The fall of the Barnier government has triggered mixed reactions in the tech sector, with startups poised to gain from the rejection of the 2025 budget cuts. However, ongoing political instability raises concerns about fundraising and representation, as foreign investors may hesitate. Key legislative processes, including essential regulations on cloud services and cybersecurity, face potential delays, jeopardizing critical initiatives. The absence of a stable government also diminishes France’s voice in significant international discussions.
Impact of the Barnier Government’s Fall on the Tech Sector
The recent dissolution of the Barnier government has sparked a wave of reactions within the tech community. While some may celebrate this political shift, the consequences for the digital landscape are likely to be mixed. Startups are expected to benefit from the rejection of the 2025 budget, particularly since the initial finance bill aimed to eliminate the innovation tax credit (CII), although subsequent amendments have softened the blow.
Moreover, the social security financing bill (PLFSS) was considering the removal of social contribution exemptions for young innovative enterprises. Additionally, the Barnier administration had made significant cuts to key investment programs, including a reduction in the “Investing for France 2030” initiative’s payment credits from 5.7 billion euros to 4.3 billion euros for 2025. The telecom sector, however, may find relief as the renewal of the 2024 budget is set to lift the previous restrictions that halved the funding for the France Very High Speed plan.
Challenges Ahead for Fundraising and Representation
Despite these potential advantages, the current institutional instability plaguing France casts a shadow of uncertainty over the business environment. While the CAC 40 saw a slight uptick on December 5, reflecting the anticipated government fall, there are concerns about how this instability might hinder access to funding. The latest EY barometer indicates that French Tech had recently shown signs of recovery, with a 5% increase in fundraising during the first quarter, but ongoing political crises could dampen foreign investors’ enthusiasm, who typically seek stable environments.
Furthermore, the tech sector may face challenges in representation with new government officials. Michel Barnier was perceived as relatively supportive of tech initiatives, while Marc Ferracci, the newly appointed Minister of Industry, and Clara Chappaz, Secretary of State for Artificial Intelligence and Digital, had previously demonstrated a proactive stance in the sector.
On the international stage, the absence of a functioning government leaves France without a voice in critical discussions, such as the upcoming Telecommunications Council of Ministers meeting, which Marc Ferracci will miss due to the government’s resignation.
As noted by Contexte, the government’s dissolution may lead to delays in several key tech legislative processes. Upcoming discussions in the National Assembly scheduled for January 20 include a “simplification” bill aimed at easing the establishment of e-commerce warehouses and mobile networks. Furthermore, the “resilience” bill, which is set for examination in mid-February 2025, is crucial for implementing the European NIS 2 directive on cybersecurity, impacting over 10,000 critical organizations.
The fall of the Barnier administration also threatens to postpone essential regulations regarding the digital space, particularly concerning cloud services and sensitive data, which were anticipated in November. This SREN law, aimed at regulating exit fees and enhancing cloud platform interoperability, is now at risk of further delays. Lastly, the anticipated publication of a second charter focused on minimizing the environmental impact of e-commerce is also likely to be postponed, having initially been expected to be signed on December 9.