Emmanuel Macron, a centrist and divisive figure, has promised to make France more competitive by cutting corporate tax rates and spurring growth through business. His pro-EU platform calls for greater integration with Germany and more collaboration with German chancellor Angela Merkel.
According to Macron, Germany has been benefitting from a dysfunctional eurozone.“Germany... has a strong economy,” he told Ouest France in an interview with the French regional daily. “but it has demographic weaknesses, economic and trade imbalances with its neighbors and shared responsibilities to give the euro area the future it deserves.”
Macron has proposed a common eurozone budget. Jointly-issued bonds, backed by Germany in order to relieve the debt crisis. Despite Macron’s victory, Germany have rejected the prospect.
After meeting with Macron in Berlin in August, Merkel expressed that she was interested in the idea of a European Monetary Fund, imagining a combined European finance and economy minister. The responsibilities of this minister have not yet been ironed out.
In a joint paper released by the Greens (the political party most aligned with Macron’s economic policies) and conservatives in late October, Germany made clear that it supported a “balanced budget.” Macron’s idea for a eurozone budget was clearly opposed by all parties, which was a major blow to his plans for economic reform.
Strengthening France’s relationship with Germany isn’t the most formidable objective for Macron. Unemployment has been a much more salient problem for the nation. France’s unemployment rate hovers around 10%, which is above average for the eurozone. Germany and the UK post unemployment rates below 5%. Despite being one of the largest economies in the eurozone, its unemployment rate has remained stubbornly high.
Macron has stated that he would like to reduce the unemployment by making it easier for companies to hire employees. Macron’s plan to lighten labor laws and restrictions does not include getting rid of France’s 35-hour work week, which has come as a relief for French workers. Some of the protections for French workers may be at risk however.
In August, Macron’s plan for labor laws went public. Macron plans to reduce the power of French unions, create more power for small businesses, and make it easier to both hire and fire workers. Pro-union groups were alarmed by these proposals and pro-corporate groups seemed dismayed by the lack of sweeping change.
Macron is in an interesting situation because he wasn’t elected solely because of his values. He was elected in part as a refusal of Marine Le Pen. As a result of his unique situation, Macron has come under fire from both the left and the right. Many contend that Macron’s planned economic reforms are not enough to reinvigorate France’s economy. Others state that it’s far too early to make any predictions about the change he proposes.
Already, Macron has been met with setbacks on both sides. He’s faced resistance from Germany as well as political parties within his own country. Indeed, it is too early to forecast the effect of the new president’s economic policies. Even centrists have been cool on Macron’s ideas. Macron will need to inspire the support of centrists in order to move forward with his plans for the French economy.
Getting Germany, pro-union groups, and pro-business groups to work alongside him may prove to be the most challenging as his centrist policies have inspired the awe and ire from both progressives and conservatives. Undoubtedly, he will face more challenges in the road ahead to stabilizing the eurozone, lowering the unemployment rate, and increasing competitiveness.
Michael Volkmann is an entrepreneur with a focus on business operations and finance. He has worked with many small businesses helping them with their M&A for over 6 years. You may sometimes catch him on Twitter.
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