French President Emmanuel Macron held his first big rally Saturday in his race for reelection, promising the French more “progress” and “solidarity” over the next five years, but his campaign has hit a speed bump.
It’s been dubbed “the McKinsey Affair,” named after an American consulting company hired to advise the French government on its COVID-19 vaccination campaign and other policies. A new French Senate report questions the government’s use of private consultants and accuses McKinsey of tax dodging. The issue is energizing Macron’s rivals and dogging him at campaign stops ahead of France’s April 10 first-round presidential vote.
Macron, a centrist who has been in the forefront of diplomatic efforts to end the war in Ukraine, has a comfortable lead in polls so far over far-right leader Marine Le Pen and other challengers.
“We are here to make possible a project of progress, of independence, for the future, for our France,” Macron told a crowd of about 30,000 at a stadium that usually hosts rugby matches. “I see difficulties to make ends meet, situations of insecurity … and so much more to accomplish to turn back extremism.”
Inflation, bonuses, pensions
Speaking to those who see “all their salary go into gasoline, bills, rent” as the war in Ukraine is driving up food and energy prices, Macron promised to let companies give a tax-free bonus to employees of up to 6,000 euros ($6,627) as soon as this summer.
He also promised to raise the minimum pension to 1,100 euros ($1,214) a month for those who have worked full time — up from about 700 euros now. The retirement age will need to be progressively raised from 62 to 65 to finance the plan, he said.
Supporters welcomed him, chanting “Macron, president!” “One, two, five more years!” and waved the French tricolor flag.
But for those trying to unseat Macron, the word “McKinsey” is becoming a rallying cry.
Critics describe the French government’s 1 billion euros spent on consulting firms like McKinsey last year as privatization and Americanization of French politics and are demanding more transparency.
The French Senate, where opposition conservatives hold a majority, published a report last month investigating the government’s use of private consulting firms. The report found that state spending on such contracts has doubled in the past three years despite mixed results, and warned they could pose conflicts of interest. Dozens of private companies are involved in the consulting, including giants like Ireland-based multinational Accenture and French group Capgemini.
Most damningly, the report says McKinsey hasn’t paid corporate profit taxes in France since at least 2011, but instead used a system of “tax optimization” through its Delaware-based parent company.
McKinsey issued a statement saying it “respects French tax rules that apply to it” and defending its work in France.
McKinsey notably advised the French government on its COVID-19 vaccination campaign, which got off to a halting start but eventually became among the world’s most comprehensive. Outside consultants have also advised Macron’s government on housing reform, asylum policy and other measures.
The Senate report found that such firms earn smaller revenues in France than in Britain or Germany, and noted that spending on outside consultants was higher under conservative former President Nicolas Sarkozy than under Macron.
Budget Minister Olivier Dussopt said the state money spent on consultants was about 0.3% of what the government spent on public servants’ salaries last year and that McKinsey earned only a tiny fraction of it. He accused campaign rivals of inflating the affair to boost their own ratings.
The affair is hurting Macron nonetheless.
A former investment banker once accused of being “president of the rich,” Macron saw his ratings surge when his government spent massively to protect workers and businesses early in the pandemic, vowing to do “whatever it takes” to cushion the blow. But his rivals say the McKinsey affair rekindles concerns that Macron and his government are beholden to private interests and out of touch with ordinary voters.
Everywhere Macron goes now, he’s asked about it.
“The last few days, I heard a lot speaking about tax evasion, an American company,” Macron said at Saturday’s rally. “I want to remind those who show outrage that they used them (consulting firms)” in local government as well.
He also pointed to his government’s fight to make sure corporations pay their fair share of taxes.
“The minimum tax in Europe, we fought for it, we did it,” he said.
France is pushing for quick implementation in the 27-nation European Union of the minimum corporate tax of 15%, on which more than 130 countries agreed last October.