French business calls for "shock" action French business urgently requires shock treatment to cut labour costs and boost its flagging ability to compete on international markets, top economists and business leaders have warned François Hollande. Growing pressure on the socialist president to take action mounted when the country's leading group of economists issued an unprecedented collective appeal for a "massive transfer" of France's high social charges on employers on to direct taxes. The "Economists" Circle," a non-partisan group whose members include those working in institutions such as the European Central Bank as well as advising the government itself, said France required a "supply shock." Its appeal came on the eve of a conference summoned by the president at which ministers, officials, trade unions, business leaders and others will discuss a range of economic and social issues, including labour costs, employment terms and pensions. The call for action was reinforced at the circle's annual conference at the weekend by Louis Gallois, former head of EADS, the aerospace group. "There is a massive problem of confidence among the heads of our companies," he said. "I believe we must have a "competitiveness shock" to help the exposed sectors." Laurence Parisot, head of Medef, the employers" federation, added her voice in an interview with the newspaper Journal du Dimanche. "[We] must address the alarming and continual erosion of the competitiveness of France over the past 12 years," she said. French business leaders have strongly criticised moves by Mr Hollande's government to raise taxes on big companies and the wealthy, including a 75 per cent marginal rate on incomes above €1m. Last week, it unveiled €7.2bn in extra taxes for this year alone, the majority levied by a rise in wealth taxes and surcharges on banks and energy companies. But business and economists are also deeply concerned by France's loss of international market share, which led to a record €70bn trade deficit last year, and declining profit margins. They point the finger in large part at France's high labour costs, caused by the financing of big social welfare programmes through charges on employers and employees. Joining the call, Henri Proglio, head of EDF, the state-controlled electricity company, told the conference hourly wage costs averaged €34 in France, compared with €30 in Germany and €20 in Spain and the UK. "The immediate difficulty is above all the weak profitability of the great majority of businesses which inhibits their capacity to innovate, to export, to invest and to create jobs," the Economists" Circle said. [We must] improve this profitability by a massive transfer of social charges on to [tax]. Mr Gallois said €30bn-€50bn in social charges should be shifted on to value added tax, other direct taxes, or taxes on pensions. The government has so far resisted these calls, instead stressing the priority of tackling France's high debt. It says fostering investment, innovation, research and support for small companies is the main way to tackle competitiveness. It has already reversed a move by the previous government to shift some social charges on to VAT. But with the Economists" Circle and figures like Mr Gallois - a known government sympathiser who has been appointed to the role of commissioner for investment - joining the calls, it has begun to signal it may shift its ground. Pierre Moscovici, finance minister, told the weekend conference tackling labour costs by reducing social charges was "not a taboo" and suggested that if a consensus was reached in the social partners" discussions, some action might be taken. Senior government officials said Mr Hollande was well aware of the concerns about the issue, but warned that any move to change would take time.