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Is France really back?

What’s fascinating about investment analysts is that they never shy away from a paradox. They won’t let a contradiction stand in their way, and we ought to watch them a bit more closely –and maybe imitate them – in order to shake off our demons. Six months ago, France was an antiquated country and something of a lost cause. Our spirit had faded and our creative potential was a thing of the past.


Listening to the same analysts today, and heeding what they say, we’re apparently the most promising country in the entire eurozone. It must be admitted that Emmanuel Macron has made his mark, especially since he will likely be able to secure a majority – albeit a disparate one – in parliament. Foreign media have been headlining “France is Back”. The Les Echos newspaper went even further this week, venturing that “the French risk has evaporated,” meaning that France’s debt is no longer a problem.


In fact, the spread between French and German 10-year bond yields has narrowed to its lowest since November and is not an issue any more. In fact, it’s almost an advantage. It dropped below its normal level of 35 points this Tuesday. And that is where it stood last November, just before the admittedly-slim possibility of a National Front victory in the presidential election sent the risk premium soaring to 84 points in February, when fears of Frexit were running rife. Commenting on the latest developments, Les Echos added “The Macron effect is still in full swing on the bond market”.


True, Mr Macron’s win has restored France’s standing – and in record time. Investors are coming back, particularly the Japanese, who have a reputation for caution. This goes to show that the miracle is truly staggering. Macron has had a real effect on markets, but as the weekly Le Point proclaims on this week’s cover: “No more excuses”. Expectations are running high, things look promising, and the advance publicity is wild – but there can be no question of backsliding or disappointing. To return to a growth path, France must display its innovation-led culture and turn its back on corporatism. In the words of Edmund Phelps, the Nobel prizewinning American economist “social protectionism is devastating”. Phelps takes an upbeat view of France, provided it gets moving and does what it says. All the attention is now on France in its cradle, and the baby already has plenty of benefactors. But – there’s always a but – it mustn’t turn its back on good fortune. The government is well aware that France is back, but how long will this last if nothing happens? No more excuses, indeed!

Christian Moguérou

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