is a key area – an area where a French politician would be well advised to tread carefully when he has the honour of being able to broach it in Germany – is that of maintaining sound public finances. A defining characteristic of France's public finances over the past decade is that they have seen a sharp rise in government debt. The gap between Germany's and France's government debt, over the past decade, has probably grown more than it has ever grown, such that it has never been so wide between our two countries before. This government debt, which has grown over the past decade, it has grown even though, over the same period, French government spending has risen and the rate of tax and social security contributions has also gone up. What that means is that we have not been able to do what Germany has – which is to reform our system so as to retain what is important to us, improve the aspects where problems can be identified and be able to develop our competitiveness. What we therefore need to keep doing today, amid circumstances that are not always straightforward, is to deliver this reform and manage to maintain sound public finances. This is a difficult, albeit essential exercise, and, together with the President of the Republic, and the whole of Government, we have already been progressing in this respect, such that, by the end of 2017, we had fallen below the famous 3% ceiling and returned to a situation of acceptable deficit; and, in 2018, we reduced government deficit and endeavoured to rein in this French habit of increasing spending, increasing tax and social security contributions and increasing debt.

It is always tricky, 19 months after a Government has been nominated, to try to reach a definitive verdict or draw conclusions on what has been undertaken. But I can see that French growth is doing quite well, is well placed with respect to the European average, when, over the past decade, it has often been confined to a position far below the European average.

I can see that deficits are going down, probably not quick enough it must be said, but they are going down. I can see that foreign investments have picked up significantly once again, to the extent that, in 2018, it was in France that foreign industrial investments rose the fastest and were the highest in Europe.

I can see that unemployment in France, though still high, is also going down and that – and this is perhaps, at the end of the day, the most telling indicator for me – since 2018 we are once again experiencing net creation of industrial jobs, when for the past ten-plus years French industry had been cutting jobs. There are more factories opening than closing in France today.

Going by these indicators, I would say that we are on the right track. Are we progressing fast enough? Probably not; are these measures cause for enthusiasm? Not entirely.

But Ladies and Gentlemen, I remember the talks that I had with Ms MERKEL and with President STEINMEIER in September 2017. When I met with them, they basically both told me the same thing, they said: if you want to reform, you have to do it early, you have to do it quickly, and you have to make it far-reaching. They went on to tell me that it wasn't the moment of setting a reform in motion that was difficult, but that it was 18 months later that it was difficult. And they weren't mistaken.

It will not have escaped your attention, if you follow French news, that a sense of anger has risen to the fore these past two months. And I should like to say a few words about this, this evening, as I know that you are all interested in what's happening in France. This anger, which is being vented through "the yellow vests movement" in France, is intense. It is all the more intense since it has been simmering, silently, for a long time.

I do not believe, Ladies and Gentlemen, that this anger is being felt solely in France. I do not deny the national part played in this anger, I will come back to this, but I do believe that part of this anger is an after-effect of the great financial crisis that shook our Western economies ten years ago, in 2008. Across many European countries, living standards have stagnated or fallen over the past ten years. Spending power over the ten years since 2008 has fallen in France. The future for our citizens is looking increasingly less bright and, in the yellow vests movement, I have seen considerations concerning spending power, I have seen women and men who told us: we can no longer live respectably off the fruit of our labour – and the future for our children is no longer as bright as it was for us. This French truth is not solely French, it is not unrelated to the political upheavals in Italy. It is not unrelated to the voicing of a certain number of political demands or political choices that have been made – including in the US. It is not completely unrelated to Brexit – it is expressed according to the forms of each nation's spirit, of course, but I think it is more general, that it is not unique to France.

Now, of course I assume my share of responsibility in the venting of this anger. It was Konrad ADENAUER, I think, who said, with that humility demonstrated by great statesmen: "it is not essential to always see things the same way, no one can prevent us from becoming smarter." And he was right.

This anger being vented in France, it expresses a need in terms of spending power that would seem to have grown, it also expresses a need for acknowledgement. In our Western democracies – in France this is clear but it is probably the case in other places besides France – there is a section of the population that no longer feels like they are seen or recognised or heard, perhaps even represented – the impression of no longer having a say. And it is also this anger that is being vented and that must obviously be heard.

This is why we have chosen to respond in three ways.

Firstly, by addressing these needs regarding spending power, expressed by a large swathe of the French population, such that work pays more without undermining the competitiveness of companies. We have therefore fast-tracked the roll-out of the measures we had planned to bolster the spending power of low-wage earners. Instead of waiting until the end of the presidential five-year term, instead of phasing it in, we have speeded things up. We have also made overtime exempt from tax and social security contributions, which is good for spending power, good for businesses and obviously good for the competitiveness of our economy. We have made sure that work pays more – it is clear that such decisions have an impact on France's deficit in 2019, insofar as they are going to lead to a reduction in revenue. But our desire is still to contain the growth in government spending, and we aren't therefore going to abandon our efforts to make savings, to streamline, for a simple reason: it cannot be left to our children to balance our books.

The second way of responding involves the method. If the anger being expressed is truly calling for a sense of acknowledgement, then we have decided, with the President of the Republic, to organise a great national debate. Of course, in democracies, we are almost always debating, at each election manifestos and leading figures are set one against the other and public strategies are compared. But let us jointly admit that debates that take place during elections are not always the right time and do not always provide the right means for talking about public policy, how our citizens might be better represented, how democracy might be better practised at local or national level, how taxation might be completely reviewed, how we might support our citizens in adapting to the energy transition, when they don't necessarily have either the tools or the means for doing so. A great debate, in short, that will bear on four main themes and give each French citizen the chance to speak out, say what is on his or her mind, what he or she fears, what he or she wants, what he or she imagines for him or herself and for his or her children.

