FOR THE previous few months, rivals in April’s French presidential election have dwelt to extra on questions of nationwide identification and immigration. This could quickly shift. Emmanuel Macron, a former financial system minister and one-time funding banker, is predicted shortly to substantiate formally that he's operating for re-election. That is prone to flip the main target to the financial system. Voters might be judging not solely Mr Macron’s financial administration since he took workplace in 2017, however how he and his rivals plan to enhance competitiveness, job creation and incomes.
Because the French financial system rebounds, progress has exceeded expectations. After a contraction of 8% in 2020, GDP recovered to pre-pandemic ranges final autumn. Development in 2021 reached 7%, its quickest price for over half a century, and brisker than in Germany, Italy and Spain. This was partly because of beneficiant authorities help to maintain companies going, individuals in jobs and incomes protected. The injection of €100bn ($113bn), or 4% of GDP, partly from the EU’s restoration plan, has additionally helped.
On Mr Macron’s watch, France has additionally turn out to be much more business-friendly. He has lower taxes on companies, changed the wealth tax with a narrower property tax, launched a flat tax on monetary revenue and courted overseas traders. For the previous 5 years he has caught to the identical fiscal coverage and the identical finance minister: Bruno Le Maire has been within the job longer than anybody since Valéry Giscard d’Estaing in 1969-74. In 2019 Mr Macron promised that by 2025 there can be 25 French “unicorns”, or tech companies valued at over $1bn. That determine was reached three years early, in January this 12 months.
Maybe most stunning, the French job market is doing comparatively nicely too. Unemployment within the fourth quarter of 2021 fell to 7.2%, down from 9.2% when Mr Macron took workplace. This isn't principally owing to authorities help: the variety of individuals on furlough schemes has fallen from 8.4m in April 2020 to 420,000 in December final 12 months. It largely displays the energy of private-sector job creation. One purpose, says Philippe Martin, of the Council of Financial Evaluation, an unbiased advisory physique, is previous labour-market reforms, notably these in 2017. Amongst different issues these capped the fee to employers of redundancy funds. As an alternative of prompting extra lay-offs, as some economists had feared, this has made companies extra keen to rent workers on everlasting contracts.
The federal government has additionally invested closely in coaching. The variety of apprenticeships has risen from 290,000 in 2017 to a file 720,000 in 2021. The employment price of 15-64-year-olds really elevated throughout the pandemic. Even older staff now keep at their desks for longer. For the 50-64-year-olds, the employment price is at its highest stage because the nationwide statistics physique began measuring it in 1975.
But there are two weak factors to Mr Macron’s financial file. The primary is the state of public funds. When the pandemic took maintain, he vowed to do “no matter it prices”, and he did. The federal government’s price range deficit was nonetheless 7% in 2021, and the extent of public debt reached 115% of GDP, in accordance with official estimates. France now belongs to the group of probably the most indebted nations within the euro zone, alongside Belgium, Greece, Italy, Portugal and Spain.
France has no problem servicing its debt. However Mr Macron has but to indicate that he has a plan to cut back it. Valérie Pécresse, the centre-right Republicans’ candidate and his most credible critic on the financial system, has accused him of “burning by means of money”. She guarantees to revive fiscal self-discipline and lower a web 150,000 jobs from the 5.6m-strong civil service.
The opposite weak point is pension reform. The common efficient age of retirement for males in France is 60 years, nicely under the 63 years in Germany and 64 years in Britain. But at the beginning of the pandemic Mr Macron shelved his formidable plan to merge the nation’s sprawling 42 pension schemes, and to lift the retirement age. The following president can have little alternative however to tackle this reform.
Mrs Pécresse vows to lift the pension age from 62 to 65, and the far-right Eric Zemmour needs to extend it to 64. However this isn't a message many French voters need to hear. Pension reform is the one coverage virtually assured to immediate strikes and protests. Certainly most candidates on the left, together with the unconventional Jean-Luc Mélenchon, in addition to the nationalist-populist Marine Le Pen, promise as a substitute to carry the pension age down.
Within the brief time left to him to marketing campaign, Mr Macron will be capable of defend a fairly good financial file. However elections are seldom gained on previous achievements. Voters stay sceptical concerning the impact on their very own purses, although common incomes grew on his watch, and they're apprehensive concerning the rising value of residing and power payments. If Mr Macron is severe about reviving the reformist spirit of his marketing campaign in 2017, he might want to current each credible pension reform and a good plan to repair public funds. This implies telling French voters some uncomfortable truths, no matter it prices. ■
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