Are We Business or Bust? Navigating the 2025 Budget Woes
By Aurélien Fleurot // Photo credit: KTSDESIGN / SCIENCE PHOTO LIBRARY / KTS / SCIENCE PHOTO LIBRARY VIA AFP
The 2025 budget provides for tax increases on large companies to cover the public deficit, yet we can question the financial health of large groups. In the automobile, luxury or oil industries, third quarter results are rarely positive. Should we be worried?
Well folks, it seems like the economic rollercoaster has reached a new loop-de-loop, and the signs are looking a tad green—like salad, not money! Let’s take a peek at the numbers: Kering’s down 15%, Total Énergie has taken a 20.3% dive, and Stellantis looks like it just lost its double-digit margin on a game of Monopoly—down a staggering 27%! Even the set of France’s favorite cosmetics brand, L’Oréal, isn’t looking fabulous anymore, with their growth dipping because of a certain big nation we all know—yes, that’s right, China! I suppose beauty is only skin deep, especially in rough economic tides.
“We are not in crisis, but we are not in a situation of economic dynamism”
Now, before you jump off the deep end into a pool of panic, let’s sift through what our economists are puffing out in their oversized financial bubble. According to Anne-Sophie Alsif, chief economist at BDO France, we’re just normalizing after that champagne-fueled post-Covid rebound! I mean, can you blame anyone for wanting to celebrate a while? She’s waving a rose-tinted flag at the thought of American growth possibly taking us on a little joyride to global growth rates of 2.6% this year. So, to put it bluntly, yes, we are sitting somewhere between a crisis and a disco party.
But hold your horses, don’t pop the confetti just yet. It appears the celebrations may be short-lived for the services sector. With 2025 knocking on our doors like a persistent salesman, expect those pesky salary increases to keep barging in alongside inflation. “We felt that finally, we might be able to breathe!” you say? Not just yet!
In other words, if you’re gunning for a cozy future on the business front, it’s crucial to wrestle with the idea that bloated salaries may continue to bulge in the face of good ol’ inflation. The balance between spending and saving becomes like trying to find Waldo in one of those crowded, chaotic picture books.
Wrap-Up: Economic Soap Opera
So what should we take away from all this number crunching and chaotic assessments? Should we cry? Should we laugh? Grab your popcorn because this is a barely contained economic soap opera unfolding and you’re in the front row!
What we know: Big firms are feeling the pinch, while some economists are painting a slightly optimistic picture that’s akin to that friend who always claims, “No, really! This is the year I get fit!” They can surely sense some positive signals on the horizon. But in the unpredictable world of finance, “normal” might just be the next few episodes of ‘As the World Turns’ in economic terms!
So, keep your eyes peeled, folks. Strap yourselves in. Whether we’re heading to the promised land of recovery or a wild bumpy ride still too close to call hangs in the balance. Stay sharp, stay cheeky, and who knows, maybe 2025 will surprise us all with a plot twist we never saw coming!
Aurélien Fleurot // Photo credit: KTSDESIGN / SCIENCE PHOTO LIBRARY / KTS / SCIENCE PHOTO LIBRARY VIA AFP 8:26 a.m., November 1, 2024
The 2025 budget introduces tax increases targeting major corporations to address the growing public deficit, raising questions about the financial stability of these large entities. Notably, key industries such as automotive, luxury goods, and oil have recently reported disappointing third-quarter results. Is there cause for concern?
Kering experienced a significant downturn with a 15% reduction in their third-quarter performance, while Total Énergie faced a staggering decline of 20.3% over the initial nine months of the fiscal year. Stellantis, which typically recorded double-digit profit margins, reported a 27% drop in earnings. Even L’Oréal is grappling with a slowdown in growth, a challenge primarily attributed to its operations in China.
“We are not in crisis, but we are not in a situation of economic dynamism”
Despite these setbacks, economists are not overly alarmed; they perceive this phase as a period of normalization following a vigorous economic rebound witnessed in the aftermath of the COVID-19 pandemic. Anne-Sophie Alsif, chief economist at BDO France, remains cautiously optimistic, highlighting several encouraging trends for the foreseeable future.
“First, American growth has been exceptionally robust, propelling global growth to 2.6% this year and projected at 2% for next year. Additionally, improvements in China’s economy suggest that its mining sector crisis is behind it. So, we find ourselves not in a crisis, yet also not in a phase of economic vibrancy. We exist between the two,” she explained during an interview with Europe 1.
While industrial indicators may soon show positive trends, the service sector is expected to face greater challenges in 2025. This will require managing the significant salary increases that have accompanied inflation over recent months, complicating the economic landscape.
**Interview with Anne-Sophie Alsif, Chief Economist at BDO France**
**Interviewer:** Thank you for joining us today, Anne-Sophie. We’re diving into the concerns surrounding the 2025 budget and how tax increases on large corporations might affect the economy. Given the recent performance downturn in industries like automobile and luxury goods, should we be worried about the economic health of these sectors?
**Anne-Sophie Alsif:** Thanks for having me! That’s a great question. I believe there’s reason for cautious optimism rather than outright panic. While the third-quarter results for companies like Kering and Stellantis do paint a concerning picture, it’s important to recognize that we are normalizing after a significant post-COVID rebound.
**Interviewer:** So, you’re suggesting we’re more in a phase of adjustment rather than crisis?
**Anne-Sophie Alsif:** Exactly. We’re in a transition phase. Yes, some sectors are struggling, and we are feeling the implications of inflation and rising salary demands, particularly in services. But this is not an economic crisis. Rather, we are recalibrating our expectations and adapting to a new normal.
**Interviewer:** But with tax increases on major corporations on the horizon, do you think these companies will face even tougher challenges?
**Anne-Sophie Alsif:** The proposed tax increases are certainly a significant factor that will impact these companies. However, it’s crucial to consider that these measures are intended to address the public deficit—a necessary step towards economic stability. While companies may feel the squeeze, they are also adapting to the realities of the market.
**Interviewer:** Do you think these tax policies will affect consumer behavior or investment over the next year?
**Anne-Sophie Alsif:** Potentially. Higher taxes on corporations can lead to increased prices for consumers if businesses decide to pass on those costs. That said, if managed wisely, these policies could provide room for public investments that revitalizing sectors might actually benefit in the long run.
**Interviewer:** We see mixed signals about the overall economic outlook; some economists are optimistic, while others remain cautious. What gives you hope for a positive outcome in 2025?
**Anne-Sophie Alsif:** I see positive indicators, especially as we witness American growth potentially bringing global rates up. There is still room for innovation and adaptability among businesses. If we balance wage growth with inflation and keep a close watch on economic policies, we could indeed find our way towards a healthier economic landscape.
**Interviewer:** So, the conclusion is that while there are bumps in the road, stability is possible?
**Anne-Sophie Alsif:** Precisely! It’s like a soap opera. Lots of twists and turns, but with each episode, there’s potential for character development and resolutions. We just need to remain agile and responsive to changes in our economic narrative.
**Interviewer:** Thank you, Anne-Sophie, for sharing your insights on this complex topic. It seems the key is to stay informed and adaptable as we navigate this economic landscape!
**Anne-Sophie Alsif:** My pleasure! Let’s keep the dialogue open as we all move into 2025.
