In Defence of Emmanuel Macron
The French president is widely reviled because he forces people to confront hard truths that they would rather not hear. Now last week's snap election is forcing others to take some responsibility
To say that Emmanuel Macron is a polarising figure is only half right. Since his surprise decision to call the snap election that ended in a hung parliament on Sunday, it is hard to find anyone with a good word to say about him. He stands accused of a reckless gamble that has emboldened the far right, empowered the far left, plunged France into political chaos and raised the spectre of a new eurozone crisis. Even his own supporters are furious with him for a decision that has cost many their jobs. Meanwhile the British media, which has alway hated him for daring to challenge two of its most cherished narratives - that France is ungovernable and that the European Union is doomed to collapse - can barely conceal its delight at the mess.
I think a lot of this criticism is wide of the mark. Clearly he has become deeply unpopular in France. His combination of arrogance and intellectualism gets up a lot of people's noses, though in my past dealings with him I always found him extremely impressive and very personable. This profile in Politico captures him very well. But whatever his failings as a politician, I think a strong case can be made that his decision to call the election was rational, that the risks arising from Sunday’s inconclusive outcome at least in the short and medium term are being overstated. And that in the long-term he may have even done France and Europe a favour.
Clarification
In one respect, his decision to call the election has already been vindicated. Macron said he was seeking a “clarification” from voters after Marine Le Pen’s far right National Rally came top in the European Parliament elections with 31.4 per cent of the vote while his own Renaissance party barely hung on to second place with just 14 per cent. Did the French really want a far right government? The voters gave their answer on Sunday when National Rally slumped to third place with just 143 seats, far short of predictions at the start of the campaign that they would emerge with a near or actual majority. Voters clearly did not want the far right anywhere near power.
But this was not the only clarification that Macron was seeking. He called a snap poll because an election this year was inevitable. Ever since his Renaissance party failed to secure a majority in the 2022 parliamentary election, Macron has been governing by decree, relying on section 49.3 of the constitution to enact reforms and daring the National Assembly to bring down the minority government in a vote of no confidence.
But this ruse was unlikely to work when it came to passing a budget later this year, in which the government would have to find further savings of up to €15 billion a year on top of €20 billion already earmarked to bring a budget deficit of 5.2 per cent back below 3 per cent by 2027 to comply within eurozone rules. So Macron was also seeking an answer to another pressing question: could the French political system take responsibility for tough choices ahead?
This was the same question that led Macron to launch his insurgent bid for the Elysee in 2017. He understood clearly that France had to reform if it was going to revive a flagging economy and see off the threat from the far right. As a young official, he had been secretary to a high-level official commission which produced a blueprint for reform that had been gathering dust for over a decade.
When I first encountered him as an impatient young economic advisor to President Francois Hollande, he was scathing about the failures of successive governments to grasp the nettle of reform, including his own boss. He had famously described Hollande’s socialist programme during the first two years of his term as “like Cuba without the sun”. By 2017, it was clear that Hollande, having made one U-turn, was going to tack back left for an election that he stood no chance of winning, while the conservatives were going to offer fantasy tax cuts. Macron stood against them, told voters hard truths and secured a mandate for radical supply side reform.
Jupiter
Since becoming President, Macron has succeeded in delivering reforms in areas such as the labour market and pensions that have eluded previous French governments for decades. Investment has poured into France and there has been a sharp increase in start-ups. But growth remains lacklustre and debt has continued to rise and has now reached a 112 per cent of GDP. Meanwhile, the inevitable fierce resistance to the reforms, which have in any case fallen short of what intended, have made him personally deeply unpopular, not helped by his “Jupiterian” manner.
Nonetheless he clearly hoped that the prospect of the hard right winning power would cause other mainstream parties to join his Ensemble coalition, creating a new parliamentary majority to deliver his reforms. But he underestimated the cynicism of the centre left Socialist Party, which instead cobbled together an alliance with the Far Left, Communists and Greens, and of a sizeable faction of the mainstream centre right party, Les Republicans, which allied itself with the Far Right.
The result was not just a three-way split, delivering a hung parliament that has taken the French political system into unchartered territory. The election also delivered a parliament in which two thirds of its members had stood on platforms divorced from economic reality. National Rally watered down its plans ahead of the first round of voting, but its proposals to scrap Macron’s pension reform, slashing energy taxes and raising the minimum wage would still cost roughly €38 billion a year, according to the Institute Montaigne, a think-tank. But the left-wing New Popular Front, which surprised everyone including itself by emerging as the largest party with 182 sears, produced a manifesto that managed to be even more fiscally reckless, consisting of extravagant social spending funded by soak-the-rich tax rises.
