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French economy bounces back thanks to ‘swift and effective’ Covid response

The OECD has issued a new report on the French economy, finding that government support during the pandemic has helped the economy rebound quickly, but investment is still need in certain areas.

OECD head Mathias Cormann addresses a press conference about a new OECD economic study about France. It found that the government responded well to the pandemic.
OECD head Mathias Cormann addresses a press conference about a new OECD economic study about France. It found that the government responded well to the pandemic. (Photo by Eric PIERMONT / AFP)

The latest Organisation for Economic Co-operation and Development (OECD) survey of France has revealed some encouraging conclusions. 

While the economy contracted by 8 percent in 2020, the study predicted GDP growth of 6.8 percent in 2021 and 4.2 percent in 2022.

A graph shows that French economy is predicted to bounce back
A strong mix of government policies in response to the COVID-19 pandemic has allowed the French economy to bounce back. (Source: OECD)

“France’s response to the COVID-19 crisis has been swift and effective, enabling it to emerge from the health crisis with jobs and household incomes well protected and its economic capacity largely preserved,” said OECD Secretary-General, Mathias Cormann, at the unveiling of the survey. 

READ ALSO French economy shows strong growth with reopening of tourism and leisure

“A rigorous implementation of the government’s Recovery and Investment Plans will help to turn the rebound into lasting sustained growth, building a greener, more digital and more resilient economy.”

The report warned however that while it was important not to withdraw financial support for households and businesses, it would be worth targeting this spending more efficiently. Money should go to ‘viable’ businesses and sectors to encourage investment, it said. 

Among all the OECD member nations, which are composed of high-income countries described by one economist as a ‘rich men’s club’, France has the highest public spending as a share of GDP.

French public spending as a percentage of GDP is higher in France than in other developed nations. (Source: OECD)

The organisation said that French businesses had been slow in adopting digital technologies and that this was harming productivity. 

It also noted that France needed to invest more in professional training to address labour market shortages and in incentives to encourage transition to a greener economy. 

Member comments

  1. OECD also said French debt is unsustainable, pension age must increase and public expenditure brought down. Amazingly, it actually suggested France should follow the British model.

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JOHN LICHFIELD

OPINION: France has two presidents – one is confident, the other weak and directionless

France has two Emmanuel Macrons: one is strangely depressed and directionless, the other confident and clear, writes John Lichfield. But which one will emerge in his second term as president?

OPINION: France has two presidents - one is confident, the other weak and directionless

There is a global Emmanuel Macron, confident and clear; and then there is a domestic Emmanuel Macron, who sometimes appears petulant and indecisive.

Global Macron is admired by many people outside France for his eloquence and his intelligence. He is also mocked and feared by some people abroad (especially in the Brexit camp in Britain) for his alleged pretentiousness and arrogance (in other words for his eloquence and intelligence).

For Global Macron, it has been a good couple of weeks. 

His speech to the United Nations General Assembly this week was the best given by any world leader.

He placed the Ukraine war in a sweeping, global and historical context, lambasting allegedly “neutral” countries for failing to stand up for the core UN principles of national sovereignty and territorial integrity. The “fake” non-aligned countries were, he said, betraying not just the values of the UN but their own interests.

Macron has also been word perfect in his tributes to the Queen.

He obtained little credit for that fact from the hardest-line,  professional Macron-haters in the UK media. They preferred to concentrate on the fact that he wore posh trainers during an informal visit last weekend to the enormous queues of people waiting to file past Her Majesty’s coffin in Westminster.

King Charles has, however, seized on this opportunity to improve relations between France and Britain which Liz Truss had ignored. After a dinner with Macron in London last Sunday, the new king is reliably reported to have decided that his first state visit next year should be to France.

So much for the global Macron.

The other Macron, the domestic president, is newly re-elected but strangely weak and directionless.

His popularity in opinion polls is fading. He seems unable to come to terms with his loss of his parliamentary majority in the legislative elections in June. He has yet to give a clear road-map for his second term to his newly renamed Renaissance party and their centrist allies.

(REMEMBER: You can listen to John Lichfield discuss the crisis on the French left and the mixed fortunes of Emmanuel Macron in the latest episode of our Talking France podcast below)

He has alternated in recent weeks between Blood, Sweat and Tears warnings to the French people that they face a cold and difficult winter and a generous (but reluctant) decision to extend domestic energy subsidies for another full year.

He has alarmed some of his own allies by raising the possibility that he might use his emergency constitutional powers to push pension reform through a divided National Assembly.

At the same time, he has pressed ahead with his vague plan for a grandiloquently-named Conseil national de la Refondation (National refoundation council). This body is supposed to find common ground between Left and Right, unions and bosses, to “refound” the French welfare state created just after the 1939-45 war.

On the one hand,  Macron says that he wants to find a new social consensus for the 21st century. On the other hand, he says that he wants to charge, without negotiation, into the social and political minefield of pension reform.

In a briefing with journalists earlier this month, the President suggested that he could avoid a lengthy negotiation with unions and the parliament to increase the standard French retirement age (now in theory 62). Changes in system could be tacked onto the annual social security budget next month and then pushed through the Assembly, in effect, by decree.

This week, the government back-pedalled. No decision has yet been taken, they say. One of Macron’s principal allies, the veteran centrist leader, François Bayrou, warned that any attempt to impose such a transformation on French lives by force would be a calamity.

How can we explain the two Macrons?

Partly, they reflect the constitutional powers given to French presidents. On international affairs and European affair, Macron can go largely his own way. On domestic policy, if he has no majority in parliament, his powers are limited.

I believe, however, that the problem runs deeper. There have been reports for months that Macron suffered after his re-election in April from a “drop in energy” or a period of depression.

The second half of his first term had been brutally occupied with non-stop management of the Covid and Ukraine crises. His attempts at mediating with Vladimir Putin had been a discouraging failure.

After his victory over Marine Le Pen, Macron drifted for weeks, delaying his decisions on a new Prime Minister and a new government. He was strangely absent from the parliamentary campaign in June (well below the limits imposed by his position as head of state).

Macron’s distraction contributed to his failure to win a new parliamentary majority; his lack of a majority has, I believe, compounded his mood of indecision and depression.

What to do with five years of a second term? Should he accept that his only role is now crisis-management? After all there are crises enough to manage.

Is the career of the self-proclaimed revolutionary of 2017 finished at the age of 44?  He cannot run again in 2027. He faces the prospect of five years of managerialism and drift while attention switches to his possible successors, from Edouard Philippe in the centre to Marine Le Pen on the Far Right.

“Macron is a magician who has lost his wand,” says one pro-Macron parliamentarian. “He’s still searching  for a way forward, a sense of direction. In short, he has the blues.”

By comparison with French politics, international crises are simple. Macron has clear ideas about the place of France and Europe in the world. He can express himself, both off the cuff and in set-piece speeches, with elegance and intelligence.

Macron has had no other position in elected politics than President of the Republic. He has no background as local or parliamentary politician. The prospect of five years of grinding negotiation to achieve quarter-baked reforms is, I believe, appalling to him.

Hence, his domestic zig-zagging.

He faces three choices in the next few months. He can accept a role as a manager of crises and minimal reforms; he can risk a Yellow Vest-type revolt by using, maybe abusing, his limited constitutional powers to impose change.

Or he can hope for an opportunity in the first half of next year to call a new parliamentary election.

Which way will he go? I don’t know. Nor, I suspect, does Emmanuel Macron.

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