As the French election race heads into the first round of voting on April 10, front-runner President Emmanuel Macron has a strong argument to persuade voters that the reforms of his first term are bearing fruit: a robust economy. The French economy has rebounded faster than expected from the COVID crisis, with growth hitting a 52-year high of 7% last year. In addition, unemployment has fallen to its lowest level in 10 years, consumer purchasing power has increased and foreign investment is flowing in.
Since coming to power in 2017 on a centrist platform, Macron, a former investment banker and economy minister, has launched a series of reforms – relaxing labor rules to make it easier to hire and fire workers , reducing unemployment benefits and reducing capital and income taxes for households and businesses. “Macron’s policies have been quite business-friendly, although he has had to adapt some amid crises, including the yellow vest protests and COVID,” said Mathieu Plane of the French Economic Observatory (OFCE). based in Paris. DW. “Overall, the economic attractiveness of France internationally has improved significantly.”
French startups are soaring
The rise of the French start-up scene is an indication of this. Earlier this year, Macron, dressed in a Steve Jobs-style turtleneck, celebrated the country’s 25th unicorn – a startup valued at more than $1 billion (900 million euros) – ahead of his own goal of 2025. “The biggest positive of Macron’s mandate is the dynamism of French companies if we look at their balance sheet, their profitability and their innovation”, declared Patrick Artus, chief economist of Natixis Bank, in Paris. DW. “There is a tremendous amount of money flowing into the corporate sector.” 2021 was a banner year, with French tech companies raising €11.6 billion in funds, a 115% increase on 2020.
The “whatever it takes” strategy
Experts say the rise of the sector has also been helped by Macron’s “whatever it takes” strategy during the COVID pandemic – spending heavily to fund businesses and help them retain employees. Damien Marc, CEO of JPB Systeme, a company that uses smart automation and robots to make interlock systems for aircraft engines, said government aid helped him overcome the crash in the engine industry. aviation, retain all of its highly skilled workforce and diversify. his products.
“All of this help from the government has actually allowed us to grow our business at a time when companies in many parts of the world were laying off employees,” Marc said. DW in its manufacturing plant south of Paris. “We actually gained market share and came back stronger than ever.” Last year, the tech company received a further cash injection of €1.5 million as part of a €100 billion government stimulus package to revive industry in several sectors.
Despite the push, manufacturing “still very weak”
Experts say the COVID crisis – which exposed France’s heavy reliance on foreign suppliers – has also given impetus to Macron’s “reindustrialisation” plans by encouraging companies to invest in French industry rather than depending on Asia for industrial imports. The government is now boosting strategic industries such as semiconductors, electric batteries and hydrogen projects. “We now realize that France’s greatest weakness is the deindustrialization that we have experienced over the past 40 years and that we have not been able to stop. It is important to reverse this trend,” said Mathieu Plane. . He added, however, that the share of the manufacturing industry in the French economy, at around 10% of GDP, “is still very low”.
Artus agreed, saying manufacturing and production ‘showed little sign of improvement’ during Macron’s five-year term despite tax cuts and reforms, adding that a growing trade deficit was another concern . “One of the main reasons for the weakness of French industry is the lack of skills and quality education. This is a big handicap,” Artus said. “Macron is trying to push learning and reform training programs but it will take time to see results.”
Skyrocketing public debt
Experts say another area of concern is the state of France’s public coffers following massive public spending and tax cuts. “The policies have all helped to stimulate growth and increase the competitiveness of businesses, but it also raises the question of how all these measures are financed and the problems of increasing budget deficit and public debt,” said Plane. Conservative Republican candidate Valerie Pecresse has accused Macron of shelling out endless sums of money and ‘looting the cash register’ for emergency pandemic funding and pushing the national debt to a record high of around 115% of GDP.
Voters feel left out
While Macron’s reforms are credited with reviving businesses, many wonder if the economic gains have trickled down. Polls suggest that voters’ main concern is diminishing purchasing power. War-related price hikes in Ukraine further heightened concerns.
At a vegetable market in eastern Paris, Isabelle, a single mother of three, said she was increasingly feeling the pinch of the rising cost of living. “Prices of basic necessities and petrol have gone up and we need to be much more careful about how we spend our money,” the 38-year-old said. Asked about Macron’s politics, Isabelle, who works in a hair salon, said: “We don’t feel like our lives have improved much. Macron is a president who only does reforms for the rich. “, she said, echoing a common opinion related to the abolition of the wealth tax by Macron in 2018.
Patrick Artus said that although France created around 700,000 private sector jobs last year, many were unskilled and poorly paid. “It is true that many French people who work in retail, catering, cleaning or logistics are poor,” he said, adding, however, that data showed the government had spent huge sums money and public transfers to support them, most recently 15 billion euros. to cushion the shock of rising energy prices.
Macron, however, is banking on his economic record, saying earlier this month that he would press ahead with reforms to reshape the economy if he wins a second term. Whether that gamble pays off when French voters head to the polls in April remains to be seen.