In her excellent book on Emmanuel Macron and the background to his rise to the presidency of France in 2017, (Revolution Française – Emmanuel Macron and the quest to reinvent a nation – Bloomsbury, 2018) Sophie Pedder, the Paris bureau chief of “The Economist” quotes part of an interview that Macron gave just a few months after becoming President: “I’m not made to lead in calm weather,” he said “my predecessor was, but I’m made for storms”. Indeed, there have been many testimonies to his poise and self-control, in Pedder’s book and other accounts since. At the height of the gilets jaunes protests in November 2018 for instance, when violent demonstrators seemed determined to march on the Elysée Palace, Macron was reported in the following week’s “Canard Enchaîné” as being expressionless and unmoved (“de marbre”) in the face of what his security staff considered an imminent threat. He didn’t budge.
As Macron now faces the second, almost perfect, storm of his presidency, he will need all the poise and self-control he can muster in deciding what to do next.
The effect of a storm is to throw a ship off course. In this case, the ship of state. How far off course depends on one’s view of where Macron has been taking France since he became President in May 2017. Contrary to what his political opponents and many in the media seem to think, his overall strategy has not been to open up France to the forces of “ultraliberal” capitalism, favouring the rich to the detriment of the less well off, but to make all French people a little less reliant on the state and its comforting but also stifling embrace, and a little more reliant on their own efforts. State intervention in the economy and the cast iron social safety net that the French enjoy at the price of high taxes and high public debt has been shifted only slightly. Or, more precisely, had been shifted only slightly before the epidemic of Covid-19 hit the country.
Running through most of France’s policy shifts since 2017, including those that have not yet been finalised, it is indeed this “liberal-light” theme of more self-reliance that seems common to all of them. The initial labour market reforms, making it less complicated and, above all, less costly to hire and fire workers had started to make a dent in some of the highest unemployment figures in the OECD. The subsequent education and training reforms, putting the choice of training schemes in the hands of employees themselves and taking it away from social partners, is credited with a big increase in apprenticeships and other training courses. The reform of the generous unemployment benefits scheme would have been a lasting incentive for the unemployed to seek retraining and find a job more quickly. But as this reform had not actually come into force by the time the Covid-19 crisis struck, it is now in limbo, some of its provisions have been put on hold and are likely to be reversed. And then of course there was the major reform of pensions, designed to adapt the pension system to a modern, post-industrial economy and also to reduce pressure on the public purse, but which had generated only controversy and confusion before the crisis. It is now on hold too and, according to some sources, more than likely to be abandoned altogether.
As he leaves his Prime Minister to oversee the precise measure to relax the lockdown from May 11th onwards, the number of employees furloughed under a state sponsored scheme settles at around 10 million, the country’s public debt to GDP ratio creeps onwards and upwards, as the state “invests in debt”, as Gérald Darmanin, the budget minister put it quaintly in a TV interview the other day, and as the latest unemployment figures soar and can only get worse, the question is whether Macron can, or indeed intends to, revert to the same course he had been charting previously, at a time when the natural reflex of most people, and not only in France, is to turn to the state for help and protection. Indeed, the man himself, in his nationwide address on April 13th, seemed unsure of his future course of action, concluding with the words, “we must all reinvent ourselves, starting with me” (“nous devons tous nous réinventer, et moi d’abord”). What that enigmatic phrase will ultimately mean remains to be seen.
For the time being at least, the French government has little choice but to continue to cope as best it can with the impact of the coronavirus and its economic fallout. Luckily, its extra borrowing is still at negative interest rates, a relatively comfortable situation which indicates that lenders have not yet lost trust in the French state’s capacity to repay its debts. But the prospect of higher interest rates is never far away. An unguarded comment by the new President of the European Central Bank was enough to push up interest rates on long-term Italian debt and the recent judgement by the German Constitutional Court has not made life any easier for the ECB to buy as much sovereign debt as it judges necessary to maintain a credible stance as lender of last resort. All this is a far cry from the situation that Macron would undoubtedly have preferred, to reduce deficits and outstanding debt and thus elicit a more favourable response from neighbours like Germany and the Netherlands to the request to loosen their own purse strings in favour of greater European solidarity.
In a recent article in “Le Monde”, Cédric Pietralunga, a journalist, writing about Macron's possible post-lockdown strategy, quotes him as saying, “of course we must protect, but protection doesn’t mean anesthetising people, as if there were nothing else to be done.” (“on doit assumer de protéger mais ce n’est pas protéger pour anesthésier, pour dire qu’il n’y a plus rien à faire”). He goes on to write that, “wanting the French to be more self-reliant is nothing new for Emmanuel Macron” (“cette envie de voir les français se prendre en main n’est pas nouvelle chez Emmanuel Macron”) referring back to his first New Year’s address to the nation in which he paraphrased JFK’s famous call, “ask not what your country can do for you but what you can do for your country”. The government spokeswoman, Sibeth Ndiaye, is quoted in the same article as saying, “the basic message is that the state alone cannot find the solution to relaxing lockdown…it’s only if everyone feels that they have their own contribution to make that we shall be able to come through this.” (“le message au fond est de dire que l’Etat seul ne peut résoudre le déconfinement … c’est parce que chacun se sentira dépositaire d’une part de la solution qu’on pourra surmonter.”). What is missing in such messages, as well as journalists’ comments on them, is the link between more or less self-reliance and the sustainability of France’s social model. The more people rely on the state, the more taxes and debt are bound to rise, a message that the French don’t really want to hear, certainly not in the present circumstances, and that very few politicians, including Macron, have yet dared to spell out in so many words.
