Inflation there reached 4.5% in March and while it was up from 3.6% in February, it remains one of the lowest rates in the industrialized West and well below the UK’s 6.2% at 7.3%. % of Germany, 9.8% of Spain and 11.9% in the Netherlands. . A decision last year to limit the amount by which France’s largely state-owned energy companies could raise prices has benefited consumers and relieved some of the inflationary pressure from gas and electricity-dependent industries. In France, where about two-thirds of energy comes from the Électricité de France nuclear power plants, the electricity component of inflation has risen by 4% in the last 12 months, but has averaged more than 27% in the eurozone as a whole. However, in the first round of presidential elections next Sunday, Macron will face criticism from left and right for the spike in diesel prices that has hit the rural poor and for his efforts over the past five years to end a series of decades. low growth. pro-business policies. The recent € 2.4 billion rage on consultants since taking office, including the € 1 billion deal with McKinsey in the US, is another front-page issue that drowns out its impressive financial record. and reduces its lead in the polls. By most economic criteria – national income, business investment, consumer spending, labor supply and rising prices – France is at or near the top of the pile of rich nations. Contrary to most forecasts, its economy recovered to 1% above pre-pandemic levels last year. The UK is still down 0.1%. Business investment is increasing in France but is declining in the United Kingdom. The labor shortages there are limited to distinct corners of the economy, thanks to the expansion of a German apprenticeship system promised by the British government but not yet implemented. “The outstanding performance of the job market was a huge surprise,” said UBS economist Felix Huefner. Better financial support meant that the French “continued to buy big tickets when people in other countries stopped” Daniela Ordonez, economist In France, more people are working than before the pandemic, while in the United Kingdom, around 500,000 people, mostly over the age of 50, have left the job market, making the shortages more acute. Daniela Ordonez at Oxford Economics credits better-funded and targeted financial support: “It meant the French continued to buy big tickets when other countries stopped.” The pay gap may seem small – the number of people working or looking for work is 1% higher in France than in 2019 (and 1.5% lower in the UK). But Huefner says increasing the number of workers through the pandemic has helped keep French wages in check – and business costs low. Philippe Aghion of the Insead School of Business in Fontainebleau says 1.2 million jobs were created between 2017 and 2021, “and not just any job – the percentage of long-term jobs has increased.” Temporary employment contracts, especially for younger workers, have been commonplace after nearly two decades of restrictive employment laws – at least the 35-hour week, dating back to February 2000 – as companies sought to circumvent the cost of permanent employment. . Ayon was one of Macron’s three financial advisers when he ran for the presidency. He says the president’s employment court’s ceiling changed the game, giving large companies incentives to hire more full-time employees. Apprenticeship and training reforms were another seismic boost, he says: “In France, we were a lot from the top down, but these days we are more from the bottom up, allowing employees to negotiate solutions with companies. Education is no longer decided by the unions. “Employees choose what they do, as they do in Germany.” Speaking to the Observer last week, Cédric O, France’s foreign minister for the digital economy and a close ally of Macron, said the president’s reforms to tax and labor laws and his understanding of small business concerns played a key role: Understands and believes in entrepreneurs. We are now halfway to creating the business ecosystem we need. ” Ordonez worries that much of the money Macron spent during the pandemic has pushed national debt below 100% to 115% of national income in two years. Earlier this year, Bank of France Governor François Villeroud-de-Galhau warned candidates that proposals for tax cuts and new spending were unacceptable: “We can not allow our public finances to deteriorate further.” Macron has already committed more than 60 billion euros to a recovery fund, along with 40 billion euros from the EU, to provide the backbone of public investment over the next two years. But Ordonez is among many who argue that, so far, the Macron government has distributed lending funds prudently. “The money is being spent on restructuring the economy and freeing companies from historically high taxes,” he said. “Higher investments and job creation will pay dividends.”
