Opinion piece published in Les Echos on 12 March 2025
Instead of chasing unicorns, which are very rare, France should support profitable SMEs that invest massively. The tax framework must be adapted to their growth, argues Eric Bismuth, chairman of Montefiore Investment.
At a time when the government is trying to contain the public deficit, it seems more important than ever to promote policies that encourage growth if our social model is to be sustainable. This will not come from a further boost in consumption, which would continue to favour imports and widen our imbalances, but from the development of our businesses.
While it is understandable that the focus should be on large companies, given their weight and their role in France’s international influence, our SMEs and ETIs are the real economic lifeblood of the country, accounting for 40% of investment, more than 50% of added value and 75% of jobs. Need we remind you that they account for over 100% of net job creation in France?
Overtaxation of labour
If we compare the French business fabric with that of other European countries, our SMEs and VSEs remain less profitable than those of our neighbours. This gap is mainly due to the taxes and levies that affect salaries, especially for skilled jobs. A recent study by Rexecode confirms that France stands out for the increasing over-taxation of labour for salaries above 1.4 SMIC, widening the competitiveness gap and contributing to the relocation of high value-added jobs.
We must address this issue and accept that, after decades of favouring consumers and pensioners, the economic strategy should continue to shift the balance towards workers and producers.
What’s more, if we have fewer small and medium-sized enterprises, it’s because we have fewer SMEs capable of sustainable growth of at least 10% a year. There are around 15,000 of them in France, less than 8% of companies with more than 10 employees. In other European countries, the figure is 11%, and everywhere these companies are responsible for around 50% of gross job creation.
Profitability, a prerequisite for growth
Contrary to popular belief, these are not start-ups, but companies that are between five and twenty years old. Above all, they invest much more. In a recent study, two French researchers, Cyrine Ben-Hafaïedh and Anaïs Hamelin, confirmed that in the vast majority of cases, profitability is a prerequisite for strong, sustainable growth, while growth without profitability very rarely leads to a profitable model.
The unicorn-hunting model should therefore be reserved for the rare companies that can create virtual monopolies in businesses with very high strategic barriers. In all other situations, the model of the profitable SME that invests massively should be favoured.
We must therefore encourage not only the financing of SMEs, but also their transfer at a time when many managers are about to retire, with the risk that the most successful will join foreign groups. If French private equity is to make its full contribution, an attractive tax framework for employee share ownership and the involvement of risk-taking managers in value creation are essential.
While it is essential to keep a tight rein on public spending, this will not be possible without a sustained recovery in the profitable growth of our businesses, SMEs and ETIs. Jobs cannot be created without high profitability, which is a sine qua non for sustained investment. And you can’t invest without a sustainable social and fiscal framework. This is also the price of preserving the French social model.
by Eric Bismuth
CEO
