Mix from Global Panorama and Mutualité Française @ flickr.com
Mix from Global Panorama and Mutualité Française @ flickr.com


On May 7th, France will elect a new president. With Emmanuel Macron and far-right candidate Marine Le Pen scoring first and second in the first election round on April 23rd, the French will have the choice between two totally different visions for their country, their society and the future of the European project. Accordingly, also the economic programs of both candidates differ starkly from each other.


What happened on April 23rd: Deep divisions but no real surprise


Before all, the polls were quite precise this time: As predicted, the head and founder of En Marche!, Emmanuel Macron, as well as far-right candidate Marine Le Pen of the Front National have qualified for the elections’ second and final round. Additionally, and unlike feared before, this year’s voter turnout was only slightly below that of 2012 (at 77.8 % compared to 79.48 %).


Beyond that, the outcome of April 23rd clearly exposed the deep divisions that run through French society. A few examples: Firstly, and as predicted by the polls, none of the traditional parties succeeded to get into the final round. Whereas the candidate of Les Républicains, François Fillon, scored third at 20 percent, the candidate of the Parti Socialiste, Benoît Hamon arrived at 5th place at only 6.4 percent of the votes. Secondly, the run-off between the first four candidates was rather tight: Exemplarily, far-left candidate Jean-Luc Mélenchon, who continuously climbed in the polls in the last weeks up to the elections, subsequently scored fourth at only 1.7 percent fewer votes than Marine Le Pen at second. Additionally and thirdly, both extreme poles of France’s party landscape received a high share of votes – a combined total of more than 40 percent, with Mélenchon receiving 19.6 percent and Le Pen 21.3 percent of the votes respectively.


Fourthly and lastly, the deep rifts that divide the French are particularly highlighted by the fact that the final election round on May 7th will see two completely contradicting visions of a future France. It is a sharp contrast between Marine Le Pen’s grim vision of a protectionist, secluded France, that closes the door on immigration, breaks with the Euro and potentially the EU altogether and isolates itself; and, on the other hand, the vision of the candidate of the En Marche! movement, Emmanuel Macron: an optimistic and open-minded France, which defines itself as a driver of European integration as well as part of a globally integrated world. It therefore is a clash between openness and seclusion that is not uniquely French, but has rather strongly shaped political discussions and democratic choices in the Western world for some time now.


What happened since the first round?


Many, and obviously particularly pro-Europeans all over the place were relieved that Macron had won the first round. Shortly after the results were published, politicians of the French government, the Socialist party in general as well as their candidate Benoît Hamon called upon their supporters to vote for Macron in the second round. Also many politicians of les Républicains expressed their support for the En Marche! candidate for the final round, as did their candidate François Fillon. Yet, some remained vague, torn or just refuse to vote for Macron.


The following days were particularly marked by several last-minute strategic manoeuvers of Le Pen’s campaign. These were certainly also motivated by the fact that in the polls for the final round, Macron is still ahead of Le Pen by around 20 percent. Along with the manoeuvers came a confusion of ideas and the particularly ever-crass populist rhetoric of the far-right candidate. A few examples: Firstly, in an attempt that was judged to reach a broader scope of both, far-left as well as conservative voters, Le Pen (temporarily) stepped down from her post as Front National party leader. But even though many far-left supporters share Le Pen’s aversion to globalization, inter alia her strong anti-immigration stance may prove as a decisive obstacle. Additionally, most supporters of far-left candidate Mélenchon (who did not reach the second round but collected almost a fifth of the votes in the first) are predicted to either abstain or spoil their ballot papers on May 7th instead. Moreover, in an attempt to appeal to undecided conservative supporters, Le Pen blatantly copied extensive parts of a speech held in April by François Fillon (videos mocking Le Pen’s copy have gone viral since). Furthermore, she tried to soften her position to rip France out of the Euro, which up to then constituted one, if not the most essential promise of her election campaign. Her new idea is to not completely replace the Euro by the (in her plans to be newly introduced) Franc, but to rather establish two parallel currencies.


