How Macron Hopes To Affect The Eurozone

“Among Macron’s many promises, he has committed himself to a united France, one more closely integrated with…”

by Donna Howard

“I’m addressing you all, all of you together, the people of France,” Macron proclaimed in his victory speech after securing over sixty percent of the vote for the French Presidency. “I’ll defend France,” he said, “its vital interests, its image, and its message.” Intimating the divisive political climate in a post-Brexit EU, “I’m aware of the divisions in our nation that have led some people to extreme votes,” he continued. “I’m aware of the anger, anxiety, and doubts that a large proportion of you have also expressed.” In the same subdued tone he began the speech, he ended it, calling for unity with the patriotic refrain: “Long live the Republic, long live France.”

The world watched with bated breath as France elected her President, Emmanuel Macron, early this May. Macron won a resounding victory over the far-right candidate, Marine Le Pen. His election, however, was more of a rejection of Le Pen, then a warm embrace of Macron, who is now, the youngest President in the history of France. “Mr. Macron cannot afford delay or political uncertainty,” writes the editorial board in The New York Times article, Mr. Macron’s Next Challenge: Governing. “All three of Mr. Macron’s predecessors promised to reform France’s antiquated welfare-state model and bloated civil service programs, but all backed down before waves of national strikes and street protests.”

Among Macron’s many promises, he has committed himself to a united France, one more closely integrated with the EU. “I am pro-European,” he said in an interview with BBC News. “The question is that you have almost half of this country angry with the European idea and with a lack of satisfaction vis-a-vis what we decided… in recent years. So, we have to reform this Europe. We need a new European Union… to protect our people and to regulate… globalization.”

Unsurprisingly, the markets have reacted favorably to Macron’s election, heaving a sort of collective sigh of relief. The euro almost immediately climbed to its highest level in six months. Two months later, the euro climbed another five cents, reaching $1.15. Strengthening relations with the EU, repairing unemployment, which currently hovers above 9%, and a public debt which sits at 96% of economic output, will mean juggling competing needs and mounting expectations, however.

Things being as they are, Macron is pushing for more investments from Germany, an economy he believes has benefited greatly from the deflated economies in the bloc. As a proponent of liberal economic policies, he’s met with Merkel, in hopes of loosening some of the constraints on France’s labor market as well as strengthening French companies and corporations. He’s already taken some measures to bolster French startups, venture capital funds, and private equity firms. Additionally, he’s proposed a shared eurozone budget, one financed by jointly-issued bonds; one of his more controversial of ideas.

Macron and Merkel have certainly forged a pro-EU alliance, but the alliance still grapples with opposing perspectives on implementing reform. Although Merkel has been optimistic about the new leader and some of the economic reform he advocates, it seems unlikely France would be able to make Germany budge on issues where they disagree. “Given the situation that we have in Germany,” Merkel said in May, “I don’t think we must now give priority to changing our policy.”

Perhaps more heartening for Macron is the fact that the eurozone economy has been growing in the second quarter, and is projected to see more recovery in the next few months or so, a nice boost in an unexpectedly pleasant year for the eurozone. “The two biggest countries in the eurozone [Germany and France] will emerge from 2017 politically and economically stronger,” said Jean-Michel Six, Chief EMEA Economist at S&P Global Rankings. S&P forecasts a 1.5% growth for France, a figure that could rise to 1.8%, if France is able to increase competitiveness and get a handle on a lack of competitiveness’ concomitant high trade deficit.

“My dear fellow citizens, a new page in our history has been turned this evening,” Macron said in May, closing his victory speech. “I want it to be that of renewed hope and confidence. The renewal of our public life… Raising moral standards in our public life, recognizing pluralism and democratic vitality will be the bedrock of my action from the first day,” he added. “My responsibility will be to bring every woman and man together, ready to confront the immense challenges awaiting us.” Those challenges have manifested into uniting the French people, overseeing Europe’s economic recovery, and accelerating growth for French businesses. Whether or not Macron can weather reform and its ramifications will be made clearer in the months to come.