PARIS – With the upcoming two-round parliamentary election on June 30 and July 7, French political parties are making big promises in hopes of ousting centrist President Emmanuel Macron’s government. However, these promises come at a steep cost and pose a threat to France’s economy and its relations with the European Union.
The recent EU parliamentary elections saw a defeat for Macron at the hands of Marine Le Pen’s far-right National Rally party. As a result, Macron called for a snap parliamentary election, hoping to prevent the first far-right government in France since World War II. However, the political landscape in France has drastically changed, with the center disappearing and the far-right and far-left gaining momentum. This has caused widespread discontent among voters due to rising prices and squeezed household budgets.
The promises made by these parties to improve the lives of French citizens may sound appealing, but they come at a high cost. Economists estimate that the cost of these promises could be in the tens of billions of euros, leading to concerns about the strain on the government budget and an increase in interest rates. The stock market and yields on French government bonds have already been affected, causing further worry.
Macron, in response to these promises, has acknowledged that they may make people happy but has also pointed out that they would cost the government billions of euros annually. The far-right National Rally, led by Jordan Bardella, has promised to cut sales taxes on fuel, electricity, and gas, which could cost the government between 9 to 16.8 billion euros per year. On the other hand, the far-left New Popular Front, led by Jean-Luc Mélenchon, has promised to freeze prices for essentials and raise the minimum wage, which could cost the government between 12.5 to 41.5 billion euros per year.
Both the right and the left have also promised to roll back pension reforms, risking the question of how France will sustain its aging population. These promises not only pose a threat to the government budget but also go against the EU’s recommendation for member states to keep their deficits below 3% of the GDP.
France already has a high debt load compared to its European neighbors, and if these promises are implemented without a clear plan to offset them, it could lead to even higher interest rates and market instability. This could ultimately have a negative impact on the economy and jobs.
The upcoming election is for the lower house of parliament, and regardless of the outcome, Macron will remain president until 2027. However, the possibility of a government led by the far-right or far-left could lead to an awkward “cohabitation” and greatly reduce Macron’s say in economic policy. This could lead to unresolved budget problems and further strain on the economy.
As seen in the case of the United Kingdom in 2022, where then-Prime Minister Liz Truss proposed tax cuts without cutting spending, the implementation of these promises without a well-planned strategy could have dire consequences for France. The European Central Bank might have to step in to stabilize the market and lower yields on French bonds, leading to further strain on the economy and the credibility of the government.
It is crucial for any future government to have a credible plan to bring the deficit down and work towards sustainable economic policies. The ECB would only step in to help if the government shows a commitment to resolving the budget problems and reducing the deficit.
In conclusion, while the promises made by political parties in France may be appealing, they come at a high cost and pose a threat to the country’s economy and its relations with the EU. It is important for voters to carefully consider the long-term implications of these promises before casting their vote. As the saying goes, “If it sounds too good to be true, it probably is.” Let us not forget the importance of fiscal discipline and responsible governance for the overall well-being of the country.
