Emmanuel Macron gambles on economic record to win a second term in France

In a not-so-distant future, France is an industrial powerhouse to rival Germany, with thriving manufacturers, robust growth rates and a narrow deficit. For the moment, however, that is fiction — an economic recovery imagined by best-selling French author Michel Houellebecq in his new novel Anéantir for the end of the second term of an unnamed president with an uncanny resemblance to the real one, Emmanuel Macron.

If he is to have any chance of turning fantasy into a reality, Macron will have to win re-election in April and finish the work he has started to overhaul France’s economy.

As he gears up to declare his candidacy, the 44-year-old president together with his finance minister Bruno Le Maire — the finance minister in Houellebecq’s book is also called Bruno — have been trumpeting new factory openings and investment pledges as proof that the “re-industrialisation” of France is under way and that the business-friendly reforms his government has enacted since 2017 have begun to bear fruit.

“It is a work of fiction, of course,” says Le Maire, who was shadowed for a year by his friend Houellebecq as he researched the novel, “but we are certainly working to ensure that the scenario he describes turns into reality.”

In January, Le Maire took the message to Dieppe in northern France, where he toured a Renault factory, which manufactures its high-end Alpine sports car brand, with the group’s chief executive Luca de Meo. The plant was threatened with closure a few years ago, but has been given a new lease of life with a deal to manufacture an electric version of the Alpine as part of Renault-Nissan’s €23bn global electric push. “We can again become one of the great industrial powers of the world,” Le Maire told workers.

French Finance and Economy Minister Bruno Le Maire stands next to a Renault Alpine sports car on the production line at the factory in Dieppe
Bruno Le Maire, the French finance minister, took his message of re-industrialisation to workers at a Renault factory in Dieppe in January © Sameer Al-Doumy/AFP/Getty Images

Some smaller businesses are also heeding the government’s call to think local and invest in French industry rather than looking to Asia for industrial imports. In Orléans, south of Paris, break-resistant glassware-maker Duralex has teetered on the brink of failure over the past 20 years under a series of different owners. Yet the company has so far proved as indestructible as its distinctively shaped glassware, familiar to generations of schoolchildren.

Last year, the factory and its 250 employees were rescued by France’s International Cookware, owner of the Pyrex brand, which acquired the group with a promise to invest €17mn over three years and double Duralex sales after years of under-investment. Project manager Eric Denis says the new owners saw value in the employees’ manufacturing knowhow and in the plant’s local supply chains, with the sand for the glass and most other inputs coming from less than 200km away. “We’re proud to produce in France,” he adds.

While Macron’s rivals have focused on crime and what they say is uncontrolled immigration, as well as on recent rises in the cost of living, his allies believe his economic record is one of the strongest cards he has to play as he seeks re-election.

Macron’s reforms — begun before the eruption in 2018 of anti-government “gilets jaunes” protests and largely enacted before the Covid-19 pandemic — have made it easier to hire and fire workers, have cut taxes on capital and income for both corporations and households, and trimmed unemployment benefits.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.


France has already enjoyed a remarkable post-pandemic comeback, with gross domestic product reaching pre-crisis levels last autumn — quicker than elsewhere in Europe. In a strategy Macron dubbed “whatever it costs”, the government spent heavily during the crisis to help businesses stay afloat and keep employees in their jobs, and then rolled out an EU-backed €100bn recovery plan to turbocharge activity in sectors from construction to cars.

Unemployment, perennially higher than in the US, the UK or Germany, is also back where it was before coronavirus at less than 8 per cent of the workforce, the lowest level in more than a decade. The government says 1mn private sector jobs have been created since 2017.

“The strategic choices we have made to transform the French economy are the right ones, and at the end of our term, you can see the results,” Le Maire says. On the pandemic, he adds: “Everyone criticised the state before the crisis but was very happy to see it swing into action during the crisis.” 

Economic and political fights

Supporters argue that a second term for Macron, the frontrunner in the election race, would open the way for France to shed its reputation for industrial sclerosis and hostility to free markets. And even perhaps boost growth to levels enjoyed in Germany and other northern European neighbours.

