Blocking Frexit Is Key for French Executives Backing Macron
(Bloomberg) -- French executives began rallying behind Emmanuel Macron, saying the former investment banker will be a more business-friendly president than Marine Le Pen by preserving the country’s place in the European Union and the euro currency bloc.
Macron’s victory in Sunday’s first round of voting lifted stocks, the euro and French bonds as investors bet he’ll beat Le Pen, who leads the far-right National Front party, in a runoff on May 7. The CAC 40 index jumped the most since August 2015, led by building-materials supplier Cie. de Saint-Gobain SA, construction company Vinci SA and lender Societe Generale SA.
The election sets up a stark choice between the pro-free trade, pro-EU views of Macron, an independent and former economy minister, and the anti-euro, anti-immigrant Le Pen. Many executives say they can’t support Le Pen because of her pledge to hold a referendum on France’s membership in the EU and seek an exit from the euro.
“Macron’s pro-European stance is good because in this extremely difficult world, France isn’t big enough to withstand all the macroeconomic and geopolitical events that prevail,” said Jean-Louis Chaussade, chief executive officer of French water and waste company Suez. “I’m totally against an isolationist vision, the closure of borders, tariffs all around.”
Macron also proposes reducing the corporate tax rate to the European average of 25 percent from 33 percent, exempting stock holdings from the wealth tax and easing the social charges that companies face when hiring low-skilled employees. Le Pen has called for a surtax on companies that hire non-French workers, the imposition of import duties and a withdrawal from free-trade pacts, including the EU.
Le Pen’s backers are already trying to turn Macron’s background in business against him, with Florian Philippot, a National Front official, describing the former banker as a “candidate of oligarchs” and banking lobbies. And Le Pen touts support she has received from small businesses and independent entrepreneurs.
Executives from big companies will line up behind Macron, said Pierre Berge, who was the CEO of fashion house Yves Saint Laurent for 40 years. Le Pen’s policies would lead to a devalued currency and a reduced influence for France in the world, said the executive, a long-time supporter of the Socialist Party who backed Macron in this election.
“Large companies are reassured by Macron, they know that he comes from finance and understands the economic problems France is facing,” Berge said in a telephone interview. “But he also sees that one of our country’s biggest problems is the abandonment of small and mid-size companies. I hope he will give them a signal very fast. I hope he will lower the charges, so that small companies can afford to hire people.”
Jean-Luc Petithuguenin, founder and CEO of Paprec, a recycling company based near Paris, sent a letter to his 4,500 employees before the first round to tell them that a French exit from the euro, as proposed by Le Pen, would hurt the company. He said he received insulting messages on social media but that the number of applicants for jobs at Paprec increased five-fold since he sent the letter.
While Macron’s program is generally pro-business, “for CEOs, the issue of the euro and the EU are the key point,” said Petithuguenin. “Macron’s election would confirm that we belong to the euro zone and that we aren’t looking to jump into a void but rather to make a further step towards Europe,” he said. “In the end, this is more essential than his economic program.”
Still, the economic and political dissatisfaction that have increased the popularity of Le Pen and communist-backed Jean-Luc Melenchon, who finished fourth in Sunday’s first round with nearly a fifth of the vote, are unlikely to dissipate soon.
“It’s our last try to reform the country,” said Philippe Salle, CEO of catering provider Elior Group SA. “The right has failed. The left has failed. Now, if the center doesn’t work either, next time the extremes will win.”