How confusing and unclear these ideas are became blatantly visible during the final debate between the two candidates on French TV this Wednesday. Generally, the debate was full of bitter onslaughts and razor-sharp in tone. But whereas Macron seemed well prepared and to safely master his numbers, Le Pen’s attempts to explain her economic and Euro plans seemed badly prepared and vague. Referring to her modified plans, she stated that French citizens should be given a “national currency”, whereas banks and big firms should still be able to trade in Euro. As Macron subsequently pointed out several of the drastic consequences and the confusion such ideas would bring about to the French economy, Le Pen refused all of these with rather superficial arguments (“we will gain in competitiveness”). Instead, she further focused on lashing out against Macron: As already done before, Le Pen repeatedly labelled him as “globalist”, accused him of being guilty for France’s current economic situation as a former Minister for Economy and Finance or depicted him as a representative of a “globalization gone wild”.


After two and a half hours of hostile debate, the latter nonetheless ended with a clear winner: A survey showed that 63 percent of the French found Macron more convincing than Le Pen, who was only accorded 34 percent respectively.


What happens next?


Despite smaller fluctuations, the estimations for the second round on May 7th remain mainly the same: The polls forecast Emmanuel Macron to lead with 60 percent of the votes, distancing Le Pen at 40 percent respectively. Hence, if these estimations prove right, Emmanuel Macron has the best chances to become France’s next president. Yet, the camp of the undecided, the “neither-nor”, that is voters who potentially abstain or spoil their ballot papers, is still estimated at around 30 percent. The next big challenge for the new president will be the legislative elections on June 11th and 18th.


Next to security and terrorism, economic and social issues were and still are central issues to these elections. Below, you will find a summary of the two candidates’ proposals on topics such as economic and fiscal policy, employment and social policy as well as trade (nota bene: this relates to the programs as published before the first election round and does not take in account any changes or new ideas as announced afterwards).


The Candidates’ Economic Programs


The visions of Macron and Le Pen concerning economic issues contrast as sharply as their overall visions for a future France. Let us take a look at the different sections of their economic programs in more detail.


Economic policy


Emmanuel Macron

Emmanuel Macron plans to revive the French economy with various reforms and to strengthen the country’s European position. His plans for a new growth model are built on three pillars: an investment plan of €50 billion, a “more just” fiscal policy, and a cut in public spending (see below). For him, achieving these objectives is a prerequisite for fellow EU members to perceive France as a reliable partner for constructive discussions on Europe’s future. Macron’s economic growth goals are rather cautious: with anticipated GDP growth ranging from 1.4 percent in 2017 to 1.8 percent in 2022. A fervent European, Macron wants to pursue the European project and is the only one among the candidates to truly push for a deepening of European integration. For him, France is only capable of handling its global challenges together with its European partners and as a strong, embedded part of the EU. The core of his European project is the deeper integration of the Eurozone. Macron proposes creating a Eurozone budget to not only stimulate future investments within the Euro area, but also to more effectively react to financial crises. A proposed Eurozone parliament, composed of MEPs from Eurozone member states, as well as a to-be-installed Eurozone minister for economic affairs and finance would control and be accountable for the Eurozone budget. Access to the budget would be conditional upon strict adherence to common rules of fiscal and social policy in order to prevent dumping.


Marine Le Pen

Throughout her electoral campaign, the far-right candidate has been lashing out against the EU and globalization, urging protectionist measures and strict limits on what she calls “mass immigration”. Her anti-EU stance is underlined by her promise to withdraw France, not only from the Eurozone and to introduce a national currency, to end the Schengen agreement and reintroduce border controls, but also eventually hold a referendum on France’s EU membership in order to withdraw the country from the union altogether. In her manifesto, Le Pen promises to strengthen the protective role of the state, shielding French workers and companies from competition. For example, she would no longer apply the EU Posted Workers Directive. She also puts forward several measures to strengthen small and medium-sized enterprises, through a reduced “fiscal and administrative complexity” of the labor code as applied to them as well as via lower social security contributions.


