Five years ago, François Hollande assumed the French presidency, promising to “put France back on her feet.” Bedevilled by debt and facing high unemployment, weak growth, and high deficits, the second-largest economy in the Eurozone was struggling to overcome the effects of the financial crisis. That struggle continues even as voters prepare to choose Hollande’s successor.
The first round of voting in France’s presidential election has now concluded, and the field narrowed to two. On May 7, electors will head to the polls for the second round. They will cast their ballots for either Emmanuel Macron, a liberal and Hollande’s former Economy Minister; or Marine Le Pen, running on the platform of the right-wing, nationalist National Front. Le Pen was also the party’s president, but stepped down from that role following the first round in an effort to appeal to all French citizens.
The choice could hardly be starker. Macron, a banker by trade, speaks favourably of globalization, of the European Union, and of the need for deep—and possibly painful—economic reform. Le Pen rails against “savage globalization” and immigration, promising to harden the border and make France “more French.”
The economy is neither the sole nor, arguably, the leading issue of the campaign. But it will be decisively important for the person who wins the presidency. When Hollande mounted the summit of French politics he claimed that unemployment figures would decide the fate of his presidency. Unemployment stayed high. Hollande’s approval ratings did not. By the last count, satisfaction with his presidency sits at 4%, making him the least popular president since the beginning of the Fifth Republic.
The economy has two longstanding structural weaknesses. First, though GDP growth has begun to pick up, the labour market continues to underperform badly. Unemployment is stuck at 10%, with youth unemployment pushing 25%. Where there are jobs, most are short-term. Of all the jobs created in 2016, 86% were temporary contracts, and 80% of those lasted less than one month. Second, the problems in the labour market are exacerbated by a slow-moving public sector that takes up 57% of expenditure relative to GDP.
Consequently, labour market reform has a prominent place in the candidates’ platforms. Where they stand depends largely on their take on France’s strong worker protections. The strict rules that govern French workers’ contracts offer considerable security to permanent employees, but also contribute to a dual labour market with a small number of secure ‘insiders’ and a bulging sector of ‘outsiders’ stuck in temporary work.
Macron is proposing to loosen the labour market, extending liberalizing reforms he made as Hollande’s Economy Minister. For businesses, he advocates greater flexibility to negotiate working hours and pay. For workers, he proposes extending unemployment benefits to entrepreneurs and the self-employed. Le Pen promotes an agenda of ‘economic nationalism,’ attracting votes from blue-collar workers with a promise to put “France First” and protect domestic industries. She would lower the retirement age and impose a tax on businesses hiring non-French workers. Her platform contains echoes of the approach adopted by leftist candidate Jean-Luc Mélenchon. Like her populist cousins in the US and the UK, Le Pen may attract support from some of those who traditionally vote left.
Like former candidates Mélenchon and the Socialist Benoît Hamon, Le Pen favours public spending to boost consumption and protect social services. Judging from the unpopularity of President Hollande’s liberal reforms, French voters may well approve of bigger government. The OECD and the European Commission may not. They have called for serious cuts to public spending, which at 57% of GDP, is among the highest in the OECD and far above the EU average of 45%. The French model is effective at providing social services, but at the expense of high public debt and a heavy tax burden.
Macron agrees that spending should come down. He would cut 120,000 civil service jobs and spending overall, but compensate with €50 billion in stimulus. His approach to taxation makes a complementary effort at even-handedness. It is something of a middle path, offering to lower corporate taxes (currently among the highest in the world) and exempt investment from the wealth tax, but equally promising tax breaks on housing and salaries for ordinary voters. Le Pen would focus on the lower end of the economy, by cutting income tax for the three lowest revenue bands and lowering payroll tax for small- and medium-sized businesses.
Whatever their differences on taxation, the candidates are even further apart on the global economy. For all its national particularities, this election is also about France’s connection with the European Union and the world beyond. The Euro, immigration, and the EU itself have all featured prominently in national debates and loom large in the candidates’ economic programmes.
Of all this year’s main contenders for president, Macron alone has spoken positively of the EU. He argues that the continent needs more coordination, not less, and presses for a common Eurozone budget under an EU finance minister. The other candidates called for varying degrees of retrenchment. Voters now have a choice between Macron’s cosmopolitan promise, and Le Pen’s assertion of national primacy. Len Pen has embraced the message of Brexit, and she promises voters a referendum on EU membership and a return to the Franc. European leaders, unsurprisingly, offered Macron warm congratulations for his strong finish in the first round.
In the final contest, most analysts say the result is a foregone conclusion. Though France is in uncertain territory—for the first time, its major parties failed to make the second round of voting—Macron’s ultimate victory is widely predicted. The last National Front candidate to compete in a presidential run-off lost the race by a staggering 64% margin. Nonetheless, after the tumult of the Brexit referendum and the American election, France’s poll is being watched anxiously. Once the results come in, observers may well read them as a decisive sign for the future of Europe. Then again, they might simply move on to watching the German election instead.
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