Why Macron is a risky bet for France and for Europe

About a month ago I wrote about Emmanuel Macron as a risk, rather than a saviour. Today, following his 1st round presidential victory in France, I feel even more that he represents a risk that is unappreciated. Here’s why.

As I put in March, “Macron as President is a ‘bad’ outcome for stability since he has no political base. His election would create uncertainty because it would make the likelihood of a weak presidency greater.” And what I meant by that is that Macron has no MPs to support him and his legislative agenda. If his reformist agenda is to be successful, he needs legislative support. And that’s hard to get when you don’t have a strong party apparatus behind you.

Tony Barber at the FT put it really well in two paragraphs that highlight both how Macron represents the status quo and how he also is an outsider legislatively:

“it is misleading to portray Mr Macron as a complete outsider. He is, in fact, the preferred candidate of wide sections of the French political and technocratic elite who saw several years ago that the old party system was breaking down and were on the hunt for a candidate who could be presented to French voters as a fresh face. He is a product of the finest French educational institutions, including the École Nationale d’Administration, the training ground of the elite, and served François Hollande, the outgoing president, both as a specialist adviser and as economy minister.

Should he win as expected on May 7, Mr Macron may not find governing easy. Sheer political momentum may help many candidates of his En Marche! (On the Move) party to win seats in the June parliamentary elections, but an outright majority may elude him. The most probable outcome is a legislature in which a large, centrist “presidential” bloc supports Mr Macron, but critics assail him from the far right, the conservative right and the left.”

Now, current President Hollande made a lot of promises about adding stimulus and creating jobs when he was running for President in 2012. Then he ran up against the strictures of the Eurozone’s stability and growth pact and was stymied in executing his agenda. His Presidency quickly became the most unpopular in French history.

His Economy Minister Montebourg was a bit of a maverick. By 2014, he was accusing the Germans of forcing France into a restrictive policy. And Montebourg was criticizing Hollande for being too restrictive and caving to the Germans to boot. Hollande had him replaced by Emmanuel Macron.

And so Macron was brought in because he agreed with the austerity-lite paradigm. Thus, he ‘owned’ French economic policy under Hollande. Yet, somehow Hollande took the blame for the economy’s shortcomings, with Macron quitting government altogether in 2016.

I would say there is no real indication that economic policy under Macron will change drastically, first because of the euro and eurozone restrictions, and the attendant government solvency risks. But then there’s the fact that Macron has no political base.

Macron has almost no government experience and has never been elected to political office. So we are talking about someone who is supposed to make his country great again by radically overhauling government without having a natural political base. That’s even more difficult to do than it has been for Donald Trump, who at least has the Republican party to help him execute policy. After all, even Macron’s old party, the socialists, are no help here. Their support has been decimated during the Hollande presidency. They will suffer heavy defeats in the parliamentary elections in June.

To me, this is the recipe for a weak presidency and then the question has to be how the economy fares. If it doesn’t fare well, Marine Le Pen will be in a much stronger position in 2022.

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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