Let's ignore for a moment the race for small presidential horses, the programs of each other, and recall, on the eve of this major electoral deadline, the major long-term economic issues that the winner of this election will have to face. .
Because, to tell the truth, the slope of decline is certainly not inevitable for France but certainly abyssal.
Lulled by the morphine of whatever the cost and the health crisis, even the war, many observers wrongly minimize these challenges.
The first major challenge for France over the next five years is that of purchasing power.
Even before the surge in inflation, under the Macron five-year term, general purchasing power had grown by only 4%, much less than under the previous five-year terms and less than the European average: the working classes had even recorded a decline of 0.5%;
But the surge in inflation threatens to push these figures towards a general decline.
Already at 4.5% year-on-year, underestimated for statistical reasons (not taking into account real estate as property, technological deflation), this inflation will quickly catch up with the European (+7%) or even American (+ 9%).
However, there is no equivalent wage inflation to compensate for it,
and the margins of our companies certainly do not support such increases.
This inflation is mainly of monetary origin (even if the end of the pandemic and the Ukrainian crisis add one or two points to it in the short term) and will not dry up
not before monetary normalization.
The French authorities must follow closely what the European Central Bank will do:
Rate hikes too late (in 2023) and inflation will trigger a purchasing power crisis and new Yellow Vests this fall
Sebastien Laye
Rising rates too quickly and the credit and real estate machine will slow down quickly, with a recession.
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it will therefore take a lot of skill over the next eighteen months to manage this balance between the fight against inflation and support for a post-Covid economy that is still convalescing.
Alongside monetary policy, which a French government cannot completely delegate to Frankfurt in the current context, measures to support purchasing power will be essential.
The reduction in taxation, with our levies still at 46% of GDP, is the best way to restore room for maneuver to French households and businesses.
It should be remembered that the energy and food impact of inflation alone consumed all of the Covid precautionary savings of the poorest 25% households;
these households no longer have a safety net.
The second problem is that of endogenous growth.
We too easily bought into the thesis of a period of post-Covid catch-up prosperity with the support of the ECB.
It was a mirage.
As France barely returns to its pre-crisis level of GDP, growth is in danger.
Sebastien Laye
The 2022 annual forecasts started at 4% for France and Europe.
They are now reviewed weekly.
I was in line with my friends at Rexecode for a 3%, but accelerating inflation and the energy impact of the war in Ukraine make me think the 2% will be barely achievable.
Because fortunately, we had a significant post-Covid growth gain at the start of the year, but in the short term, Germany probably had a negative first quarter, and France will have zero growth in the second…..In Beyond that, with a rise in interest rates, barring an economic revolution with a government that would have a program of aggressive measures, our potential is at 1/1.5% over the following two years, and we
We will not escape a few quarters of slowdown as for this spring of 2022. We will therefore have to ask ourselves the question, to revive growth, of the reduction in compulsory levies (and therefore of the restructuring of our State and of public spending), but above all innovation, research and reindustrialisation.
Regaining our place in research, increasing the share of GDP in industry from 11% to 20%, reducing our foreign trade (from -80 billion to at least the average of the last decade of around -30 billion) is essential for get us back on the right growth path.
the reduction in compulsory levies (and therefore the restructuring of our State and public spending), but also above all innovation, research and reindustrialisation.
Regaining our place in research, increasing the share of GDP in industry from 11% to 20%, reducing our foreign trade (from -80 billion to at least the average of the last decade of around -30 billion) is essential for get us back on the right growth path.
the reduction in compulsory levies (and therefore the restructuring of our State and public spending), but also above all innovation, research and reindustrialisation.
Regaining our place in research, increasing the share of GDP in industry from 11% to 20%, reducing our foreign trade (from -80 billion to at least the average of the last decade of around -30 billion) is essential for get us back on the right growth path.
Read also Nicolas Baverez: “The economic consequences of the war in Ukraine”
These questions are of course intrinsically linked to the problem of unemployment.
We have painfully gone from a rate of 9% in 2017 to just under 8%, at the cost of exceptional monetary support (for which we are paying the price with inflation, as if we had all paid for these few job creations…) but above all changes of categories: partial unemployment, autoentrepreneurs, training, come out of the cohorts of the unemployment statistics without it being possible to really say that quality jobs are available to our young people in abundance.
For example, 90% of the improvement in employment in France since mid-2019 is due to the ramping up of apprenticeship systems.
All apprentices, all in training, all self-employed?
This approach is not tenable for the next five years, for the reindustrialization of the country and its rise in technological power.
Sebastien Laye
Finally, the last dilemma is that of debt and deficits.
To make 140 billion euros of additional GDP over the last four years, we have created 600 billion euros of
debt.
This ratio of 5 to 1 has no equivalent in the world and in the annals of economic history.
Our debt/GDP ratio of 112% could only be reduced on the condition of very strong growth but above all of control of public expenditure in the future, while we are still starting from a deficit of 5% in 2022. Controlling the accounts, reviewing the scope of our State, which cannot do everything, is certainly a thankless task but one of the utmost importance for the next team.
While purchasing power is the first concern of the French, unemployment the fourth, the economy was not very present in this campaign and I deplore it.
Reality will however quickly catch up with all those who deny these subjects, in particular for those who will be in power and risk wasting their time for the French if they are not prepared on these themes.