At the end of a lightning campaign, marked by the return in force of economic and social issues (inflation, purchasing power), Emmanuel Macron was re-elected on April 24 for a second term. Having been criticized for his often haughty attitude and being out of touch with the daily concerns of the French, the head of state tried to turn the perception around between the two rounds of the election. Although the program he presented in mid-March insisted on increasing the legal retirement age to 65 and on making the minimum solidarity income conditional on hours of work, Mr. Macron then re-focused his message on promoting more typically "left-wing" measures. The third place won by the leader of La France Insoumise (LFI), Jean-Luc Mélenchon, forced the president, whatever his campaign team says, to give a more social turn to his proposals.
So what might come next? Pending the appointment of a government and the results of the June legislative elections, it is difficult to predict precisely what the first weeks of the new five-year term will look like. One thing is sure, however; it will start the way the previous one ended: with concerns about purchasing power being paramount. The unexpected stagnation of the gross domestic product (GDP) in the first quarter and the persistence of high inflation highlight a key fact: 2022 is nothing like 2017 on the economic front.
At that time, the failure to reverse the unemployment curve prevented François Hollande from running for re-election. Still, the economic upturn was real, driven above all by pro-business measures. The former first secretary of the Parti Socialiste had converted to a supply-side policy approach with the objective of lowering the cost of labor. He had implemented, at the beginning of his five-year presidential term, the tax credit for competitiveness and employment, and then the responsibility pact, offering companies lower employer contributions and tax breaks. Corporate margins had returned to their 2007 levels, investment was picking up and so was growth. Europe had finally erased the stigma of the financial crisis.
All quiet on the finance ministry front
Five years later, President Macron's first term has ended with that situation turned upside down. Unemployment has dramatically fallen – to 7.4% of the active population by the end of last year – so the issue did not surface in the campaign and Mr. Macron's full employment goal seems within reach. But inflation is picking up and growth, supposed to be one of the main drivers of budget revenues in the candidate's plan, is stalling.
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