An uphill climb this summer
Every day brings a fresh batch of upsets; the economy and markets are in earthquake mode; the issues are numerous and the stakes enormous; and political leaders are well aware they can no longer sidestep pressing matters. Unemployment in France may be edging up again but, strangely enough, the growth prospects for the country and for the eurozone as a whole are upbeat. What's more, French consumer confidence is at a ten-year high, confirming a trend already in evidence in May. This newfound assurance in the future should enable France to step up a notch.
Be that as it may, investors want to see deep-seated reforms right away, starting with the country's labour laws. The economic ecosystem also needs strengthening. Many industries are searching for a new economic growth model and will certainly need a helping hand from the new administration. This applies to banks. But already, Emmanuel Macron seems to want to backtrack on his plan – a key plank of his presidential election platform – to convert the CICE tax credit system into cuts in social security charges. No official announcement has yet been made, however, as the weekly magazine Le Point reports. "The idea was to reduce the cost of labour by lowering social charges on a long-term basis in 2018. This was supposed to be the emblematic measure that would boost growth to at least 1.8% next year." For the time being, though, nothing has changed.
Elsewhere in Le Point, the editorialist Pierre-Antoine Delhommais penned a lengthy analysis of how France was experiencing the immediate aftermath of Macron's election. "There is a liberal economic longing in France. What will the new government do? Will the president be able to disprove what research has shown and succeed in making in-depth reforms? […] While it may come as a shock to Macron followers, the election of the founder of En Marche! has one thing in coming with Donald Trump's election: it shows that the French and the Americans alike wanted a businessman as their head of state. Both men have shown that they can earn a heathy living in the private sector, one in real estate, the other in banking. Through the ballot box, American and French voters have clearly expressed their feeling that Trump and Macron are better able than trained politicians to run their countries".
Be that as it may, tangible proof is needed now. This summer will be crucial, and it's likely to be an uphill climb, particularly since markets – notably in the US – are more cautious and showing signs of impatience. So let's get a move-on, and never mind the heatwave.
Sources : Le Figaro Economie, Harvard Business Review, Financial Times, Le Monde, Le Point, Les Echos