Macron weighs economics and politics in France’s reopening

With the reopening of French bars and restaurants last week, President Emmanuel Macron’s government has experienced an important moment: how to get rid of the Covid economy back to life and restore it to health.

When the pandemic began, Macron promised to do “at all costs“Support enterprises and workers through a series of programs, such as vacations, loans and cash support.

But now, as the scale of emergency assistance begins to shrink, the president who will run for re-election in May must show voters that he can get the French economy back on track. Well-known economists and political opponents, such as Marine Le Pen, are urging the government to think more about stimulus.

Macron stated that he wanted to conduct extensive consultations with citizens and business leaders this summer to “create a second-stage economic growth plan,” thereby proposing the idea of ​​increasing state spending. [economic] Restart”-on the basis of the 100 billion euro recovery plan already implemented in France submitted Approved by the European Union.

Ministers also coveted the attractive prospects of more funding, and the country must wait and see how the economy performs under the plan.

At the same time, in order to show the weight of voters Macron on the European stage, France it has started Lobby the EU to take new measures to strengthen investment to keep up with the fast-growing US and Chinese economies.

“The question that may be asked is whether we need a long-term investment plan because we have to plan before 2022… Back to our level of economic activity in 2019, can we do better?” The Minister of Finance Bruno Le Maire (Bruno Le Maire) told France Information.

In Brussels, almost no one resumed discussions on the 27-member EU’s 750 billion euro recovery plan: “It’s too early,” European Commission Executive Vice President Margrethe Vestager (Margrethe Vestager) Means, tell Les Echos newspaper.

France will receive 40 billion euros of its 100 billion euros European Recovery Plan. Although EU funds have not yet begun to flow, France has allocated 30 billion euros for the project.

These are based on three priorities: green investment, such as clean fuel research and building renovation; measures to improve competitiveness, such as factory modernization; and “social cohesion”, including health and vocational training.

But the difficulty of obtaining more funds in Europe and the fact that Macron and his ministers have denied any recent EU agreements have intensified the suggestion that politics is also driving the French president to worry that the United States and China are sneaking in. Europe. Innovation.

Nevertheless, with the reduction of emergency support, the question of whether EU countries such as France should increase spending remains a related issue.

Some economists pointed to the trillion-dollar spending plan of US President Joe Biden, calling for direct transfer to low-income households, debt forgiveness for hard-hit companies to obtain state-backed loans, and greater stimulus measures. .

in a Recent papersJean Pisani-Ferry and economist Olivier Blanchard said that France should increase spending beyond the currently planned 60 billion euros.

Pisani-Ferry, the former head of the French economic planning agency, said: “Even if the scars are left by this crisis, there are ways to heal at least some of them.”

He added that Macron “should not delay debt” and other measures, because not injecting enough capital into the economy may turn into a “self-fulfilling prophecy” of low growth.

One of the priorities is to induce the French to spend the 165 billion euros they saved last year. According to these data, using 20% ​​of the savings for beverages, food and outing activities can generate an additional 1.7% GDP growth. See you, National Bureau of Statistics.

After six months of closure, when it reopened for outdoor services last Wednesday, many restaurants and bars eagerly welcomed returning customers. But some people decided not to reopen because they feared that restrictions such as a curfew at 9 p.m. would make it unprofitable.

At the same time, other companies are struggling to deal with last year’s debt, including government-backed debt. PGE Loan plan. Trade groups argue that such companies should be allowed to extend the loan period to six years. However, such changes may prove to be expensive, and banks are reluctant to agree.

A Parisian restaurant owner, Michelin-starred chef Yannick Alleno, tried to extend his 1.5 million euros state-guaranteed loan for another year, but when the bank said that the renegotiation would cost about 50,000 euros upfront costs, it decided to refuse. He said: “Many restaurants are now heavily in debt.” “We need to help protect employees’ jobs.”

Another sensitive question is whether the company will lay off employees in the next few months because the government has reduced its support for the government through reduced vacation plans, which have so far prevented the unemployment rate from soaring.

Pisani-Ferry said that if Macron wants to protect work and ensure that consumer confidence remains high, he will need to let go of the faucet.

He believes that the risk of expanding stimulus measures that will be spent on purchasing foreign goods and increasing public debt is offset by the benefits of faster economic growth. The benefits of economic growth have been predicted and will reach at least 5.5% this year and next year. Will reach at least 4%. The Central Bank of France.

“There are no hard budget constraints in the short term, but there are soft political constraints… The French government does not want to give people the impression of unlimited consumption.” said Philip Martin, chairman of the French Economic Analysis Committee.

Daniela Ordonez, chief French economist at the Oxford Institute for Economic Research, went further. He believed that Macron did not need to increase spending in Europe: “France can do whatever it wants.” She said , But politically speaking, this is a different story.

With France taking over the EU presidency in 2022 and the upcoming general election, “Macron wants Europe to be a game changer, and he wants to show that Europe has changed under his leadership.”