As elections approach, specter of inflation threatens Macron’s economic progress

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As French President Emmanuel Macron seeks a second term, he risks high inflation eroding the economic gains he made during his presidency. In 2017, Mr Macron pledged to implement business-friendly reforms and reopen the eurozone’s second-largest economy by cutting taxes, easing labor laws and aggressively marketing France to foreign investors. . was elected. Although his early reforms sparked violent anti-government “yellow vest” protests in late 2018, Macron can point to many indicators that his reform efforts are bearing fruit.

Strong growth along with labor reforms aimed at making it easier to hire and fire have helped push France’s stubbornly high unemployment rate to its lowest level since the start of the 2008 global financial crisis. youth unemployment – ​​a scourge of Macron’s predecessors for decades – fell even faster as his government stepped up apprenticeship programs and incentives to hire young people.
INFLATION Record inflation in the eurozone has made it increasingly difficult for the Macron government to convince voters that its cocktail of growth, tax cuts and targeted payouts to low-income people are resulting in power gains. actual purchase.

Polls show Mr Macron is likely to win the first round of elections on Sunday. But far-right leader Marine Le Pen is making a comeback in the polls, and a race between her two top candidates for the April 24 second round is approaching. During his presidency, the French economy outperformed other major European countries as well as the wider Eurozone, rebounding from the worst of the COVID crisis with the strongest growth in more than five decades.

To prevent those gains from evaporating, France has rolled out a package of measures worth more than 25 billion euros ($27.6 billion) to soften the blow of a price-fueled inflation spike. Energy. Costly hikes in gas and electricity prices have kept France’s inflation rate lower than most other eurozone countries, but President Macron’s rivals are taking advantage of the frustration of voters in the face of declining purchasing power. A spike in inflation has clouded the economic picture, suggesting that France has otherwise become more open for business during Macron’s presidency.

It will take time to return to pre-COVID levels. So far, Macron’s progress in making France more business-friendly has not translated into improved competitiveness when it comes to the trade balance.

With the influx of foreign direct investment, employers are losing their grip on coveted long-term contracts. French entrepreneurs, meanwhile, are launching new businesses at an unprecedented rate, mostly freelance couriers who have decided to capitalize on the online shopping boom. President Macron promised to stabilize the economy “at all costs” at the start of the pandemic, and in 2020 he posted a record budget deficit of 8.9% of economic output, his 10 years owed the country continuous debt .

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  • As elections approach, specter of inflation threatens Macron’s economic progress
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