2024-11-20 10:00:00
LThe budgetary difficulties facing France and which the national representation is having such difficulty resolving are coupled with another threat: since the start of the school year, the French economy has experienced a clear economic downturn. Investment is slowing down, the unemployment curve is reversing, social plans and bankruptcies are increasing, the attractiveness of the country is deteriorating, the social climate is becoming tense.
The reasons are multiple: four years after the pandemic crisis, the measures that had been taken to protect the economic fabric are coming to an end, causing a painful return to reality for the most fragile companies. Germany, our main trading partner, is experiencing a recession which is starting to have an impact on activity in France. Finally, the political context creates an environment that is not very favorable to the decision-making of economic actors: faced with fiscal uncertainty, households are saving and business leaders are slowing down investment.
These difficulties come at the worst time, because global competition is intensifying. China, which seeks to revive its economy through exports, is becoming increasingly aggressive commercially. In the United States, with the election of Donald Trump, there is a risk of ushering in a new era of protectionism, of which Europe will be, with China, the main victim.
The European Union is alarmed. Failing to take decisions that could profoundly call into question its functioning, it is multiplying reports on how to regain competitiveness in the face of blocs seeking to consolidate their economic power, and calls for immediate reaction.
Necessary sorting in expenses
By contrast, the absence in France of any rational reflection on the conduct of economic policy is obvious. Parliamentary debates, marked by deep dissensions, boil down to electoral postures and speeches. The left locks itself into the all-tax dogma. The right rightly denounces the poor state of public accounts, but prefers to flatter its clientele (retirees, local elected officials) rather than supporting a coherent recovery strategy.
The Macronists, for their part, are bracing themselves on the defense of the supply policy, on the pretext that it has made it possible for seven years to reduce unemployment and attract foreign investors, but they appear to be completely amnesiac on the budgetary slate they left behind. Today, the necessary sorting between good and bad expenditure cannot spare the reduction of charges, which represent an annual expenditure of more than 70 billion euros and deserve careful examination with regard to their effectiveness and the imperative of tax justice.
By settling in Matignon in particularly difficult conditions, Michel Barnier attempted to launch what France has always had the greatest difficulty in carrying out when it has its back against the wall: to carry out budgetary recovery and the preservation of the production tool. The balance he proposed to try to resolve the difficult equation seemed reasonable: a little more taxes, concentrated on those who can bear it, much less public spending. But he relied on his strength. At this point, the entire copy is deconstructed, and the only message that emerges is that everyone wants to continue spending more. The reflex is undoubtedly legitimate in a country seeking protection, expressed by part of the population, but it is not realistic in the world as it presents itself.
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How is Germany’s economic recession impacting the economy of France according to Dr. Dubois?
**Interview with Dr. Elise Dubois, Economic Analyst**
**Interviewer:** Thank you for joining us, Dr. Dubois. Given the current economic downturn in France, can you explain what key factors are contributing to this situation?
**Dr. Dubois:** Thank you for having me. There are several interconnected factors driving the current economic downturn in France. Firstly, we are seeing a significant slowdown in investment, which is critical for economic growth. Following the pandemic, many protective measures for businesses are coming to an end, exposing the vulnerabilities of our most fragile companies.
**Interviewer:** You mentioned the impact of external factors. How is the economic situation in Germany affecting France’s economy?
**Dr. Dubois:** Germany is facing a recession, which is one of France’s largest trading partners. When Germany slows down, it has a cascading effect on French exports and overall economic activity. This interconnectedness means that issues in one economy can swiftly translate into challenges for another, especially within the Eurozone.
**Interviewer:** In your opinion, how are domestic political challenges influencing economic decision-making?
**Dr. Dubois:** The political landscape in France is quite fragmented right now. Parliament is embroiled in deep divisions, resulting in debates that often lack direction or constructive solutions. While the left focuses on tax increases and the right criticizes poor public finances, neither side is promoting a coherent strategy to stimulate growth. Instead, they are catering to their bases, which is not fostering an environment conducive to sound economic policy.
**Interviewer:** What do you think about the Macronists’ approach of defending supply-side policies? Is it enough to combat the current economic challenges?
**Dr. Dubois:** While there have been successes in reducing unemployment and attracting foreign investment under supply-side policies, the Macronist government seems to overlook the pressing issues of public finances and expenditure effectiveness. The need for a thorough evaluation of expenditures, particularly the over 70 billion euros of charges, is critical. Without it, we risk exacerbating the current fiscal difficulties.
**Interviewer:** Lastly, can you comment on the international competitive landscape and its implications for France?
**Dr. Dubois:** Certainly. As global competition intensifies—especially with China’s focus on export-led recovery and potential protectionism from the U.S. under Donald Trump—the pressure on European economies, including France, is growing. The European Union is alert to these challenges, yet without decisive and united action, we risk losing our competitive edge in the global market.
**Interviewer:** Thank you, Dr. Dubois, for your insights on these pressing economic issues. It seems clear that a multi-faceted approach will be crucial for France in the coming years.
**Dr. Dubois:** Thank you. It’s vital that we engage in rational and collaborative economic discussions to pave the way for a more resilient future.