The president’s political opponents are naturally more sceptical. On the left, Macron will probably lose votes from former supporters who now dismiss him as an arrogant “president of the rich”, notorious for abolishing the wealth tax in 2018.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.


The conservative candidate Valérie Pécresse — who is given a chance by opinion polls of becoming France’s first woman president — says Macron has “ruined” the country and “raided the till” for emergency pandemic spending that is burdening France with mountains of public debt which came close to 116 per cent of GDP in 2021.

With a large bureaucracy and generous social security benefits, France’s government spending — at over 55 per cent of GDP — remains higher than in any industrialised country other than Austria.

Ordinary voters, furthermore, do not feel as if they have grown richer under Macron — whose first round poll ratings remain stubbornly around 25 per cent — despite government data showing that consumer purchasing power grew 8 per cent during his tenure, faster than under any of his recent predecessors.

“Many French are still poor, especially workers in some sectors like retail, cleaning, restaurants or agriculture,” says Patrick Artus, chief economist at Natixis. Rising energy and fuel prices are also hurting consumers, despite the government spending more than €15bn to protect them from recent price spikes.

Agathe Lyon, a 34-year-old mother of two in Calais, recently started shopping at discounter Lidl instead of the nearby Intermarché hypermarket to save money. “Biscuits for the kids, cheese for my husband, toothpaste — it’s all cheaper here,” she says, adding that higher petrol bills for her car are a particular worry.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.


Le Maire says that one reason the government reacted “so strongly” on energy prices was to protect people such as Lyon and ensure that its economic achievements were not “eclipsed by an external shock”. Macron’s rivals for the presidency slammed the spending as a gambit to boost his re-election bid.

Macron’s bet is that a French industrial revival — although it will take years to bear fruit — will boost long-term prosperity by creating more skilled jobs and will also reduce Europe’s dependence on foreign suppliers, a vulnerability cruelly exposed by shortages of masks and other medical supplies at the start of the pandemic.

During the 2017 election campaign, Macron promised a “Marshall Plan for the re-industrialisation of areas where the economy has collapsed”. Last week he returned to the industrial north to announce support for former mining communities hit by high unemployment and poverty — including the opening of a “gigafactory” for electric batteries from a French start-up called Verkor that is set to create up to 1,200 jobs.

Le Maire calls the process of “industrial reconquest” a political as well as an economic necessity to keep workers out of the clutches of extremists — the two far-right candidates have a combined 30 per cent support in the polls — and to avoid the kind of popular, post-industrial anger that powered the rise of Donald Trump in the US and Brexiters in the UK.

“When a factory closes, you see the opening of an office of the Rassemblement National because people feel neglected, despised,” says Le Maire, referring to the far-right party of Marine Le Pen, who came second to Macron in 2017, and who the polls show to be one of his main rivals again.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.


Macron and Le Maire have already announced multibillion-euro plans for green hydrogen production and other projects and boasted of a rise in foreign industrial investment into France.

“The government made a lot of progress in improving the rules to make things more favourable for industrial investment,” says Mark Costa, chief executive of Eastman, which plans to spend as much as $1bn in France on what would be the US group’s biggest polyester recycling operation.

Le Maire has repeatedly boasted that France began creating industrial jobs for the first time in 30 years in the period between 2017 and 2019, before the pandemic dented output. His ambitious goal is to increase the French manufacturing industry’s share of GDP from 10.5 per cent today to 15 per cent and ultimately 20 per cent.

Some economists question how realistic that is given that industry’s contribution to the French economy halved between 1970 and 2020. France’s trade deficit in goods rose by a third to a record €84.7bn in 2021 as manufacturers lost market share in exports, creating what even Le Maire has admitted was “a black mark” over the economy that showed the need to boost industry as quickly as possible.

“There are some foreign companies that are coming in, of course,” says Natixis’s Artus. “But we continue to lose industrial jobs and the trade deficit is still deteriorating . . . There has been absolutely no re-industrialisation of France. It’s pure propaganda.” 

Start-up nation

Le Maire likens the economic reforms introduced since 2017 to an unfinished multistorey edifice that began on the ground floor with cutting taxes on capital — including the abandonment of the wealth tax — and reducing corporate tax by eight percentage points to 25 per cent.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.


