Paris – The City of Promises and Expensive Dreams
As France gears up for its upcoming two-round parliamentary election on June 30 and July 7, the political parties are making bold promises to win over the hearts and minds of the voters. From cutting gasoline taxes to raising wages and allowing workers to retire earlier, the campaign pledges are appealing – but they come at a high cost.
The main contenders in this election are the centrist government of President Emmanuel Macron, the far-right National Rally party led by Marine Le Pen, and the New Popular Front, a coalition of far- to center-left parties. With the recent defeat of Macron’s party in the EU parliamentary elections and the rise of the National Rally, the political landscape in France is shifting.
The center, which was once a dominant force in French politics, seems to have evaporated, leaving the extremes to gain ground. This has raised concerns among economists about the potential impact of their campaign promises on the country’s economy and its relations with the European Union.
The French economy is already facing challenges, with weak growth and rising prices. The International Monetary Fund projects a meager growth of 0.7% this year, down from 0.9% in 2023. In such a situation, the promises of putting more money in the pockets of voters seem like a welcome relief. However, economists have done the math and the costs could be significant – tens of billions of euros.
The news of the National Rally’s political ascendance has already had an impact on the stock market and government bonds. The CAC 40 stock index saw its worst week in over two years, and yields on French government bonds have also risen. This has raised concerns about the strain on government finances.
President Macron has acknowledged the appeal of the National Rally’s economic promises but has warned that they could cost the country 100 billion euros annually. He also claims that the left’s plans are four times worse in terms of cost. However, the National Rally’s president, Jordan Bardella, dismisses this figure as pulled out of the government’s hat.
The New Popular Front’s 23-page list of campaign pledges also lacks details on the costs and financing. However, the coalition has vowed to tax high earners and fortunes more heavily to “abolish the privileges of billionaires.” They have also promised not to add to the country’s debt.
On the far-left, Jean-Luc Mélenchon’s France Unbowed party has the largest number of candidates in the New Popular Front coalition. They have estimated that their platform would require 200 billion euros in public spending over five years but would generate 230 billion euros in revenue by stimulating the economy.
The National Rally has promised to slash sales taxes on fuel, electricity, and gas from 20% to 5.5%, citing the struggles of millions of French people to afford heating and transportation. However, this pledge could cost the government between 9 billion and 16.8 billion euros annually, according to different estimates.
On the left, the New Popular Front has promised to freeze prices for essentials like fuel, energy, and food, as well as increase the minimum wage by 200 euros per month. These pledges, combined, could cost the government between 12.5 billion and 41.5 billion euros annually, according to the Institut Montaigne. They also warn that the minimum wage increase could have a negative impact on the economy and jobs.
Both the left and the right have pledged to roll back pension reforms implemented by Macron last year, which raised the retirement age from 62 to 64. This could reopen the debate on how to sustainably fund pensions in an aging population.
These campaign promises come at a time when France is already under pressure to address its unbalanced government budget. The EU has criticized France for running up excessive debts, with its public debt at 112% of its GDP, higher than its European neighbors. The EU has long insisted on member states keeping their annual deficits below 3% of GDP, but this target has often been ignored.
The upcoming election is for the lower house of France’s parliament, and even if Macron’s party loses, he will remain president until 2027. This could lead to an awkward “cohabitation” with either the far-right or the far-left in power. With a government on the extreme ends of the political spectrum, the country’s budget problems are likely to go unresolved, leading to higher
