Daily Management Review

France achieves EU budget deficit goal but Macron’s popularity sinks


03/27/2018


Last year, France's state deficit was below the 3% limit of the European Union for the first time in ten years, Reuters reports.



cgo2 via flickr
cgo2 via flickr
Decreasing to 2.6% of gross domestic product, France's budget deficit was below the government's target of 2.9%. This was the best indicator since the global financial crisis in 2007.

President of France Emmanuel Macron managed to comply with the EU rules, although his predecessors did not succeed. Reducing the deficit was the cornerstone of his efforts to restore France's financial reputation.

This improvement should support Macron's desire to convince Germany, the EU's main financial sponsor, to reform the euro area and help overcome the mistrust between the Nordic countries and southern countries that are considered wasteful.

"This helps us to regain our authority in Europe," said Finance Minister Bruno Le Maire on the radio Franceinfo. "Today, when the president speaks in Europe, he is heard and respected."

Shortly after his election last May, Macron took measures to tighten the budget, including the reduction of the popular housing allowance, to make sure that the budget deficit does not exceed a 3% limit, which is why his rating in the country has declined. 

However, data from the statistical office INSEE showed that the improvement of public finances in France exceeded expectations, which also contributed to higher tax revenues and faster economic growth.

The French tax burden rose to 45.4% of GDP in 2017 from 44.6% in the previous year. According to INSEE, public spending grew by 2.5%, and government revenues - by 4%.

Meanwhile, data from a Reuters poll conducted last week showed that the popularity of French President fell to the lowest level during his presidency.

As the agency notes, the results of the poll were announced the day after the mass protests against the Macron reforms began in the country, due to which tens of thousands of civil servants took to the streets.

Despite the drop in unemployment and the high profile at the international level, the number of people with favorable opinion about the 40-year-old former investment banker decreased by 3 percentage points in March to 40%, the BVA survey showed.

Since the end of last year, his popularity has dropped by 12 points, although this result is no worse than the popularity of its predecessors François Hollande and Nicolas Sarkozy in the same period from the presidency, the BVA said.
Disappointed with large-scale labor and welfare reforms of Macron, nurses, teachers and other public sector workers left work last week on Thursday because of fears about his plans to cut staff and introduce merit based wages.

Protesters also want to disrupt Macron's plans to introduce a special tax used to finance well-being. The tax will hit pensioners, reforming unemployment insurance and reorganizing a highly indebted state-owned railway company.

The introduction of higher taxes for retirees is likely to upset people of the age group that previously had a positive attitude towards Macron. His popularity among voters over 65 in March fell below the level of 50%, down to 47%.

source: reuters.com






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