Bonjour et bienvenue to the Paris Edition. I’m Paris Bureau Chief Alan Katz.

Paying Up

Ask people in Paris and they’ll say, largely, that of course they support Ukraine in its war against Russia and even back raising French defense spending. But press them on whether they’d be willing to pay higher taxes to fund a jump in military outlays, and a majority say no.

Support goes up if you put the question differently, as this poll did, asking whether the richest people and large companies should pay more taxes to fund the defense budget. Then again, it’s never been hard to convince people that someone else should pay.

President Emmanuel Macron agrees with the ‘no’ camp. Last week, he called for the government to immediately boost its defense spending, but without any tax increases. Easy for him to say. His party no longer dominates France’s government, meaning he’s no longer directly on the hook when it comes to figuring out how to raise those funds — nearly €50 billion a year more than France’s current spending, according to Defense Minister SebastienLecornu — without worsening the country’s budget deficit.

Sure, there are savings to be found in France’s budget, and the government of Prime Minister Francois Bayrou has made a point of saying it’s searching hard for them, but they won’t add up to anywhere close to that amount.

Finance Minister Eric Lombard, who as my colleague Will Horobin quipped, is operating in the here and now of trying to repair France's fiscal reputation with investors after months of financial market pressure, says the country simply can’t afford to increase its debt. “We don't have the fiscal margin for maneuver, whether at a French level or the European level,” Lombard said on the sidelines of a meeting with his counterparts in Brussels. “We do not want this war effort to increase the pressure on our public finances.”

Macron did make some deep-sounding comments last week about how a defense buildup will require reforms, choices and courage, but that’s not an actual recipe for raising tens of billions of euros absent tax increases. 

Maybe the coming week will bring some clarity. Lombard has talked about reorienting some of French citizens’ private savings toward defense. He and Lecornu will hold a meeting with bankers, private investors and insurers on March 20 on possible solutions.

Given the self-imposed constraints, it’s not obvious how they’ll find the funds, but it will be interesting to see the paths they propose, even if it’s the public sector that will ultimately pick up the tab for the equipment produced.

France’s economic outlook has deteriorated as the potential impact of a global trade war compounds an already slow start to the year, the country’s central bank said.

The UK and France are scrambling to bolster Ukraine’s negotiating position as US President Donald Trump seeks to force through a settlement in its war with Russia.

Kering disappointed investors by naming an internal designer to oversee a makeover of its struggling Gucci brand, turning to Balenciaga’s Demna Gvasalia rather than a high-profile external hire.

Demna Gvasalia Photographer:  Geoffroy van der/AFP

European Union finance ministers are worried bond investors could be reluctant to finance their defense-spending plans, with a massive German program already driving up debt-servicing costs in the region.

Companies across the world are looking for cover from Trump’s frenzied tariff barrage, planning for the worst even as reversals and exemptions leave them desperately seeking clarity.

A UBS unit was found guilty by a French court of harassing two whistleblowers who lifted the lid on the bank’s efforts to help wealthy locals dodge taxes.

LVMH appointed one of billionaire founder Bernard Arnault’s sons to lead its Italian cashmere brand Loro Piana, renewing questions on succession. Meanwhile, Arnault, 76, signaled he could helm the luxury group for the best part of another decade.

L’Oreal is recalling all lots of its acne treatment Effaclar Duo in the US because of concern that the creams are contaminated with benzene, a known carcinogen.

French households, businesses and local authorities will face soaring costs for insurance if the country fails to adapt to a changing climate, the government said.

Monday: Bloomberg March France Economic Survey     

Tuesday: Euronext holds its annual conference; Insee updates economic forecasts for the first half of 2025

Wednesday: Bank of France annual results presentation

Thursday: Bloomberg Future of Finance Paris 2025 conference;
Macron attends EU leaders summit in Brussels

Friday: French March business and manufacturing confidence; 4Q final wages

The 23 new apartments in the Maybourne Saint-Germain, an ultra-luxury hotel in Paris coming from the group behind Claridge’s, could be among the most expensive homes (on a per-square-meter basis) in the city.

A rendering of a sitting room with historic features Source: Sotheby's

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Paris Apartments Are the Most Expensive New Homes in France