Employment and Social Policy


Emmanuel Macron

Macron’s program does not touch the 35-hour work week. He proposes that, where possible, collective negotiations shall be decentralized and take place at firm-level. Social charges shall be reduced in order to increase purchasing power. Macron plans to introduce a universal unemployment insurance, that once every five years is also available to those who quit their job on their own initiative. Macron conditions this universal coverage to the recipient’s active search for new employment. If two fitting offers are refused or if the individual’s job search lacks commitment, he/she may lose the right to receive unemployment aid. Additionally, as part of his investment plan (see below), Macron wants to invest greatly in education and skills training. He proposes a universal pension system, replacing the separate systems currently in place in France. Macron intends to adhere to the retirement age of 62, but proposes that those who want to work longer shall have the opportunity to do so.


Marine Le Pen

Le Pen has harshly criticized the labor market reforms under Hollande’s presidency and would scrap the Loi El Khomri. While keeping the 35-hour working week as a general rule, she would allow certain branches to negotiate 37 or 39 working hours a week which would have to be fully paid. She also wants to set the entry to retirement at 60 years or after 40 years of contribution payments. Le Pen further proposes to introduce a “national employment priority”, by which she would introduce “a tax on every new contract with a foreign employee” – which would be incompatible with the EU rules governing the Single Market. Her main strategy against high unemployment is a re-industrialization policy further underpinned by protectionist measures (see Trade Policy). In addition, she intends to prioritize French companies for all public procurement.


Fiscal Policy


Emmanuel Macron

Macron wants to respect the European deficit rules by reducing public spending at least down to 3 percent of GDP. He therefore intends to save €60 billion by 2022: €25 billion in social spending, that is in the health sector and due to an expected decline in unemployment to 7 percent by 2022; €10 billion by cutting the outgoings of local authorities, and finally €25 billion by decreasing government spending, due to further digitization of administration and cutting the number of civil servants by 120,000 over five years, except for sectors such as defense and national education. An integral part of Macron’s program is an investment plan of €50 billion. Over five years, €15 billion would be invested in education and skills training; €15 billion to deal with ecological change and energy transition. Finally, €5 billion each for agriculture, public health, public transport and the modernization of public administration. Macron further wants to abolish housing taxes for 80 percent of the French, intends to add a 13th month salary to the minimum wage (French: SMIC), which would give an extra €100 per month, and wants to introduce the option of individual taxation. He also intends to decrease corporate taxes from 33.3 percent to 25 percent.


Marine Le Pen

In terms of tax policy, Le Pen is committed to lowering taxes for low and middle incomes. The tax cuts would target smaller and medium enterprises for which the relevant tax rate would be cut to 24 percent. Similarly, she intends to lower income taxes for the three lowest tax brackets by 10 percent. The expected revenue shortfall would supposedly be offset by savings to the tune of €60 billion over five years. These are to come from lower spending on policies supporting immigration and from renegotiating on payments to the EU budget.


Trade Policy


Emmanuel Macron

Throughout the presidential campaign, Macron was the only candidate clearly in favor of free trade agreements. He assumes that CETA would objectively improve trade relations with Canada. Underlining his European stance, he emphasized in the context of the CETA debate that in matters of both trade and competition policy, the EU is strongest when it acts commonly.


Marine Le Pen

Le Pen has adopted a critical and protectionist stance towards free trade and is strictly against any free trade agreement, including CETA and TTIP. She wants to put in place policies that would protect French companies against dumping. Imports of all goods not conforming to French standards would be prohibited. She also wants to adopt a control mechanism for foreign direct investment into France so as to protect the national interest.


Of course the story does not end with the May 7th. elections. Who ever will become France’s next president will face a variety of short- and long-term challenges. On Monday May 8th. we will therefore hold a GED Virtual Roundtable, where we will talk about the French election results and the challenges ahead, as well as, answer questions from you, the audience. The virtual roundtable is free to participate in, all you have to do is register for the event here and log in online for the virtual roundtable at 1.30 – 2.00 pm CEST (Berlin).