2018: A year of challenges for President Macron

Thousands demonstrated against President Emmanuel Macron’s labour law reforms in September. With the President’s popularity in decline, the French government will face a new set of challenges in the first months of 2018.

In late September, the freshly elected government led by Emmanuel Macron faced its first street protests when thousands demonstrated against controversial reforms to France’s labour code. While the protests were largely peaceful, skirmishes broke out between protesters and the police. The president’s popularity has since taken a hit. The government will face renewed challenges in 2018 as it tries to push through further economic reforms. Despite the recovery of the French economy in the last months of 2017, structural economic problems remain, including high unemployment rates and debt levels. As French politics remains polarized, Macron’s centrist party La Republique en Marche (LREM) is likely to face tensions from within, increasing the risk of a political crisis.

Macron’s difficult first months in office

Macron’s first months in office have been marked by successes abroad and a mixed domestic record. On the international stage, the president spoke out in favour of tackling climate change and hosted peace talks in Paris to broker a ceasefire between Libya’s rival factions. At home, the president has faced a series of setbacks. Despite securing a majority in Parliament, his party – a combination of moderate left and right-leaning parliamentarians – has sparked criticism for its lack of experience. The resignation of four cabinet members over a fake jobs scandal a few weeks after the election results contributed to tarnishing Macron’s first weeks in office. One hundred days after his election, Macron’s popularity was lower than any of his predecessor’s, with approval ratings standing at 36 percent.

Macron also faced street demonstrations sooner after taking office than any other president in recent years. Having served as Minister of the Economy under the unpopular government of François Hollande, Macron had already faced a nation-wide protest in April 2016 (“Nuit Debout”, i.e “Staying Up all Night”) over his plans to reform labour laws. Shortly after his election, Macron’s determination to push these reforms led to several rounds of demonstrations organised by trade unions and opposition parties. The new law, approved by Parliament in early October, gives employers more freedom to negotiate on working hours and wages and makes layoffs easier. The use of “ordinances” (a speedy legislative process) to fast-track the legislation boosted opposition parties, including the left-wing France Insoumise (France Unbowed), led by veteran politician Jean-Luc Mélenchon.

What are the risks of a political crisis?

The government has benefited from favorable economic circumstances in the last months of 2017, as the French economy gathered speed. Economic growth reached 0.5 percent in the last quarter of the year, bringing annual growth to 1.8 percent. The center-left CFDT became France’s largest trade union, ahead of the more radical CGT, which has been active in opposing Macron’s policies. Yet France still faces economic challenges. The European Commission predicted that France’s deficitcould reach 3 percent (the maximum threshold authorised by the EU) in early 2018. Unemployment rates still stand at just under 10 percent.

After the unpopular labour law reforms, the president will attempt to pass more reforms through Parliament, including pensions reforms, which could lead to renewed strikes in the new year. Freezes to public sector pay are also likely to fuel public discontent and will complicate Macron’s agenda. Macron ran his campaign for the presidential elections on a bold reformist platform and has staked his credibility on his ability to transform the French economy. Political paralysis or difficulties to pass legislation would most likely have an impact on Macron’s credibility.

On the political front, the momentum created by the legislative elections, in which Macron’s party won a comfortable majority, is likely to abate. While the president has managed to maintain the unity of his party, tensions could emerge within the government’s ranks between different strands of pro-market liberalism. Three conservative parliamentarians excluded from the right-leaning party Les Républicains (LR) joined LREM in early November. The majority of the pro-Macron parliamentarians are nonetheless former members of France’s Socialist Party. Conflicting economic views cannot be ruled out.

On the international front, the uncertainty triggered by the Brexit negotiations and Germany’s political crisis will put additional pressure on the French government. The erosion of Angela Merkel’s influence at home could compromise the French president’s plans to build a strong Franco-German alliance in Europe. Macron’s ambitious plans for reforms in the European area could also fail to materialise without Germany’s support. Although Germany’s main parties hold similar views on Brexit and Europe, political uncertainty in the short term will force the French president to play a growing role in shaping European policy.

This article first ran on Global Risk Insights, and was written by Cecile Gurin.