Trussonomics
Of course, these programmes would risk a deep crisis if they were even delivered in full. As Moody’s and Standard & Poors have warned this week, the combination of higher deficits from increased spending plus slower growth as a result of the reversal of reforms would lead to questions about long-term debt sustainability. But this clearly isn’t going to happen. One reason is that Macron’s party will hold the balance of power in the National Assembly and thus has a veto.
A second reason is that such a budget would fall foul of eurozone fiscal rules which require member states to take steps to reduce their debt and deficits to 60 percent and 3 per cent of GDP respectively. France has been put into the excessive debt procedure, which means its budget plans will come under extra scrutiny from Brussels.
A third reason is Liz Truss: no government wants to suffer the indignity of being outlasted by a lettuce after losing the confidence of markets days after entering office. France got a warning of what is at stake when the spread between French and German 10 year bonds ro rise to a 12 year high immediately after the election was called.
Nor could any government pursuing such reckless programmes expect to win such a tussle with the EU and markets. It is true that the European Central Bank has the tools to intervene to “counter disorderly market dynamics” . But what constitutes disorderly dynamics is not defined. In any case, the Transmission Protection Instrument can only be used to buy the bonds of a member state that is in compliance with the EU’s fiscal framework, which includes taking any measures required to bring down an excessive deficit. On the other hand, the ECB could intervene to buy the bonds of other governments to minimise contagion, leaving France isolated.
It is now up to France’s political parties to find a way out of the mess that they have created with their reckless promises and refusal to confront economic reality. It is the need to come up with a realistic budget, rather than France’s lack of tradition of coalition politics, that will surely be the biggest obstacle to finding a solution. Jean Luc Melenchon, the far left firebrand whose La France Insoumise is the largest party in the New Popular Front has insisted that the left must choose the new prime minister and have its agenda implemented in full. But other members of the NPF clearly recognise that is not going to fly, while Macron's group have said they won’t back any government with the far left or the far right.
That leaves various options ranging from a minority left-wing government supported on a bill by bill basis by the centrists; a coalition spanning all parties except the far left and far right; or an Italian-style technocratic government comprising non-political figures charged with passing a budget and not much else. Macron himself has called for mainstream parties “to build a large force to govern together”.
Thanks Brexit
None of these outcomes would be politically stable. But providing they resulted in sensible budget policies they need not be economically unstable. Many European countries including Belgium, the Netherlands, Spain and Italy, have experienced political fragmentation in recent years without tipping into crisis. Besides, thanks to Brexit, no party now advocates doing anything as stupid as taking France out of the EU or eurozone, so France’s trading and regulatory arrangements would remain stable. Nor is the risk of France holding up much needed EU reform as high as has been suggested, France’s national interest has not changed. At the very least the parliamentary elections produced a strong pro European majority in favour of measures to deepen the single market and defence cooperation.
The greater risk is that the prolonged political instability combined with continued economic stagnation as the reform efforts stall, makes it more likely that Marine Le Pen wins the presidency for the far right in 2027. On the other hand, it may be that she is a busted flush. The campaign exposed the party’s racist underbelly, as the spotlight was shone on its xenophobic candidates. For all the party’s complaints about an unfair electoral system, it secured just 33 per cent of the votes in the first round while the public turned out in huge numbers to support the Republican Front designed to keep it out. Meanwhile Le Pen herself is now subject to a corruption probe. Clearly the party still has a mountain to climb to make itself electable.
But out of this debacle, there is opportunity: to provide the clarification that Macron was seeking in the form of political parties prepared to be honest about the state of the French economy and what is needed to revive it. Once again, Britain provides a model, albeit in this case a positive one. After a long period of political chaos under a succession of populist governments, the Labour Party has just won a landslide victory not with traditional tax and spend policies but a commitment to supply side reform.
Macron be now be a diminished figure on the political stage. But in forcing parliament to confront economic reality, Macronism continues. As one Socialist Party leader noted this week, “it is the end of Jupiterianism and of governments of 49.3. We are obliged to behave as adults”. Indeed. If the result of this snap election is a return to a politics of responsibility, that would be a pretty good legacy.