France: What is the economic balance of Emmanuel Macron? – Business

Bruno Le Maire is often in a good mood. He likes his job, as you can tell from the French economy minister. Hardly a day goes by for Le Maire to smile at the TV camera and calculate how well the French economy is doing. Three months before the elections, Le Maire wants to take stock and show that his boss, Emmanuel Macron, despite the pandemic, has delivered to the French what he promised them in 2017: to put the French economy on the path to success. The Macron government sees this as its main asset in the election campaign. After all, polls show that material issues such as purchasing power and inequality are at the top of voters’ priority lists. Le Maire says: “Who people choose depends on what’s on their plate. And our economic performance is flawless. ”

But not everyone in France believes this story. Many consider Macron a detached former banker who cuts taxes and prefers to tackle startups rather than families. Macron can no longer get rid of the “president of the rich” label. How he once asked an unemployed gardener at a public event that he “only needs to cross the road” to get a job is too much of a problem for people. Or as he said at the inauguration of the company campus about “people who are successful and people who are nothing.”

Macron did not keep many of his promises

Macron started with a promise to pursue a policy that was neither left nor right; finding a compromise, reforming the French state and economy, but not impoverishing the French. Five years later, it is clear: he was unable to implement his most important plans, many of the problems beneath him worsened. Many of Macron’s central reforms failed due to public resistance because he did not share the cost of the change with the rich.

Macron did not skimp on the pandemic. He has spent over € 240 billion on short-term work benefits and other scholarships. In France, assistance to employees was much richer than in Germany. Research shows that the French middle class was able to improve its standard of living under Macron despite the worst recession since World War II. In addition, Macron kept an important election promise: he brought billions from Brussels. “It is mainly thanks to Macron that the EU reacted in solidarity to the crisis. Because he convinced Merkel to the idea of ​​a European reconstruction plan, ”says economist Moritz Schularick, who conducts research in Bonn and Paris. EU funds account for around 40 percent of France’s € 100 billion stimulus package.

Today, thanks to these investments, the French economy is growing at a rate of seven percent, much faster than other economies in the EU, and more people are finding jobs than 14 years ago. The high level of youth unemployment also fell during the Macron period, although one in five people aged 15-24 are still unemployed.

Thanks to generous assistance to workers and an economic stimulus package, Macron was able to resolve distribution conflicts during the crisis in the short term. However, these billions in spending are mainly financed by debt: the deficit was 9% in 2020 and 7% last year. economic production. Macron bought himself time this way.

But in one breath it relieved companies and cut taxes by 20 billion euros without any environmental and social compensation. Already at the beginning of his presidency, he abolished the property tax and decided on lump-sum taxation on income from capital ownership. To justify these steps, Macron likes to use the metaphor of the French welfare state as a rope party on a steep slope. In order for France to be able to climb the slope, you need to put as much weight on the workhorses in the front as possible. Then they dragged the entire rope assembly with them.

But the story of the rope team is not true. Economists at the Paris-based Institut des Politiques Publiques recently refuted that the abolition of the wealth tax and the flat dividend tax would lead to increased investment and growth. Macron is giving out debt-financed gifts to the rich.

For months, the yellow vests had protested against Macron’s reforms

Before taking office, many French were concerned that he would create a low-wage sector like Gerhard Schröder. To deflect the sails of left-wing critics, Macron at the start of his presidency based his labor market reforms on the Scandinavian flexicurity model: first he relaxed protection against dismissal and then restructured unemployment insurance so that quitting workers also have insurance claims. But then he left the middle and increased the eco-tax on fuel at the end of 2018 – without socially amortizing the measure.

The French had had enough of Macron’s zeal for reform. The yellow vest protests paralyzed the country for months – Macron’s political capital was wasted. He had to withdraw the green tax increase and was then unable to organize sufficient public support for the reform of the pension system.

This means that France is still struggling with the problem of being too large and inefficient a country, according to the OECD report. The ratio of government spending to gross domestic product (GDP) is higher than that of any other developed country. The French state pays around 14 percent of its gross domestic product annually on the pension system alone. Treasury distributed with a large spoon; but not only eliminates injustice, but also creates new ones: while railwaymen, officials and employees of state-owned companies sometimes retire at 50 for a good salary, the system works against the self-employed or people with a hard CV.

Without reforms and without tax increases, the question of which money a country should use to ecologically restructure its economy remains unresolved. The Jacques Delors Institute has calculated that EUR 17 billion will be short of each year from 2024 to meet the French climate target of a 40% CO₂ reduction by 2030. France does not yet have a plan to meet the European climate targets of 55%.

The Greens and the left want to introduce a climate tax on wealth, Macron does not say where he wants the money from. During the crisis, public debt rose from 98 percent to 116 percent of GDP, in absolute numbers: EUR 2.8 trillion. France has more public debt than Italy. The economist Schularick says as long as growth rates remain above low interest rates, the country can get out of debt. But if interest rates go up in the next few years, this calculation will not work. Repurchasing time too long to avoid domestic distribution conflicts could one day become costly for Macron and France. There is no question of uncomfortable change in the long run – the only question is whether the “president of the rich” will again gain the people’s trust to guide France through the change.

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