Friday, 21 January, 2022

After the “yellow vests”, an economic turn in trompe-l’oeil for Macron


The head of state was forced to revive the budget and put an end to the orthodoxy of public accounts to put out the social fire. The price to pay to maintain the supply policy applied since the start of his five-year term.

During the announcements of the first social measures for the

What if the “yellow vests” were the best economists in France? On the roundabouts, there has been a lot of demand for measures in favor of purchasing power, to the point of forcing Emmanuel Macron to make a spectacular economic turn: the budgetary sluices have been opened, and some 17 billion euros have been poured into the economy. over the past winter in an attempt to put out the social fire. An unexpected windfall which in fact turns out to be rather timely: if the French economy is resisting the slowdown in global growth better than its neighbors, it is in particular thanks to domestic demand that is still solid fueled by these emergency measures.

So that, for once, France did not launch a budgetary stimulus out of time. A note from France Stratégie, the think tank attached to Matignon, showed in 2016 that “Since the 1980s, fiscal stance has been mostly acyclical or pro-cyclical”. Clearly, we have too often clearly reduced the deficit when growth took a nosedive (the latest example is the start of the Holland five-year term) or forgot to restore the public accounts in a period of economic dynamism, when it would have been necessary to do opposite.

Keynesian trims

This social crisis therefore allowed Emmanuel Macron to earn his stripes as a good Keynesian – which was not necessarily expected in view of his 2017 campaign – with public accounts as a collateral victim. The goals of returning to a balanced budget in 2022 have been shelved, and the deficit is still expected to stand at 2.2% of GDP next year. The 3% rule? “A debate from another time,” ruled the head of state. Symbol of this change of foot, there is no longer any question of removing 50,000 positions of state officials over the five-year term, only half (at best).

Read also:

REPORT A year later, the anger intact of the “yellow vests” of Libourne

However, it is difficult to go so far as to speak of a turnaround. For Emmanuel Macron as for the economists who surrounded him during the campaign, the public deficit has never been the main problem of the French economy. The priority has always been to revive growth, through these structural reforms so popular with investors. However, not one of these (reform of the Labor Code, capital taxation, attractiveness measures, etc.) has been called into question for a year, even though the ISF was a totem hated by “vests”. yellow ”. The unemployment insurance reform, decided upon after the crisis, even fits perfectly into the supply policy touted during the campaign. Clearly, Emmanuel Macron only wanted to buy time to preserve the fundamentals of his economic policy, even if it means losing readability. It remains to be seen whether the pension reform will disrupt this watchmaking industry.

TO FIND OUT MORE >>> INFOGRAPHIC: Where are the government’s promises?

The head of state was forced to revive the budget and put an end to the orthodoxy of public accounts to put out the social fire. The price to pay to maintain the supply policy applied since the start of his five-year term.

During the announcements of the first social measures for the

What if the “yellow vests” were the best economists in France? On the roundabouts, there has been a lot of demand for measures in favor of purchasing power, to the point of forcing Emmanuel Macron to make a spectacular economic turn: the budgetary sluices have been opened, and some 17 billion euros have been poured into the economy. over the past winter in an attempt to put out the social fire. An unexpected windfall which in fact turns out to be rather timely: if the French economy is resisting the slowdown in global growth better than its neighbors, it is in particular thanks to domestic demand that is still solid fueled by these emergency measures.

So that, for once, France did not launch a budgetary stimulus out of time. A note from France Stratégie, the think tank attached to Matignon, showed in 2016 that “Since the 1980s, fiscal stance has been mostly acyclical or pro-cyclical”. Clearly, we have too often clearly reduced the deficit when growth took a nosedive (the latest example is the start of the Holland five-year term) or forgot to restore the public accounts in a period of economic dynamism, when it would have been necessary to do opposite.

Keynesian trims

This social crisis therefore allowed Emmanuel Macron to earn his stripes as a good Keynesian – which was not necessarily expected in view of his 2017 campaign – with public accounts as a collateral victim. The goals of returning to a balanced budget in 2022 have been shelved, and the deficit is still expected to stand at 2.2% of GDP next year. The 3% rule? “A debate from another time,” ruled the head of state. Symbol of this change of foot, there is no longer any question of removing 50,000 positions of state officials over the five-year term, only half (at best).

Read also:

REPORT A year later, the anger intact of the “yellow vests” of Libourne

However, it is difficult to go so far as to speak of a turnaround. For Emmanuel Macron as for the economists who surrounded him during the campaign, the public deficit has never been the main problem of the French economy. The priority has always been to revive growth, through these structural reforms so popular with investors. However, not one of these (reform of the Labor Code, capital taxation, attractiveness measures, etc.) has been called into question for a year, even though the ISF was a totem hated by “vests”. yellow ”. The unemployment insurance reform, decided upon after the crisis, even fits perfectly into the supply policy touted during the campaign. Clearly, Emmanuel Macron only wanted to buy time to preserve the fundamentals of his economic policy, even if it means losing readability. It remains to be seen whether the pension reform will disrupt this watchmaking industry.

TO FIND OUT MORE >>> INFOGRAPHIC: Where are the government’s promises?