May 13, 2021


FRANCE: Betting on the post-pandemic bonanza

BY Antonio Barroso

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As the vaccination campaign progresses – around one-quarter of the population has received at least one dose of the jab – President Emmanuel Macron looks determined to leave Covid-19 restrictions behind. Macron seems to be betting that the expected rebound in the second half of the year will provide him with a favorable political outlook ahead of next spring’s presidential election. In this regard, the three issues to watch going forward are the potential social effects of the country going back to “normal,” the noise around another potential round of stimulus, and the June regional elections.

Lockdown exit: With opinion polls indicating increasing lockdown exhaustion amongst the population, the government has strongly signaled that it plans to push ahead with its four-stage plan to eliminate most restrictions progressively. For instance, the unpopular night-time curfew is expected to be lifted on 30 June. Therefore, and absent any new flare-ups in cases, life could look relatively “normal” by September with a health pass required to attend certain events. However, the reopening of the economy also might lead to the reignition of protests, especially if the withdrawal of support measures from July leads to increases in unemployment. To bolster its “social” credentials, the government is preparing new measures such as an EUR 500 subsidy to individuals aged 16-26 who do not have a job or training.

Relaunch 1.5: As previously underlined, Macron has made a point of letting his European counterparts know that the EU should be more ambitious regarding fiscal stimulus. However, an expansion of EU post-pandemic recovery resources remains unlikely. Instead, the French government could take advantage of the current flexibility of fiscal rules to top up its EUR 100bn “Relaunch” initiative (40% of which is funded by EU money). Finance Minister Bruno Le Maire has said there would not be a second plan, but a revision of the ongoing initiative is underway. An increase in funding for long-term investment projects would make sense politically for Macron, as he would probably use it as one of the main selling points for his electoral campaign for a second presidential term. Any announcements on this issue are unlikely before Q3, however.

Regional elections (20 and 27 June): Macron’s repeated efforts to divide the right were recently on display when his Republic on the Move (LREM) party reached an agreement with the center-right candidate from The Republicans (LR) in the Provence-Alpes-Cote d’Azur (PACA) region. The deal entails LREM withdrawing its candidacy in exchange for joining the list of LR candidate Renaud Muselier. However, a recent opinion poll showed the move could backfire, as it put far-right National Rally (RN) candidate Thierry Mariani ahead of Muselier. To be sure, it is unlikely that the RN will be able to win several regions in the upcoming regional polls. But the data suggests some right-wing voters might not be very happy with LR candidates getting close to Macron.

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