However he decides to “reinvent himself”, Macron too, for the time being at least, has little choice but to batten down the hatches and limit the storm damage, while trying to persuade other ships of state to come to the rescue. A tactical change of course is undoubtedly essential before the overall strategy can move on again. This tactical change will last until the storm has blown over, probably by the time of the presidential election campaign in just two years’ time. Only then will we have a clearer idea of whether the French are likely to give Emmanuel Macron a second chance to continue, in Pedder’s words, “his quest to reinvent a nation”.
As Macron now faces the second, almost perfect, storm of his presidency, he will need all the poise and self-control he can muster in deciding what to do next.
The effect of a storm is to throw a ship off course. In this case, the ship of state. How far off course depends on one’s view of where Macron has been taking France since he became President in May 2017. Contrary to what his political opponents and many in the media seem to think, his overall strategy has not been to open up France to the forces of “ultraliberal” capitalism, favouring the rich to the detriment of the less well off, but to make all French people a little less reliant on the state and its comforting but also stifling embrace, and a little more reliant on their own efforts. State intervention in the economy and the cast iron social safety net that the French enjoy at the price of high taxes and high public debt has been shifted only slightly. Or, more precisely, had been shifted only slightly before the epidemic of Covid-19 hit the country.
Running through most of France’s policy shifts since 2017, including those that have not yet been finalised, it is indeed this “liberal-light” theme of more self-reliance that seems common to all of them. The initial labour market reforms, making it less complicated and, above all, less costly to hire and fire workers had started to make a dent in some of the highest unemployment figures in the OECD. The subsequent education and training reforms, putting the choice of training schemes in the hands of employees themselves and taking it away from social partners, is credited with a big increase in apprenticeships and other training courses. The reform of the generous unemployment benefits scheme would have been a lasting incentive for the unemployed to seek retraining and find a job more quickly. But as this reform had not actually come into force by the time the Covid-19 crisis struck, it is now in limbo, some of its provisions have been put on hold and are likely to be reversed. And then of course there was the major reform of pensions, designed to adapt the pension system to a modern, post-industrial economy and also to reduce pressure on the public purse, but which had generated only controversy and confusion before the crisis. It is now on hold too and, according to some sources, more than likely to be abandoned altogether.
As he leaves his Prime Minister to oversee the precise measure to relax the lockdown from May 11th onwards, the number of employees furloughed under a state sponsored scheme settles at around 10 million, the country’s public debt to GDP ratio creeps onwards and upwards, as the state “invests in debt”, as Gérald Darmanin, the budget minister put it quaintly in a TV interview the other day, and as the latest unemployment figures soar and can only get worse, the question is whether Macron can, or indeed intends to, revert to the same course he had been charting previously, at a time when the natural reflex of most people, and not only in France, is to turn to the state for help and protection. Indeed, the man himself, in his nationwide address on April 13th, seemed unsure of his future course of action, concluding with the words, “we must all reinvent ourselves, starting with me” (“nous devons tous nous réinventer, et moi d’abord”). What that enigmatic phrase will ultimately mean remains to be seen.
For the time being at least, the French government has little choice but to continue to cope as best it can with the impact of the coronavirus and its economic fallout. Luckily, its extra borrowing is still at negative interest rates, a relatively comfortable situation which indicates that lenders have not yet lost trust in the French state’s capacity to repay its debts. But the prospect of higher interest rates is never far away. An unguarded comment by the new President of the European Central Bank was enough to push up interest rates on long-term Italian debt and the recent judgement by the German Constitutional Court has not made life any easier for the ECB to buy as much sovereign debt as it judges necessary to maintain a credible stance as lender of last resort. All this is a far cry from the situation that Macron would undoubtedly have preferred, to reduce deficits and outstanding debt and thus elicit a more favourable response from neighbours like Germany and the Netherlands to the request to loosen their own purse strings in favour of greater European solidarity.
In a recent article in “Le Monde”, Cédric Pietralunga, a journalist, writing about Macron's possible post-lockdown strategy, quotes him as saying, “of course we must protect, but protection doesn’t mean anesthetising people, as if there were nothing else to be done.” (“on doit assumer de protéger mais ce n’est pas protéger pour anesthésier, pour dire qu’il n’y a plus rien à faire”). He goes on to write that, “wanting the French to be more self-reliant is nothing new for Emmanuel Macron” (“cette envie de voir les français se prendre en main n’est pas nouvelle chez Emmanuel Macron”) referring back to his first New Year’s address to the nation in which he paraphrased JFK’s famous call, “ask not what your country can do for you but what you can do for your country”. The government spokeswoman, Sibeth Ndiaye, is quoted in the same article as saying, “the basic message is that the state alone cannot find the solution to relaxing lockdown…it’s only if everyone feels that they have their own contribution to make that we shall be able to come through this.” (“le message au fond est de dire que l’Etat seul ne peut résoudre le déconfinement … c’est parce que chacun se sentira dépositaire d’une part de la solution qu’on pourra surmonter.”). What is missing in such messages, as well as journalists’ comments on them, is the link between more or less self-reliance and the sustainability of France’s social model. The more people rely on the state, the more taxes and debt are bound to rise, a message that the French don’t really want to hear, certainly not in the present circumstances, and that very few politicians, including Macron, have yet dared to spell out in so many words.
However he decides to “reinvent himself”, Macron too, for the time being at least, has little choice but to batten down the hatches and limit the storm damage, while trying to persuade other ships of state to come to the rescue. A tactical change of course is undoubtedly essential before the overall strategy can move on again. This tactical change will last until the storm has blown over, probably by the time of the presidential election campaign in just two years’ time. Only then will we have a clearer idea of whether the French are likely to give Emmanuel Macron a second chance to continue, in Pedder’s words, “his quest to reinvent a nation”.
