Macron’s Post-Coronavirus Economic Challenges Are Just Beginning
France has become the next European nation to end its lockdown in the midst of the coronavirus pandemic. French President Emmanuel Macron recently hailed a “first victory” against the virus over the weekend while also promising that lessons will be learned from the pandemic, referring to the impact that it has had on France’s economy and its healthcare system.
On Monday, cafes and restaurants in Paris reopened, nearly two weeks later than the rest of the country.
France’s borders with other EU member states also reopened on Monday, while borders with nations outside of the bloc where the virus has also been defeated will reopen on July 1st.
On June 22, every school child under the age of 16 will be required to return to full-time education.
Macron’s Battles Have Just Started
According to recent data, 194,153 French citizens were infected with COVID-19. Officially, 29,410 people died as a result of the epidemic in France, whilst 72,982 others were cured. As of June 14, only 9 people died of COVID-19. This is a remarkable turnaround for France and it is little wonder that Macron feels confident enough to reopen his country’s economy again, even if it means that travelers from the UK and Spain will have to self-isolate for 14 days.
However, while the French President may be claiming he has defeated the coronavirus, his real battle starts now. France has been struck with an economic blow because of the lockdown, which caused output in the first quarter to drop by 6 percent once Macron placed his entire nation into quarantine.
France’s Lockdown Will Have Long-Term Negative Effects
The IMF claims that the French Government’s fiscal support measures equal 4.7 percent of GDP, including the nation’s chomage partiel job subsidy scheme. Furthermore, they anticipate that output will drop by 7.2 percent for the rest of the year.
The Governor of France’s central bank, the Banque de France, said in May that the lockdown had cost the French economy around 6 percent in lost activity.
If Macron cannot trigger economic growth in France, many French citizens may wonder whether it was worth going into lockdown in the first place, especially when nations such as South Korea were able to tackle the pandemic’s spread via a contact tracing system.
Prior to lockdown, France’s economy was already in a poor state. GDP fell by 0.1 percent in Q4, with Finance Minister Bruno Le Maire blaming protests earlier in the year for harming economic growth.
Macron Has Many Upcoming Struggles in Europe
France’s economic fortunes also depend upon what happens in Europe. If Britain and the EU cannot agree on a post-Brexit trade deal, then the French economy could potentially lose 140,000 jobs according to a report released last August. With the French President in a powerful position to influence the final outcome of the Brexit negotiations, and the deadline for a deal fast approaching, the time is coming for both sides to show some flexibility if they are serious about reaching an agreement.
Macron is due to attend a tricky European Council (EC) meeting that will discuss European Commission President Ursula von der Leyen’s €750 billion stimulus, and despite Germany’s support for this package, a watered-down total could be negotiated as the Frugal Four (Sweden, Denmark, the Netherlands and Austria) oppose member state grants and prefer loans. Failure to approve of a package of this size will have wider political and economic consequences for the rest of the EU.
Can Macron’s Presidency Survive?
Prior to COVID-19, the French President supported a vision for greater economic integration in the eurozone, and the coronavirus will continue to test the EU’s solidarity for the rest of the year. But with Italy’s economy in dire straits, it is clear at some stage that EU leaders will have to decide whether they support Macron’s vision or not. This will be an ongoing struggle for the French leader.
Macron may have felt it was necessary to place his entire nation into lockdown, but the economic effects of his decision have yet to creep up on him. How France’s economy recovers will determine his fate.