All the political and psychological conditions for recovery are present but the improvement is precarious.
In 2017, and for the first time since the beginning of the 21st century, the year has ended better for France than it started. At the end of François Hollande’s disastrous five-year term as president, our country was ailing and had become the laughing stock of the developed world: it found itself with economic stagnation, mass unemployment, loss of control over public finances, impoverishment of the French people, disintegration of the nation, degradation in internal and external security, and was reduced to sitting on the touchline of Europe and the world. All the elements were there to favor populism – a decline in status of both the nation and its citizens, an identity crisis and an Islamist threat. This justified fears in France, as it had in the UK and the USA, that the country would fall victim to demagogues. All this was changed when Emmanuel Macron won the presidential elections. Now at last there is recovery, characterized by a growth rate of 1.8% and about 270,000 new jobs that have brought unemployment down to 9.7%. Reform of the labor market and of education, together with the beginnings of fiscal normalization have initiated the modernization of the economic and social model.
On the political front, the dignity of the presidency has been restored. France has made its comeback on the international stage by becoming the main driving force behind the revival of the European Union and the eurozone, by establishing itself as the flagship of multilateralism to counter the irresponsible sallies of Donald Trump, and by regaining its role as a useful mediator in the Gulf – in the Lebanon, Iran and Qatar. In short, the French are once more proud of themselves. France’s image, which was tarnished under François Hollande, has turned about and become a positive one. All the more so at a time when Donald Trump is dismantling US leadership, Theresa May is taking the UK into a dark place with Brexit, Angela Merkel is having a hard time forming a government in Germany, Italy is facing high-risk elections, and Spain’s recovery from crisis is being compromised by the Catalonian psychodrama.
However, the difficulties that other democracies are undergoing should warn us to not to lose our heads. Emmanuel Macron’s talent has been to bring together the necessary political and psychological conditions for France’s recovery. But this recovery is very far from completion. The improvement in our economy is modest and precarious. France is performing much less well than Germany or the eurozone (a 2.3% growth rate, 8.7% unemployment, a trade surplus of over 250 billion euros, a deficit and public debt reduced to 1.7% and 87% of GDP). Long-term growth remains limited to 1% because of a low level of competitiveness, borne out by a deficit of over 62 billion in the balance of trade and the persistent waywardness of public finances: the deficit, forecast as being 2.9% of GDP will thus be the highest in the eurozone in 2018, a year during which our country will have to borrow 195 billion euros to finance a debt totaling 97% of GDP. Furthermore, the upturn in growth in France is above all the result of an improvement in external conditions as from the end of 2015 and these conditions are now tending to get harsher due to the effect of the rise in oil prices, in interest rates and in the value of the euro against the dollar.
Politically speaking, the French are putting their trust in Emmanuel Macron and giving him all the necessary opportunities to modernize the country. But skepticism remains about his success and there are deep divisions in the country, among its citizens and among the regions, concerning the good sense and the content of the reforms – divisions highlighted by the first round of the presidential elections – and these are holding back and hindering their implementation. For this reason, public expenditure, which is at the heart of France’s problems, will still go unchecked in 2018 for lack of any true strategy to reduce it. The sovereign functions of the State are still being sacrificed, which casts serious doubt on its ability to deal with economic crises and other major shocks. The unprecedented centralization of power puts the French president in an exposed position and could easily compromise reforms if civil society is not involved and if the outlying regions do not adhere to them.
The year 2018 will thus be decisive for both the modernization of France and the renewal of Europe. For France, the success of the reforms depends on the reconfiguration of the State and the reduction of public expenditure: yet again put off this year, it is imperative that they happen in 2019 or else our country’s recovery is fated to end in a disastrous failure. For Europe, in the same way, there are opportunities not to be lost in the formation of a new government in Germany, in the Italian elections, and in the European elections in 2019. In order not to lose out on this historic moment in time, Emmanuel Macron’s mastery of the spoken word be translated into an ability to take action as a leader. It is to his credit that he has restored hope. André Malraux said that “a world without hope is one in which we cannot breathe”. France and Europe are not saved yet; but they are breathing once again.
(Column published in Le Point, 21st December 2017)