Macron’s victory will have a significant economic impact, both in France and in Europe.
Emmanuel Macron has been elected the next President of France, following a resounding victory in the Presidential run-off election. Macron, 39, will become France’s youngest leader since Napoleon Bonaparte, after defeating Marine Le Pen of the far-right Front National (FN). Macron ran as a centrist, vowing to do away with the old distinctions of left and right, and his policies are broadly pro-business, pro-EU, and socially liberal.
Macron had labelled himself an outsider, but that is only partly true. He is the first candidate to win outside France’s main political parties – the Parti Socialiste or Les Républicains – since the founding of the Fifth Republic in 1958. Consequently, in the French parliamentary elections set to take place in June, his nascent political party, En Marche! – which holds no seats but has received promises from Macron, to run a candidate for all 577 seats – faces opposition from parties with established campaign structures and greater resources. Yet, Macron is also a former Rothschild investment banker, and has served as the Economy Minister in the government of his predecessor, François Hollande. Indeed, compared to Le Pen’s anti-immigration, anti-EU, anti-globalisation and anti-tax platform, Macron was seen as the safe choice and it may partly account for the scale of his victory.
Macron’s victory will have a significant economic impact, both in France and in Europe. France’s economy has underperformed following the 2008 financial crisis, and barring Italy, has grown slower than any OECD country since 1990. Unemployment sits at 10.1 per cent, with nearly a quarter of those aged under 25 out of work. Macron will seek to address this by helping businesses, continuing the work he began under Hollande. Corporation tax will be gradually reduced from 33 per cent to 25 per cent, 40 billion euros in other tax breaks will be made, and Macron will attempt to push through politically unpopular changes to France’s stringent labour laws to encourage new employment. France’s public spending, among the world’s largest at 56.5 per cent of GDP, will slash 120,000 civil service jobs, with Macron also pledging to reduce fluctuating budget deficits to less than 3 per cent of GDP. In contrast to the cuts, he has also promised to extend the welfare state, for example, by promoting benefits for entrepreneurs and the self-employed.
In Europe, Macron has advocated greater integration within the EU on issues of social, environmental and fiscal regulations. Macron’s European agenda includes the creation of a common fiscal policy under a joint finance minister, increased economic activity by Germany to stimulate the wider Eurozone, and comprehensive reform of the bloc. Macron’s positions will have consequences on a range of key issues, including austerity policies and the negotiations over Britain’s exit from the bloc. Crucially, his election has given credence to the theory that the popularity of nationalist, anti-EU movements may be on the wane. Elections in the Netherlands and Austria hinted at a slowing of EU opposition, and this was seemingly confirmed in France. Macron has been widely applauded by European leaders, likely relieved that Le Pen’s threat to pursue ‘Frexit’, a potentially fatal outcome for the EU, has been avoided. Victory for a pro-Europe party in the German federal elections in September would probably secure the EU’s medium-term future. But opposition to the EU and skepticism of the benefits of the single currency abound. Macron’s calls for reform should be heeded, lest the same malaise that gave rise to the likes of Brexit and Le Pen could set in once more. In this pursuit, the energy and passion that Macron aims to inject into the French economy and politics should be applied in the EU as a whole.