Macron to take time reforming economy in divided France

BERLIN/PARIS: After a decade of slow growth, rising unemployment and dwindling competitiveness, France elected a president on Sunday who says he has a plan to pull the country out of its economic malaise.

Emmanuel Macron, a former investment banker who quit the government of Francois Hollande twice out of frustration with the slow pace of reforms, is promising to overhaul the labour market, simplify the tax and pension systems, while paring back regulations he says hamper innovation.

But as he gets set to enter the Elysee Palace following his defeat of far-right candidate Marine Le Pen, the 39-year- old former economy minister faces daunting obstacles.

He will be trying to push through his reform agenda at a time when France is more divided than ever over how to respond to the disruptive forces of globalisation.

The election campaign showed that nearly half the country would prefer a dirigiste approach to the economy in which the role of the French state is expanded rather than shrunk, as Macron proposes.

In order to have a chance to implement his plans he will have to secure parliamentary backing.

That will depend on how his uproven new party, En Marche! (Onwards!), does in legislative elections next month. And even if he does get the majority he needs, it is likely that many of his reforms could take months, or even years, to produce results.

Delays could expose Macron and his government to the same political backlash that ultimately pushed Gerhard Schroeder, the chancellor responsible for Germany’s ‘Agenda 2010’ reform drive, out of office a dozen years ago.

“Macron is promising an incremental approach whose success will depend on negotiations with the unions,” said Gilles Moec, chief European economist at Bank of America Merrill Lynch.

“I understand the strategy, but it is not one that will deliver immediate results. It will take time to bed down.”

Macron’s economic programme, put together by Jean-Pisani Ferry, the former head of Brussels-based think tank Bruegel, eschews the ‘shock-and-awe’ approach of his defeated centre-right rival Francois Fillon, which included radical public sector job cuts and an extension of the statutory working week.

Instead he is charting a more nuanced course that his advisers say is better suited to addressing the root causes of France’s economic troubles. Many independent economists agree.

Macron will not scrap the controversial 35- hour workweek, as Fi l lon promised.