The president’s approval ratings are now dire—but the big test is yet to comeby George Magnus / September 5, 2017 / Leave a comment
It seems only yesterday that Emmanuel Macron swept to power in France’s presidential election, and his political movement, EN MARCHE!, secured a commanding victory in subsequent parliamentary elections. Fears that France would succumb to the Front National’s populism proved groundless. Yet Macron’s latest approval rating stands at just 36 per cent, not dissimilar to that of Donald Trump. And this is before he has done anything really controversial to address the country’s structural economic problems. Last week, though, he began, and announced proposals to reform France’s labour market system, or Code du Travail. These reforms, which have been a long time coming, will soon be tested in the streets with strikes predicted next week, and possibly also in the courts.
If you took an economic snapshot of France, the picture wouldn’t be so bad. The economy grew by 2 per cent at an annual rate in the second quarter, and is on course for growth of about 1.5-1.8 per cent this year and in 2018. Unemployment, now at around 9.5 per cent, is slowly coming down, while profit margins and investment spending are going the other way. France has the opposite of the UK household sector’s addiction to debt: French household savings equate to about 14 per cent of disposable income. And income inequality has been less of a problem in France than elsewhere in advanced economies.
Against this though France is weighed down by some acute structural problems. Public debt is almost Italian in size, amounting to about 125 per cent of GDP and President Macron hasn’t begun to address the country’s deadweight levels of public spending and taxation, which amount to about 56 and 53 per cent of GDP, respectively. While these levels are not toxic in and of themselves, France’s economic model has nevertheless failed in important respects, compared, say to Scandinavian countries that also have high levels of public expenditure and tax.
What’s more, over a fifth of under 25s are unemployed. France has lost more middle-skill, middle wage-paying jobs in the last ten years than any other major OECD country. The share of people aged 15-74 in employment is still about 2 per cent lower than before the financial crisis, and the gap between France and the rest of the OECD in this respect has risen steadily.…