During the French presidential campaign five years ago, far-right candidate Marine Le Pen’s economic program proved to be one of her weak points.
As in this year’s election, she faced centrist Emmanuel Macron – the current president – in the second round.
In a televised debate days before the 2017 run-off, Macron called Le Pen’s plans for the country to exit the eurozone and renegotiate EU treaties “deadly for [France’s] Purchasing power and competitiveness.
Le Pen struggled to counter her criticisms and repeatedly got lost in the many files she had piled on the table in front of her, citing misinformation.
The extremist candidate has officially abandoned her plans to leave the eurozone. But economists say implementing his manifesto would ultimately lead to the same result – and trigger an international financial crisis.
Le Pen presents herself, as in the 2017 election, as “the candidate of [increased] purchasing power. She promised to reduce the value added tax from 20% to 5.5% for energy products such as fuel, and to abolish this tax for certain basic necessities.
French consumers could be in for a nasty surprise if Le Pen succeeds Macron
Measures that could lead to stagflation
But Philippe Crevel, an economist and head of the Parisian political center Cercle de l’Epargne, called such measures counterproductive and accused Le Pen of being on the brink.
“Prices would go down initially, but that would drive up consumer demand and ultimately prices, because there suddenly isn’t more product available on the market,” he told DW.
He explained that only higher productivity—that is, more products generated by input like labor—could increase purchasing power, because the extra money could be spent on additional available goods.
Le Pen also promised to encourage wage increases by removing employer charges on those wage increases. “But that would cause inflation again: to balance wage increases, companies – especially as they face rising resource prices also due to the war in Ukraine – would increase the prices of products,” Crevel said.
The economist thinks that in the long term, the proposed measures would trigger stagflation. It’s a combination of stagnant growth and high inflation.
“It would be similar to what happened after the oil shock of the 1970s, you would see mass unemployment, which would hit the workers first,” he said.
An “absurd” and “deeply immoral” program
Henri Sterdyniak, an economist at the Paris-based leftist research center Observatoire Français des Conjonctures Economiques, agrees that Le Pen’s program is unlikely to help the less fortunate and calls it “absurd”.
“She plans to dismantle the French wind turbines and give the grant money to the French people instead. taxes? It doesn’t make any sense,” he added. said DW.
“In addition, his measures are deeply immoral: foreigners would be asked to pay and French nationals would have priority in terms of employment, housing or social assistance,” he added.
The economist is also strongly opposed to the reduction in employers’ charges: “Our public debt is excessive, currently at 113% of GDP, we have to finance our social state in one way or another!” he said.
Sterdyniak criticized Macron’s program for the same reason. The current president pledges to triple the so-called “Macron bonus”, an end-of-year bonus of €1,000 ($1,080) exempt from taxes and employers’ charges in place since 2018.
“It’s a dangerous game and hardly compatible with Macron’s promise to increase the minimum pension from over €100 to €1,100,” warned Sterdyniak.
Will Macron be able to push through new reforms?
Overall, Macron’s manifesto includes fewer concrete measures and is much less detailed than Le Pen’s. His main pledge is to continue doing what he has been doing since 2017: market-oriented reforms. It also plans to further liberalize the labor market, reduce corporate taxation and raise the retirement age to 65 from the current 62.
Economist Crevel said a pension reform made perfect sense, given rising public debt.
“And yet, bringing his plans to fruition should be more and more difficult because many French people are against it,” he explained. The first term of the president in power was disrupted by numerous demonstrations such as those of the so-called yellow vests movement which blocked the country for months to demand more social justice.
Macron, meanwhile, has already begun to water down his plans mainly to convince the 22% of the electorate who chose far-left candidate Jean-Luc Melenchon, who came third in the first round on April 10. target the retirement age at 64 and submit its plans to a referendum. He also said he would include more green measures in his program.
Stanislas Hannoun, head of the campaign for tax justice and against inequality at the federation of charities, Oxfam France, welcomed these reversals. Her group sifted through candidate manifestos for social, ecological and gender justice content.
“Macron performed very poorly, even though Le Pen looks even worse,” Hannoun told DW.
“The president calls himself a progressive – he should follow suit by exempting alimony from taxes, for example,” he added.
Lisa Thomas-Darbois fears that a Le Pen victory will weigh heavily on the French public budget
Le Pen’s plans would ‘undermine investor confidence’
The Institut Montaigne, a Paris-based think tank close to employers, also scrutinized the candidates’ manifestos – for their fiscal viability.
“Both would increase the burden on the public budget, but Le Pen’s plans would mean a net result of around 101 billion euros in additional spending compared to an overall cost of 44 billion euros for Macron’s program” , Lisa Thomas-Darbois of the Institut Montaigne told DW. .
“Furthermore, many of Le Pen’s proposals contradict French law and the country’s international commitments, which would undermine investor confidence,” she said.
“But this confidence is crucial to keep interest rates low for France, on which the country relies to refinance its public debt,” added Thomas-Darbois.
Le Pen plans to set up a new national fund to nationalize certain strategic sectors such as highways. French companies would have priority in public tenders. And French products would benefit from a concept of “national preference”.
“All these protectionist measures would violate EU law – the national preference rule, for example, would mean the government would levy import duties,” macroeconomist Crevel explained, adding that the plans would eventually lead to a Frexit, France leaving the EU.
“Le Pen seems to be banking on the fact that the EU will end up expelling France, because the country would go against too many European rules and create too much instability,” he said.
And a Frexit would have international repercussions.
“Several French banks are systemic to the euro zone and their exit from the euro system would cause global repercussions; this would trigger an international financial crisis,” he warned.
Edited by: Hardy Graupner