French President Emmanuel Macron has started of his presidency by presenting himself as the new Sun King. He has already succeeded in dismantling and remaking the French political establishment. Will he now also manage to remodel the French economy or will he drown in the political morass like so many before him?
Reservations
Let's start off with some sobering observations:
> Macron's party LREM and its ally MoDem may have achieved a clear majority in the National Assembly, but it isn't as overwhelming a majority as some of the polls had suggested in the days leading up to the vote.
> Almost 6 out of 10 French voters didn't feel strongly enough one way or the other about Macron's revolution and reform pledges to head to the polls. That could turn out to be a serious obstacle to the president's agenda, as he will surely need broad popular support if he wants to remake the French state according to his vision.
> According to one poll just before the elections, just 48% of people wanted Macron to have a majority in parliament. The explanation could be that the French feared that Macron would simply have too much power, since he was forecasted to win with an overwhelming majority. However, it could also be because of people simply not being supportive of Macron's reform agenda. Perhaps voters were happy to kick the old guard in the teeth, but were also reluctant to enable Macron to overhaul society too much.
> When President Hollande tried to pass a less ambitious jobs bill than the one envisioned by Macron, Hollande faced street protests and strikes. France has a long history of resistance to structural reforms and it remains to be seen if it stays quiet on the streets this time when Macron will give it a shot.
> LREM will bring a group of disparate newcomers into parliament. This could complicate work for Macron. They will soon have to learn the dirty, muddy and necessary art of compromise. This could disappoint the people who voted for Macron and his party to shake things up and turbocharge a new way of doing politics. Also, tensions within LREM are bound to emerge too.
> Macron could run into trouble because of his new presidential personality. Macron clearly opted for an entirely new way of acting when he moved from presidential candidate to president. He had concluded long ago that the French don't want a buddy to lead them, they want someone distant and mysterious. Hollande had promised to be a "normal president" but quickly discovered that the French didn't like that. Now Macron is trying the opposite. However, this could come back to haunt him if the French decide that Macron is taking the emperor/king-like role too far.
> Macron's programme in some ways could be interpreted as a belated Third Way for France. The US, UK, Germany and the Netherlands had their market-friendly leftish political leaders in the 1990s, but France had never joined the fray. Up until now that is. It could turn France into a more competitive country, but the evidence from the countries that followed the path of the Third Way also shows that Third Way politics had some serious flaws.
Macron the Saviour?
The above factors could hamper Macron's success. Yet, there are also a number of reasons why Macron could turn out to be the reformer he promises to be:
> Improving economic conditions and a clear majority in parliament provide the president with a window of opportunity for reforms. Business confidence reached its highest level for six years in May, jobs are picking up, and France is bound to grow at a pretty decent rate this year.
> Contrary to popular belief, France has some great economic basics going for it, namely a growing native working-age population and high productivity. The average French worker produces in four days what a British worker produces in five. The high quality of France's infrastructure and education play a substantial role in this.
> Hollande faced the opposition of trade unions when he attempted structural reforms. Macron could be luckier as the more moderate CFDT has supplanted the CGT - which made life hard for Hollande - as the nation's largest union in the private sector.
> The abstention rate being very high could indeed mean that the French are indifferent to Macron's reform agenda. Yet, it could also point towards a wait-and-see approach. The polls indicated that Macron would win big, so the French could have decided to stay home and enjoy the sunny weather being already convinced that Macron would win.
> Macron aims for a government of national unity, a radical centrist administration. Historians point towards two instances of leaders who ran governments of national unity in French modern history. Both were successful and produced lasting improvements: Raymond Poincaré in 1926 and Charles de Gaulle in 1945.
> Macron's first month as president looked promising. He wasn't afraid to engage in a handshake "dual" with American president Trump and to be critical of Russian president Putin when standing next to him. He will need that strength and courage to attack the paralysis within his own country.
France and Europe on a roll?
Despite the previously mentioned strengths of the French economy, Macron has his work cut out for him. Unemployment has stood for five years at 10%. Businesses are bogged down by mind-numbing, elaborate and complex labor laws which protect permanent jobs and keep firms from creating new jobs.
Macron has promised to pass job market reforms in the next two months. It is supposed to provide employers more freedom to negotiate working hours, overtime and salaries with their workers. Layoffs would be made easier and damages awarded to employees made redundant would be capped. By September, we should be able to tell if Macron's reformist agenda is off to a good start and if the hype is justified.
Taking a European perspective, Macron's clear mandate improves the chances of a stronger Eurozone and EU since the French leader is an outspoken supporter of the EU and of strengthening and deepening the monetary union. Should German Chancellor Angela Merkel win re-election at the end of September, the most important members of the Eurozone and the EU will have pro-European, business-friendly leaders in the driver's seat. These two will have a couple of years where they won't be distracted by elections and where they can focus on building stronger national and European economies.
For Merkel, this would be even more so. If she will start her fourth term, it will almost certainly be her last. She will then care most about the legacy she leaves behind, and she would like that to include leaving behind a resilient Europe. Therefore, a stronger Berlin-Paris axis seems likely in the quarters and years ahead.
In the ongoing clash between those in favour of an open society, trade, markets and Europe on the one side and nationalist, protectionist and isolationist populists on the other side, the former have won another major battle. French electoral outcomes are positive for the euro and EU. Risks for the survival of the Eurozone have clearly retreated further to the background.