A difficult challenge

The victory of Emmanuel Macron avoided the worst to France and Europe. However, the new President inherits a country lost in translation, where the majority of the young population voted for the extreme parties.

France is still under urgency rules and experimenting a high structural level of unemployment. Despite a better economic environment, the unemployment rate remains around 10%, – versus 4.3% in Germany -. France’s youth unemployment rate continues rising in contrast to a decline in most advanced economies.

The fiscal situation is weak, with a chronic deficit and a government spending remaining structurally high and ineffective. France has one of the highest taxes levels in Europe, but the public debt is still on its way up (96% of GDP). It will become soon unsustainable. Indeed, about two third of the debt is on the hand of non-residents versus one-third in Italy or ten percent in Japan.

Macron is facing a tougher challenge than former German Chancellor Gerhard Schroeder’s in the early 2000s when he introduced the so-called Hartz reforms that transformed Germany. The environment is more globalised and competitive than seventeen years ago. Even if Macron proves able to stimulate the labour market efficiently, the rise of the Front National is not solely driven by economics. Immigration issues and terrorist threats are a major part of the voters’ concerns.

No political legitimacy to impose tough reforms

Despite apparent rallying to the Macron’s cause from the Conservators side and the Socialist party, the abstention vote (including “blank or white votes”) raised to about one-third of the total electors.  One-quarter of the voters or 10.6 million people voted for the extreme right party, a score never seen before. In total only 45% of French citizens chose Macron. Likely almost half made a choice by default which leads to an uncertain situation in the perspectives of the general election coming in four weeks.

Le Pen won more than 36,000 communes. It shows that her candidacy did have widespread support throughout the country and the Front National is strongly anchored in the French political landscape. Le Pen’s appeal was strongest in the Front National’s usual redoubts in the industrial north and older, more conservative south-east.Both are areas where deindustrialisation and globalisation have led to stubbornly high unemployment, and lots of anti-establishment feelings. The country is divided through various fractures: urban versus rural, white-collar versus blue-collar, workers versus unemployed. With the French people heading back to the polls next month to elect a new National Assembly, the balance of power remains uncertain and the chance for En Marche! (“On the Move“, Macron’s independent party), to win a majority is slim.

What’s next?

In the French political system, the President designs the Prime Minister, who composes the government, which has to be approved by the Parliament. Macron is expected to name his prime minister around 15 May, but the choice could be temporary. Indeed, the president may be forced to replace his first choice with someone from an opposition party if he fails to obtain a parliamentary majority in next month’s election. This would lead the country to a cohabitation, a situation not supportive of any reforms urgently needed in the country.

But the situation could be even worse and bring the country in a situation with no majority. Indeed, if the result of the first round has to be translated in the coming general election, four equal forces will emerge: the extreme-left lead by Melenchon (close to the five-starts party in Italy or Tsipras in Greece), the right wing conservator party, the French President movement and the Extreme right of Madame Le Pen. The format of the coming election is different than the Presidential election. The conservator, the Socialist and the extreme-right parties have a better organisation and structure than the Extreme-left and the young President movement to perform in this more local environment. Macron, with unsteady parliamentary backing at best, will struggle to implement the structural reforms that he promised.