Last but not least, the third response is the firm intention to push on with reforms, for the greatest risk would probably be to do nothing. This is why, when the trade union and employers' organisations have moved forward and perhaps concluded in terms of overhauling unemployment insurance, we will pick up where they left off and – where they may not have come to the end of their negotiations, complete them. This is why we wish to continue reforming the French State, we wish to take swift, strong, far-reaching action, so that, in a nutshell, our mentality remains one of movement and that we never become set in our ways, unwilling to move forward.

You will perhaps see, and over the past few months you will have seen, images that you consider shocking, they are, with high levels of violence. And in that respect too, we are obviously determined to uphold order, law, the rules and values of my country.

The year ahead of us will be marked by continuing efforts in the three areas I have just mentioned of the French Government's action, but it will also host a key event that has much to do with the subjects that have been addressed by the speakers who have come before me, the European question: the European elections.

First of all, a word to say that these elections are going to take place against a very specific backdrop. We are familiar with this backdrop, it is part of our lives – we do not always give it a form and sometimes we would prefer to ignore it, but it is there.

What is it? First of all, it is a dangerous world. The world we are living in is a dangerous one, with heavyweight States asserting ambitions of power that it would probably be dangerous not to grasp, not to understand, not to wish to acknowledge head-on, with an instability at Europe's borders that is unmissable, with considerable challenges: the climate challenge, the immigration challenge, glaring inequalities that sometimes develop a mere few hundred kilometres from Europe's borders.

A backdrop also marked by democratic distrust amid a rising populist tide, foreign interference in the workings of democracy, cyber-attacks, fake news. Our long-standing perception of representative democracy is being challenged and, perhaps in some respects, transformed. I have often wondered how Konrad ADENAUER and General DE GAULLE might have governed with continuous news feeds and Twitter. I'm not sure, I'm not sure they would have been fans.

The key issues shaping the upcoming European election are, I think – this is the President of the Republic's thinking – completely unprecedented. The agenda, come May 2019, is not to know whether we want a Europe that is a bit more social-democrat or a bit more conservative, a bit more liberal or a bit more moderate – that's not the challenge facing the European elections. The challenge of the European elections is to know whether we want to develop Europe according to the values which have enabled its construction, the values that were upheld by Konrad ADENAUER and many others, whether we want to call time on this Europe and whether – worse still, perhaps – we want to build a Europe grounded in other values, and which ones.

As you can see, this is not simply an election to decide if we are going – as we would say in France – a little bit more towards the left or towards the right. This is an election to find out if a majority, a strategy, an alliance can come together to defend Europe as it has been built or – to be more exact – the values that have enabled its construction, without being naive about the continuous improvements we can make to the workings and to the system that exists today.

Will we be capable, Ladies and Gentlemen, citizens and States, of doing what is necessary given the security and defence challenges. Our traditional allies are changing tactics – and some of them are sometimes unpredictable. In today's world can we really sit around and accept such unpredictability? Will we measure up in light of the disruptive innovations, the will, the assertion of commercial, technological and industrial power of a certain number of our partners in Asia in particular? Will we manage to jointly defend our commercial and industrial interests? The car of tomorrow – to bring up a sector which is at least of as much interest to Germany as it is to France, and more particularly the electric car – will it run on batteries designed, developed and built in Europe, or on batteries designed, developed and, who knows, produced elsewhere? Will we safeguard the sovereignty of our industrial apparatus? These questions, they call for answers – and I do not think anyone here believes it will be possible to answer them in a satisfactory way solely within a national framework. Will we measure up when it comes to the space race and competition? To touch on a subject of interest both to France and Germany and on which I will tread with care, will we make do with a Europe where, in 30 years' time, we and our children should have to travel in trains that have been built and designed by manufacturers who are not European.

These are all issues that we are going to have to settle over the coming months and years. And the question we must ask ourselves – this is a difficult, intractable, sensitive question – is will we be able to deliver in light of these issues?

So Ladies and Gentlemen, given the high stakes involved, we need to see reality in a clear light and show considerable ambition in our plans for Europe. Ultimately, the more the principle of European construction, the more its foundations are challenged, the more ambitious we need to be for this European Union.

I should like to end by saying that we must also always view it through the special lens of our Franco-German relations. If I accepted your invitation, Mr President, it was because the city of Cologne – as you know – is important to me. It's because the city of Cologne, Madam Mayor, is twinned with Lille and Konrad ADENAUER was from Cologne and General DE GAULLE was from Lille. It's because, just as you said Mr President, the Chamber of Commerce was founded within this quite peculiar, unique context where the history of our two nations has become intertwined as they have opposed each other, complemented each other, enriched each other or even detested each other – but existed together. What better place than Cologne and this Chamber of Commerce to urge us, Ladies and Gentlemen, to strive to match up to the great figures of our past.

That is the challenge, and it depends on us – not only those of us who are in this room, but our people, our businesses, our States, our local authorities – it depends on us being able to deliver in light of these issues, as I have already said.

And to properly end, I should like to conclude with two words that I think are understandable to everyone here, two words which tell us a lot about what links us, two words that every French citizen knows how to share with their friends and which are entirely appropriate for the occasion: bon appétit.

Thank you.