Aside from widely reported health measures such as the compulsory vaccination of care workers, President Emmanuel Macron's speech on 12 July included several cues about the government's economic policies ahead of the 2022 presidential election. Below we cover the main signposts to watch in the second half of the year when Macron will make the last moves to prepare the ground for his re-election.
– No more reforms : Macron's suggestion that his government would not push for changes to the pension system until the pandemic is over signals the reform has been effectively postponed until after the presidential election. At the same time, he confirmed that previously approved changes to the unemployment insurance system would finally fully enter into force in October. Such a move is designed to fend off potential criticism that he has given up on changing the country while limiting the risk of a backlash in the streets – opinion polls consistently show that a majority of the public is opposed to reforming the pension system under the current circumstances. While this course of action does not eliminate the risk of protests, it does reduce the chances of widespread demonstrations against the government.
– Relaunch plan 1.5 : As previously explained, an expansion of EU post-pandemic recovery resources remains unlikely. Rather, Macron seems eager to exploit the current flexibility of EU fiscal rules to top-up its current “Relaunch” plan and deploy a host of new investment initiatives. The plan is unlikely to be conceived as stimulus money. Rather, Macron seems poised to double down on his “industrial sovereignty” push, with initiatives to boost the country's productive capabilities in sectors such as electric batteries, semi- conductors, or the hydrogen economy. While more details on the plan will emerge after the summer, the announcement creates some doubts about the government's plans to reduce public expenditure significantly from 2022.
– Crisis support measures: Beyond stating that the government remained “mobilized” to help those sectors badly battered by the crisis, Macron did not provide any information about whether some of the support measures would be extended beyond August. This probably signals the government wants to grasp the potential impact of the recent surge in Covid-19 cases before deciding on prolonging the existing support mechanisms. In any case, a return of restrictions to contain the virus would inevitably lead to an extension of some of the economic measures after the summer.
– The political risks of a Delta wave : Macron's decision to mandate a “health pass” to participate in a wide range of social activities led to demonstrations across the country on 14 July. Far-right presidential candidate Marine Le Pen has vocally opposed the announced measures, but it is unclear whether she will be able to capitalize on the protests. An ELABE survey published shortly after Macron's speech showed a majority of the population supports his tough approach on health issues. A signpost to watch is whether any potential new restrictions to contain the virus leads to Macron losing steam in the opinion polls, which continue to point at a two-way race between him and Le Pen in the first round (see below) and a victory of the incumbent president in the second round.