The Re-election of Emmanuel Macron: A Renewed Mandate to Reinvigorate the French Economy
Addressing the nation from the Champ de Mars, in the shadow of the Eiffel Tower, on Sunday, 24 April 2022, Emmanuel Macron, the jubilant and newly re-elected President of France, eschewed triumphalism and reached out to those who had voted for his National Rally opponent, Marine Le Pen, and also to those disaffected citizens who had chosen not to vote at all. Macron’s convincing victory in the second round of the presidential election, in which he gained 58.54 per cent of the vote to Le Pen’s 41.46 per cent, gave him a smaller majority than the one he received during the burst of enthusiasm that greeted his political entry five years before. Propelled into a second and final term as President, the centre-right incumbent, with a distinctly Europhilic, internationalist, and multilateralist outlook, has been given until 2027 to continue with his mission of transforming France and stamping his mark on the world stage.
Emmanuel Jean-Michel Macron belongs to a new breed of unconventional political leaders, in his case side-lining the traditional political parties of the left and right that have hitherto dominated French politics. His unconventionality extends to his marriage, in 2007, to Brigitte Auziere, his high-school language teacher and 24 years his senior. Macron’s meteoric rise to the Élysée Palace on 7 May 2017 took just thirteen months after he launched a new grass-roots, non-partisan, political movement, En Marche, in his hometown of Amiens in northern France, on 6 April 2016. The youngest-ever President brought a breath of fresh air in the political arena and promised new hope for a stagnating French economy.
Emmanuel Macron was born in December 1977 into a medical family, one of three children of doctors, a profession also chosen by his two younger siblings. His elitist education included stints at the selective Lycée Henri IV in Paris, Sciences Po, and the Ecole Nationale d’ Administration. The high-flying Macron’s career took him through the Inspection Generale des Finances at the Finance Ministry, followed by four years as an investment banker at Rothschild’s in Paris, before becoming an economic adviser to President Francois Hollande in 2012. Serving as economy minister under Hollande between 2014 to 2016, he presented the loi Macron in January 2015, a series of structural reform initiatives to help deregulate the economy.
Macron resigned from government at the end of August 2016, to carve out a new political identity. Prior to setting up En Marche, Macron set about identifying the issues that mattered to voters. During the Grande Marche of the summer of 2016, volunteers working on behalf of Macron collected information on a smartphone app from 25,000 individuals, confirming widespread disillusion with the political status quo. Despite his candidature on behalf of a new and untested political party, Macron benefited from his elitist education and his intimate knowledge of the inner workings of government. Upon becoming President, he was able to move effortlessly into Napoleonic mode as he sought to rejuvenate the French economy as well as make his name on the global political stage.
The French economy has, in recent years, experienced the fallouts from an inflated public sector, a large state-linked industrial sector, and a rigid, two-tier, labour market, in which employees on permanent contracts benefit from prospects for promotion and protection against dismissal, while the remainder are on short-term contracts with few, if any, perks. To cap it all, a 35-hour working week was introduced under prime minister Lionel Jospin in 2000, ostensibly to facilitate work sharing and job creation. The origins of state benevolence in France can be traced back to the Popular Front government of Leon Blum in 1936, and over the years the expectations of citizens have remained high until the economic turmoil of recent years prompted a reality check. High taxation was for long accepted in return for access to high-quality education and healthcare, and generous social welfare benefits and pensions, all of which been threatened by globalisation and outsourcing.
Macron pledged to reduce unemployment, encourage economic growth, and boost the purchasing power (le pouvoir d’achat) of consumers as part of his mandate as President. He took on the economy in a way some have seen as benefiting the wealthy and increasing inequality in France, themes which formed part of Le Pen’s campaign, during which he was referred to as “arrogant” and “out-of-touch”. With his first budget, in 2018, he abolished the wealth tax (impôt sur la fortune, or ISF), introduced a flat tax rate of 30 per cent on financial income, and reduced the corporate tax rate from 33 per cent to 25 per cent (over five years). However, the evidence suggests that tax cuts at the top have not been followed by the expected trickle-down of investment in the economy. To be fair to Macron, he has also been campaigning for global corporate tax reform.
The Yellow Jacket (gilets jaunes) movement defined public discontent with Macron from 17 November 2018 onwards, beginning with protests over planned eco-taxes on petrol and diesel. Protesters were distinguished by their fluorescent high-visibility jackets, which are compulsory for all motorists in France in case of breakdown. This modern version of the Poujadist movement of the 1950s reined in financially insecure people, on low or modest incomes, from both left and right wings of politics along with those of no particular political persuasion, feeling victimised by the political establishment and suffering the effects of rising economic inequality.
At the same time as the wealthy were feeling less threatened, Macron’s actions discomfited those lower down in the economic chain. He was forced, however, by the backlash from the Yellow Vest movement to cancel fuel tax rises, which would have disproportionately affected the less well-off. In 2019, the Competitiveness and Employment Tax Credit was abolished, and employer contributions to social welfare programmes were cut back. The voluminous and complex Labour Code was amended to allow firms to lay-off workers more readily in times of financial difficulty. Job security and job quality were compromised in the interests of economic growth.
The French economy proved resilient in the face of the external shock of the COVID-19 pandemic, rebounding by the fourth quarter of 2021, when GDP growth reached 7 per cent and the unemployment rate fell to 7.4 per cent. These improved employment figures included many low-paid, part-time, short-term, and low-value-added positions in the services sector, with low job security. In response to the novel coronavirus, the Pret garanti par l’État (PGE) scheme provided state-guaranteed loans to firms to help tide them through lockdown. Turning his attention to the wider EU, Macron persuaded German Chancellor Angela Merkel to support a stimulus package for the EU, for which they jointly announced their support on 18 May 2020. On 21 July, the 27 EU member states unanimously agreed upon the NextGenerationEU, a COVID recovery package of 750 billion euros, 360 billions of which consisted of debt-financed loans, and another 390 billion in grants. For the first time, the EU agreed to take on new joint or mutualised debt by issuing bonds, to fund their recovery plan. This fund supplemented the seven-year 1.1-trillion-euro multi-annual financial framework, or EU budget. Franco-German leadership helped the EU to effectively cushion the economic effects of the pandemic.
Macron’s policies have proved attractive to foreign investors, prompting increased foreign direct investment in a leading economy. France remains the world’s seventh-largest economy in terms of GDP as of 2021. The diversified French economy includes strong manufacturing, pharmaceuticals, and tourism sectors, and it is a leading exporter of military equipment, cars, aircraft, wine, cosmetics, luxury goods, processed foods, and packaged medications. But imports continue to outweigh exports, leading to a foreign trade deficit of around 85 billion euros in 2021, partly accounted for by high energy (oil and gas) prices.
Macron has been given the green light to proceed with his promises of job creation and attract foreign investment, as well as introduce less popular measures, such as raising the retirement age from 62 to 65 by 2031. Even as France demonstrates continued economic growth, millions claim to be feeling poorer as the cost-of-living crisis kicks in, especially in rural areas, small towns, and the banlieue of larger cities. Youth unemployment is high, while social mobility remains low. Elections to the 577-seat National Assembly lie ahead, on 12 and 19 June, and the electorate may still choose to cast their votes elsewhere, if only as a statement of their dissatisfaction with France’s direction of travel during Macron’s tenure. Macron seems aware that his victory may have been, at least in part, the result of a vote against Le Pen rather than a vote for him. and that he has to step up his message to overcome the deepening political divide in France. At the same time, there can be no denying that, by his re-election to France’s most powerful position, Macron has also become the de facto leader of the EU.
Ashis Banerjee