The implications of government censorship for French Tech

© FlickR/European Parliament

Political instability reigns in France. The motion of censure of the Barnier government affects the entire country, and this is also the case for the French Tech ecosystem: some aid dedicated to startups should unfortunately be abandoned.

No more innovation tax credit

On December 4, Parliament voted a motion of censure to overthrow the government of Michel Barnier, appointed Prime Minister by Emmanuel Macron on September 5. An initiative that forces all the ministers and secretaries of state to resign and, above all, plunges the country into an even more pronounced climate of political instability.

As a result, the 2025 budget presented 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 Act 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 related to the development of new products and prototypes from their corporate tax, and concerns 45% of French startups, according to the France Digitale association. Although its number of beneficiaries is said to 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 that 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.

© Shutterstock

The plan France 2030 also affected

But the sighs of relief are not reaching all sectors. The France 2030 plan, whose objective is to position France as a leader in the technologies and industries of the future thanks to an envelope of 54 billion euros, should be affected.

While startups that have already obtained their funding approval can breathe, those waiting for validation must be patient, the project being on hold due to the budget freeze. This situation is particularly damaging for industrial startups, already in difficulty, 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 that is not very favourable to the business world, with leaders favouring caution. This is unlikely to help the startup ecosystem, which has already been weakened by a major funding crisis.

• The government's motion of censure will also affect the French Tech ecosystem.
• Some aid dedicated to startups will be suspended.
• The overall climate is not very favorable to the growth of startups, with managers being very cautious with their spending.

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