They are twice as rich as before the crisis. Between the start of the pandemic in March 2020 and the end of 2021, the fortune of the five richest French people increased by 173 billion euros, according to Oxfam (PDF). This is more than what the health and economic crisis linked to Covid-19 cost in 2021. This massive enrichment also concerns the forty billionaires in France. SOver this period of nineteen months, “the wealth of large French fortunes jumped 86%, a gain of 236 billion euros”, writes Oxfam. To compare, “they had increased by 231 billion euros in ten years, between 2009 and 2019”. A dazzling increase that questions, while the health crisis has at the same time weakened the most precarious.
How to explain this enrichment of a handful of people? Is this French situation exceptional? Franceinfo answers, with supporting graphics, the questions raised by this increase in great fortunes.
Is this increase exceptional?
This is unheard of for Bernard Arnault, the leader of LVMH, world number 1 in luxury with brands like Louis Vuitton and Dior, Françoise Bettencourt-Meyer, majority shareholder of L’Oréal, François Pinault at the head of Kering, whose the brands Gucci or Yves Saint Laurent are part of it, and the brothers Alain and Gérard Wertheimer who share ownership of Chanel. The fortune of these five billionaires, the richest in France, has more than doubled in a year and a half. The undisputed champion is Bernard Arnault, with an increase of almost 100 billion between March 2020 and October 2021.
“You have to keep in mind that March 2020 is the low point. This is when the stock market fell a lot at the start of the Covid epidemic, and therefore the comparison with March 2020 makes the spreads particularly impressive”, specifies Catherine Lubochinsky, economist at the University of Paris 2 and specialist in finance, with franceinfo.
The ranking of Challenges, which takes stock in September of each year of the great French fortunes, allows us to observe the evolution over ten years. This ranking is slightly different since it is calculated by family. These five billionaires are present, but the Wertheimer brothers are counted together, which brings the Hermès family into the top 5.
The observation remains the same as that of Oxfam: the increase in 2021 is the largest ever observed. Their cumulative wealth had already been rising almost permanently for ten years and this phenomenon had already accelerated since 2016. Over the past ten years, the fortune of the five richest families in France has thus been multiplied by 6.5.
How did they get rich?
“Their fortune is mainly made up of stocks. The value of these stocks has increased”, explains to franceinfo Pierre-Noël Giraud, economist specializing in inequalities. If the world stock markets fell heavily in February and March 2020, they quickly started to rise again. In France, the CAC40 returned to its pre-crisis level in March 2021 and even reached a new all-time high in early January 2022.
In Europe, the ECB has created an emergency purchase program in the face of the pandemic. In all, 1,850 billion euros were injected by the ECB to buy debt securities from banks, private or public, in a logic of “whatever the cost” financial. This money was not directly used to buy stocks, but to reassure investors and lower interest rates, which ultimately benefited stock markets and drove up stock prices. Similar programs have already existed since 2007, but the amount spent during the health crisis is disproportionate.
“The goal of the Central Bank, when it conducts its purchasing policy, is not to enrich the richest, explains Pierre-Noël Giraud. It does so to avoid a financial crisis which would affect the real economy. The enrichment of large financial fortunes is a mechanical consequence known from the beginning. Quentin Parrinello, advocacy manager at Oxfam France, points out that “the enrichment of the ultra-rich during the crisis is not due to their good decisions, but to public intervention”.
Is there a French exception?
Programs similar to that of the ECB have been implemented around the world and the rapid rebound of financial markets has therefore been observed on a global scale. Many stock markets have seen record highs in recent months, according to Capital.
“The rise of large fortunes is a global phenomenon, but French fortunes have particularly increased. Bernard Arnault is the second richest man in the world since the start of the crisis, behind Elon Musk”, founder of Tesla and Space X, specifies Quentin Parrinello. In Asia, the palm of enrichment goes to the Indian industrialist Gautam Adani, specializing in the production of fossil energy, whose fortune was multiplied by eight during the health crisis.
The great French fortunes benefit from the good health of the luxury sector. “As the rich get richer globally despite the crisis, they continue to consume luxury”, explains Catherine Lubochinsky. For example, Bernard Arnault’s LVMH group saw its turnover drop in 2020 due to strict confinements all over the world. But the rebound was not long in coming since turnover in 2021 exceeded that of 2019 by almost 20%, before the Covid-19 epidemic.
It is above all at the stock market level that the comparison with pre-crisis levels is most impressive. Between January 2020 and January 2022, LVMH’s rise in the CAC40 is more than 70%. It took advantage of the overall increase in financial markets and the fall of other sectors more weakened by the Covid-19 crisis, such as tourism, to become more attractive to investors.
Are French billionaires being called upon to repay the “covid debt”?
For Oxfam, the equation is simple: “Since it is the public intervention of the ECB that has helped these ultra-rich to increase their fortune, it would be normal for them to contribute to repay the covid debt.” The nearly 2,000 billion euros spent by the ECB are not public money from taxes or State loans, but from monetary creation, which can notably create inflation. The latter is precisely on the rise, but the increase in energy prices, linked to the economic recovery, seems to be more responsible for this than the money injected into the markets by the ECB.
To make the wealthiest contribute, Catherine Lubochinsky believes that it is difficult to tax the increase in value of a share, because it is a potential capital gain. “The greatest valuation of a stock only directly creates money for its owner when it is sold., explains the economist. It’s like when the value of your home increases: if you don’t sell it, this increase doesn’t actually make you richer. In addition, this increase in value is temporary and may very well start falling again afterwards. But at the time of the sale, there is the possibility of taxation. This taxation of capital income was precisely reduced by Emmanuel Macron in 2018, via the “flat tax”.
“There could also be a real policy of taxation on very high incomes, because today they largely manage to escape tax and it is really a problem”, adds the economist. According to Quentin Parrinello, of Oxfam, however, this is not France’s preferred route: “The government is thinking about solutions to pay the bill for the crisis and for the moment the billionaires do not seem to have to be involved.”