RaboResearch - Economic Research

France: A Second Term for Macron

Economic Comment

  • Emmanuel Macron won a second term as president of France
  • The economy has done quite well in his first term. The unemployment rate decreased and the economy grew considerably
  • Macron is likely to continue his agenda of economic reforms and deeper European integration, but this is conditional on whether he is able to secure a majority in parliament

Vive la République, vive la France!

On April 24 Emmanuel Macron was re-elected as the president of France. With 58.5% of the votes he won the elections by a landslide, albeit at a smaller margin than in 2017. However, this is just the first hurdle to be taken. In June the French will head to the ballot boxes for the parliamentary elections. Macron’s party, La République en marche!, started off with an absolute majority in 2017, which it lost in 2020 due to defecting MPs. And it is far from certain that he will be able to secure a similarly firm foothold this time around. Jean-Luc Mélenchon, the hard-left candidate that barely missed out on the second round of the presidential elections, wants to unite the left and has posed himself as France’s new prime minister. If Mélenchon succeeds, and Macron and Mélenchon will have to work together in a form of cohabitation, it will be much harder for Macron to continue with his liberal policies and advance European integration.

How did Macron do in his first term?

So France will have Macron for another five years. To see what that means for the French economy, we first analyse how he did in the past five years. In the run up to the election day Macron’s contender, Marine Le Pen, accused Macron of having a “very bad economic record”, but he has actually done quite well. Macron managed to (partially) reform the notoriously unreformable French labour market. One of his goals at the start of his presidency was to reduce unemployment to 7% in 2022 and despite a pandemic and war in Europe he has nearly succeeded. Some of his policies were aimed at making long-term contracts more favourable for employers by capping the cost of unfair dismissal. He has also made short-term contracts more costly and set up a EUR 15bn training scheme for long-term and young unemployed. Additionally, he has reformed the tax system to make low-wage jobs more attractive.

Meanwhile consumers’ purchasing power increased. According to the IPP, the average increase in purchasing power was around 1.6% over the past five years. Yet, the 5% poorest French households actually lost 0.5%. This explains some of the unrest and discontent in the French society. After Macron defeated Le Pen he vowed to unite the divided French and to make  purchasing power a major topic for his second term. However, with the sharp rise in inflation, that goal could prove challenging and very costly to achieve.

Figure 1: The labour market has been doing pretty well
Figure 1: The labour market has been doing pretty wellSource: Macrobond, INSEE
Figure 2: Consumer purchasing power increased
Figure 2: Consumer purchasing power increasedSource: Macrobond, Insee

Did the improvements in the labour market come at the expense of public debt? It’s hard to make a fair comparison since the pandemic has put an enormous strain on public finances; France’s public debt ratio rose from 100.7% to 112.9%. But in the period preceding the pandemic the budget deficit was somewhat smaller than in the years prior. This didn’t come at the expense of economic growth. Moreover, most of the growth between 2017-2019 was driven by stronger domestic demand, rather than on the back of a growth in world trade. So, all in all, Macron’s policies worked out quite well, although they fall short of being outright genius.

Figure 3: The debt ratio marginally improved from 2017-2019
Figure 3: The debt ratio marginally improved from 2017-2019Source: Macrobond, INSEE
Figure 4: GDP growth kept up, despite a smaller budget deficit pre-pandemic
Figure 4: GDP growth kept up, despite a smaller budget deficit pre-pandemic.Note: We exclude 2020-2022 here since it distorts the axis
Source: Macrobond, Eurostat

So what does that mean for his second term?

This report is too short for a full analysis of Macron’s plans for France and Europe, but we will highlight the most important aspects. In general, Macron intends to continue his policies of European autonomy, a further reform of France’s labour market and a further enhancement of France’s competitiveness.


In the run up to the elections president Macron made the case that recent crises have revealed vulnerabilities in the French economy and that it needed a round of investments to ensure that France stays autonomous. Macron hinted at greater state participation in key industries, such as in utilities, tech, biotechnology, and nuclear. He called for an industrial strategy, meaning the deployment of 100% French supply chains. These would require an annual EUR 50bn investment.

A reform of France’s notoriously hard-to-reform pension system was another point of debate during the campaign. Macron initially wanted to raise the retirement age from 62 to 65, but has watered down his proposal after it became clear that a sizeable share of the population strongly opposes the plans. He has now suggested to raise the retirement age to 64 and leaves the starting date of these reforms in the middle. Institute Montaigne calculated that an increase in the retirement age could save between EUR 6bn and EUR 10bn annually, but this figure is smaller if the retirement age would only be raised to 64. Still, Macron’s plans would put an extra strain on France’s public finances, as high as EUR 44bn according to Institute Montaigne.


After both his election victories, Macron took the stage to the EU anthem. It is no secret that Macron has a clear vision for Europe. At the start of France’s period of the EU presidency, Macron stated his wish that Europe should become a sovereign power. To achieve this goal, he wants to boost defence spending (which has landed on fertile soil since the start of the war in the Ukraine). Moreover, Macron wants to push forward with his plans to enlarge the EU’s joint defence capacity. Additionally, Europe would have to become energy independent as well as digitally independent. To fund all these plans Macron has stated that France will push for a rethink of budget deficit rules. On this topic it seems that he already has an important ally, given his joint op-ed with the Italian prime minister, Mario Draghi.

Going forward

The prospects for the French economy are (relatively) bright because of Macron’s focus on innovation, his investment agenda and his plans to reform the labour market. These prospects remain uncertain though. A loss in the legislative election in June or a worsening of the cost of living crisis could throw a spanner in the works.

Erik-Jan van Harn
RaboResearch Global Economics & Markets Rabobank KEO
+31 6 3002 0936

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