The next stage was the all-encompassing “Loi Pacte” — a package of initiatives designed to deregulate the private sector, especially small and medium-sized companies where France lags badly behind its neighbours in Germany and northern Italy. The government has also relaxed labour market rules to encourage businesses to hire new staff.

“On the right we championed these kinds of measures for years without putting them into practice,” says Franck Riester, a former politician in the conservative Les Républicains who is now a minister in the Macron government responsible for foreign trade and inward investment. “But he’s actually done it.”

Investors report a big change in the official attitude towards business and say the government seems to want to help the country’s entrepreneurs. From a low base in 2017, France now counts more than 25 tech start-ups each with a market value of more than $1bn among its ranks, including Ledger, a crypto wallet maker, Doctolib, an online medical appointment app and Exotec, which develops robots for warehouses.

“The atmosphere for start-ups is like night and day since Macron came in,” says the chief executive of one French industrial company who is supporting his re-election campaign. Another company boss, in consumer goods, adds: “I think he’s really changed things. He’s given a sense of regulatory stability, and simplified the rules.” 

A woman holds a banner reading “Social” as people take part in a demonstration called by French unions as part of a nation-wide day for better working conditions and against pensions and unemployement funds reforms
Pension scheme reforms have been stalled by the pandemic and by worker protests © Philippe Lopez/AFP/Getty Images

The results of such reforms, some of them begun under Macron’s predecessors, were starting to show in France before the pandemic, in the form of falling unemployment. And after Covid-19 struck, Macron convinced former German chancellor Angela Merkel and other European leaders of the need for a €750bn EU pandemic recovery plan, financed by common EU debt, that has also boosted European economies.

The government knows much more needs to be done to reform the French economy and close the gap with Germany’s industrial performance. The next target — the top floor of Le Maire’s reform structure — is full employment, which means a profound modernisation of the education system, more investment in training, and increased labour mobility.

Pension reform — raising the retirement age from 62 to at least 64 — is one big unfinished item on Macron’s agenda. The pandemic killed off his ambitious attempt to merge 42 separate pension schemes into a single, fairer system, but even before Covid it had been stalled by disruptive protests from workers in the most generous schemes. He is expected to try again with a less ambitious and as yet undefined plan for pension reform if re-elected. Pécresse has also vowed a reform that would eventually extend the retirement age to 65.

Other structural problems persist. The Macron government has stripped €10bn out of the €70bn of “production taxes” that hit companies hardest, especially small manufacturers. These taxes, levied on land, turnover or staff regardless of profit, make up a quarter of the French state’s tax revenues from business and are higher than in any major EU economy except Sweden. Most of Macron’s presidential rivals also support cutting these taxes further.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.


But financing further tax cuts will not be easy. Le Maire concedes that restoring order to the public finances must be the government’s main priority alongside industrialisation if Macron is re-elected, while the surge in energy prices this winter is a painful reminder of how easily the best laid plans can be knocked off course.

At the Duralex factory in Orléans, Denis says spikes in the price of the gas needed to fuel the plant’s glassmaking oven have forced it to cut production rather than increase it as planned and to rely on stockpiles to maintain sales. “We’ve frozen certain investments,” he says. “It’s extremely worrying.” 

A broader concern is whether the rush of pandemic spending on high-profile projects might go to waste, especially if France and its European neighbours fail in their multibillion-euro efforts to produce electric vehicles and the batteries to power them at low enough prices to compete against Asian and American manufacturers.

A masked worker inspects a glass at the end of the production line at a factory of French glassware manufacturer Duralex
Production at glassmaker Duralex, which was bought last year with the promise of €17mn investment, has been hit by the spike in gas prices © Guillaume Souvant/AFP via Getty Images

Eric Trappier, head of the metals industry employers’ federation and chief executive of aircraft maker Dassault Aviation, says the pandemic has galvanised attempts to re-industrialise in France and reduce dependence on imports, but warns that continued progress is not guaranteed.

“We must recognise that there has been lots of government aid that helps this recovery,” he says, “How do we ensure that French industry continues to recover and does not start declining again?”

Leave a Comment