There has long been speculation that Francois Hollande's ‘soak the rich’ campaign including his 75% tax for millionaires would push money out of the country as wealthy people scrambled to protect their fortunes. And it's not just Gerard Depardieu who has been recently seen at a Siberian branch of IKEA finding accessories for his new place.
Now, new data from the Banque de France shows that in autumn last year, £43.3bn was moved out of the country – roughly during the period when Hollande’s string of tax rises was announced.
An important gauge of the French economy’s money supply, known as ‘six-month real M1’, has been contracting at an accelerating rate since Hollande was elected president back in May. It is now at its lowest (which is bad) since the height of the European debt crisis back in 2008.
It sounds bad – and since youth unemployment is up at 27% and the country can’t seem to pull itself out of recession.
The problem for the wider economy in France is that fiscal tightening (to meet EU agreement requirements) coupled with an increase of taxes could stifle the country's fragile recovery in 2013.
Companies are worried about it, too. In October, a large group of significant French employers released a State of Emergency alert about the president’s policies. The French equivalent of the CBi, MEDEF, warned that the business community was ‘in revolt’ across France, and that ‘large foreign investors are shunning France altogether’.
Clearly time to start in war in Mali to distract attention from the dismal home front.
*le fric = dosh