Yellow Vests cast a shadow but France maintains outlook

French Finance Minister Bruno Le Maire said the government is sticking to its growth forecast of 1.7 per cent this year, even as he warned of risks from the international environment and the Yellow Vests’ protests in France.

The threat of a trade war between the US and China is weighing heavily on global growth, and there are uncertainties in Europe, notably surrounding Brexit, Mr Le Maire said in an interview on Europe1 radio yesterday. In France, the minister said the so-called Yellow Vests protests have a high economic cost and took about 0.1 percentage point off growth in the fourth quarter last year, according to Bloomberg.

Rioters in Paris torched motorbikes and set barricades ablaze on the upmarket Boulevard Saint Germain on Saturday, as protests against high living costs and the perceived indifference of President Emmanuel Macron turned violent on the fringes.

Mr Macron’s government, shaken by the unrest, had last week hardened its stance against the uprising, calling the protesters agitators seeking to overthrow the government.

Driving the unrest is anger particularly among low-paid workers over a squeeze on household incomes and a belief that Mr Macron is deaf to citizens’ needs as he enacts reforms seen as favouring the wealthy, Reuters said. Thousands more rallied in cities including Bordeaux and Toulouse in southwest France, Rouen in the north of the country and Marseille in the south-east.

“We are still counting on growth of 1.7 per cent, but I’m obliged to recognise that all our international environment is tense,” Mr Le Maire said.

Mr Macron announced tax cuts in December in an attempt to appease the protesters, and has promised a national debate in the coming weeks on fiscal policies and on changing how the state functions.

Last month, he promised tax cuts for pensioners, wage rises for the poorest workers and the scrapping of planned fuel tax increases to quell the unrest at a cost to the Treasury of $11 billion. The measures marked the first big U-turn for a president elected 18 months earlier on a platform to break with traditional French politics and liberalise the heavily-regulated economy.

But Mr Le Maire said the government will not go back on its landmark tax decisions, in particular the abolition of the wealth tax.