President Macron gave a speech on Thursday April 25th, wrapping up the “Great National Debate” that has been going on in the context of the Yellow Vest movement. This was followed by a major national press conference, an exercise which President Macron has previously refused to engage in, and which marks a first for him.
Below is a short summary of the measures announced and what it means in the French political and economic landscape.
- Summary outlook/Political headlines
- Most of the announced measures had already been leaked following the postponement of his televised speech last week following the fire at Notre Dame cathedral in Paris (see our weekly dated April 19th).
- In essence, the head of State confirmed that he would be staying on his pro-business course and would continue his policy of reducing public spending. He also defended his progress to date, saying that he stood by his reforms. He did, however, admit to having made mistakes, and specifically to having been arrogant in the way he communicated.
- The main measures he announced concern:
o Purchasing power measures, including: tax cuts for the middle class which should represent €5 billon; indexation of retirement pensions under €2,000 to inflation as from January 2020; perpetuating the annual bonus of up to €1,000€ free of tax and social charges, a measure which had been announced last December as being temporary. Those measures should be financed by the elimination of some tax loopholes for companies but any further tax cuts must be matched by spending cuts.;
o Reform of the pension system: while the official retirement age will continue to be 62, in reality more working life will be spent making pension contributions and an incentive will be given (higher pension) to those willing to work longer; the creation of a universal point-based pension system was confirmed; and the President pledged to set a minimum pension (for a full career) of €1,000 a month. In this respect, a bill should be ready for this summer;
- Democracy: a share of proportional representation (20%) will be introduced for legislative elections; the number of National Assembly members should be cut by 25%; political term limits will be introduced; easier rules for referendums should be passed: the number of signatures required to initiate or propose a “popular initiative referendum” (which permits bringing a bill before Parliament) will be reduced from 4.5 to 1 million; and more decision-making will be decentralized to local levels. A constitutional reform bill along these lines should be brought before Parliament in the coming months.
- Administration: the number of job cuts should be revised downwards and primarily concern central government employees (the bill for the reform of central government has been announced for May); confirmation of plans to shut down the ENA (elite post-graduate school that has educated top French politicians and public officials since the end of WWII, including Macron himself) and the “Grands Corps de l’Etat” (these “corps” being both administrative and technical, with the administrative “corps” essentially recruiting graduates of the ENA while their technical counterparts essentially recruit from the École Polytechnique, although their ranks are also open to Écoles normales supérieures, the École des Ponts and the École des Mines); and changes in the way high officials are recruited were also announced.
o Rural areas: no hospitals or schools will be closed without the agreement of the local mayor concerned between now and 2022; local public services will be reorganized in structures “Maisons France services”, inspired by the Canadian experience, the idea being to provide citizen-centered service delivery to citizens in rural areas via one-stop shops, i.e. to provide access to a variety of public services at a single location.
o Environment: a “citizen’s council” was announced to work on the most significant measures for the planet. It should be set up by June and will be composed of 150 citizens elected at random. A council for the defense of the environment will also be created to take strategic decisions on climate change and coordinate with all of the relevant ministries.
- The first surveys carried out on the day following President Macron’s speech indicate that 63% of the population did not find him very convincing. However, when questioned about individual measures the results showed strong support from the population.
- The measures announced by President Macron mainly target the middle class and in part address the demands made by the Yellow Vests, but without calling in question his pro-business stance;
- The President has only backtracked concerning the number of job cuts in the civil service (he had initially promised to trim 120,000 jobs upon taking up office) to the benefit of local teams. He also adjusted his “vertical” approach to the exercise of power by bringing local elected officials back into the decision-making loop and giving them back some responsibilities. Clearly, President Macron is seeking to mend his relations with local elected officials, especially ahead of the next municipal elections for which he will need to put together alliance strategies;
- However, the reform of the pension system remains unchanged. Maintaining the official retirement age is a symbolic measure that will in fact only have a marginal budgetary impact, considering the financial arrangements surrounding it;
- The President did not succeed in lifting the negative impression large sectors of the public have of him and of his government, but this would have been “mission impossible” in any case considering the current political fragmentation of French society. Paradoxically, the specific measures announced by him, be they economic or institutional, went down well with the population;
- While President Macron remains personally unpopular, his policies are not “disowned” by the population at large and the measures announced by him should enable him to preserve his electoral base, and possible grow it ahead of the European elections and give him the necessary leeway to subsequently reposition himself.
 Note that there is no official definition of these “corps” or bodies, but that they have long been a feature of the French State. Their members form a closely-knit network of members of an administrative elite known as a “corps”, which in addition to the services provided by their members to the public and private sectors, promotes their interests and helps them move between public and private-sector employment and negotiates, behind the scenes, what positions should go to their members. By way of comparison, their grip on the apparatus of the State is tighter than the “Oxbridge” grip on the British civil service.