Political instability reigns in France. The Barnier government’s motion of censure affects the entire country, and this is also the case for the French Tech ecosystem: certain aid dedicated to startups should unfortunately be abandoned.
No more innovation tax credit
This December 4, Parliament voted for a motion of censure in order to overthrow the government of Michel Barnier, appointed Prime Minister by Emmanuel Macron on September 5. An initiative which forces all ministers and secretaries of state to resign and above all, which plunges the country into an even more pronounced climate of political instability.
As a result, the 2025 budget supported by the government will not be carried out. In mid-December, the President of the Republic is expected to present a special bill, which will extend the 2024 budget. This situation is as beneficial as it is harmful for French Tech.
The 2025 finance law provided for the extension of the innovation tax credit (CII) until 2027. It allows SMEs with fewer than 250 employees to deduct 30% of the costs linked to the development of new products and prototypes from their income tax. companies, and concerns 45% of French startups, according to the France Digitale association. Although its number of beneficiaries would have fallen by half, the fall of the Barnier government should simply not allow it to be renewed, because it expires on December 31, 2024.
On the other hand, the renewal of the 2024 budget should remove the financial restrictions which targeted half of the credits planned for the France Très Haut Débit plan, which consists of covering the entire territory before 2030. Enough to reassure operators in France.
The France 2030 plan also affected
But the sighs of relief do not affect all sectors. The France 2030 plan, whose objective is to position France as a leader in technologies and industries of the future thanks to a budget of 54 billion euros, should be affected.
While startups that have already obtained their funding approval can breathe easy, those waiting for validation must be patient, the project being on hold due to the budget freeze. This situation is particularly harmful for already struggling industrial startups and deeptech companies, which rely heavily on these investments to support their costly research and development programs.
More generally, the context of political uncertainty casts doubt on various industries. A dynamic which is not very favorable to the business world, with managers favoring caution. This should not help the startup ecosystem, already weakened by a major financing crisis.
- The government’s motion of censure will also affect the French Tech ecosystem.
- Certain aid dedicated to startups will be suspended.
- The climate as a whole is unfavorable for the growth of startups, with managers being very cautious with their spending.
