French Banks Are Suddenly Moving Money To Britain, House Crises Worsen | Euro On Brink Of Collapse

French Banks Are Suddenly Moving Money To Britain, House Crises Worsen | Euro On Brink Of Collapse
#france #economy #crisis

As France gears up for its 2024 budget talks, a storm is brewing in the housing arena. Industry and political bigwigs are pointing fingers at President Emmanuel Macron, claiming he dropped the ball on his promise to crank up the construction of new buildings.

The budget bill, slated for a late September unveiling, has the opposition clamoring for more affordable French real estate and an increase in council housing. But wait, there's more. In January 2023, the construction of new buildings hit the brakes, slowing down by 3.3%.

Meanwhile, building permits took a nosedive, plummeting by a jaw-dropping 22%. According to the Fédération française du bâtiment, they're anticipating an overall 9% dip in construction compared to last year. Globally, building costs and land prices have been on a rollercoaster ride since the Russia- Ukraine conflict in February 2022.

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Meanwhile, renting is getting pricier and harder to find. Prices vary widely across the country. Demand dropped by 39.1% from late 2021 to mid-2022, per the Fédération des promoteurs immobiliers. Bien’ici, the expert website, notes that housing supply in France dipped by 6% in Q2 2023 compared to last year, while rents climbed 2%. In certain areas, like student towns, it's even more extreme.

Paris saw a 26% drop in housing supply, and rent jumped by 10% to €1,495. Rennes, a student hub, witnessed a 34% supply decrease and a 6% rent hike. Many blame Macron for not delivering on his 2017 "housing supply shock" promise to lower prices. Institut Montaigne's 2021 report highlighted fewer constructions since 2018, and a 2017 tax reform cut council housing funding.

Economy Minister Bruno Le Maire pledged a €5 billion spending cut in this year's budget. He's already announced the end of a tax break for buy-to-let properties.

French MPs, in a meeting with Finance Minister Thomas Cazenave, warned against reducing access to zero-interest mortgages for those in need. Across the nation, local housing taxes are on the rise, showing an average increase of 7.1%. However, in certain areas within Paris, residents are facing an astonishing 52% surge in these taxes.

This upward trend can be attributed to a combination of factors. Firstly, inflation is playing a pivotal role in driving these tax hikes.

As prices for goods and services continue to climb, municipalities find themselves needing more revenue to cover their expenses. This necessitates an increase in local taxes to balance the books.

In addition to inflation, fiscal reforms have contributed to this upward trajectory in housing taxes. These reforms have imposed limitations on the traditional revenue sources available to municipalities.

As a result, local governments are increasingly turning to property taxes as a means of securing the funds they require to maintain essential services and infrastructure.

So, as inflation and fiscal reforms continue to shape the financial landscape, local housing taxes are feeling the impact, leading to significant increases in some areas, including parts of Paris.

Eric Coquerel, a far-left La France Insoumise MP and president of the Parliament’s Finance Committee, summed it up: The housing situation is dire for working-class families. They need more council housing, and high energy prices aren't helping.

And as if that wasn’t enough to cast fear and confusion on European citizens, one of France's major banks is urging its customers to support Britain. How? Transferring their money "out of the eurozone," caused a headache for Emmanuel Macron.

BNP Paribas, a large French bank, claims that the British economy is outperforming expectations, while the Euro remains under threat. As a result, clients are encouraged to invest in the UK stock market, citing a "favorable exchange rate" among other factors that make Britain a more attractive investment destination than the struggling eurozone.

Leading analysts at the bank, which employs approximately 193,000 people worldwide, have shifted their focus from the eurozone to the UK, providing a welcome boost to the London stock market following years of investor exodus.

This is likely to lead wealthy investors to heed the experts' advice and move their money into some of the UK's largest publicly traded companies.
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