Macron Can Push French Economy on After Best Growth in Six Years

(Bloomberg) -- French President Emmanuel Macron’s push to help businesses is handing the economy a chance to extend its strongest expansion in six years.

Macron wants to provide more support to the self employed, make it easier to hire and fire workers and loosen restrictions on companies, all aimed at reducing unemployment and putting further fuel into the economy. Data on Tuesday showed gross domestic product rose 0.6 percent in the final three months of 2017, with full-year expansion at 1.9 percent.

Having vaulted to power in May on a campaign of economic reform and commitment to the European Union, Macron completed a landmark overhaul of French labor law at the end of the year. Yet with public debt approaching 100 percent of GDP, unemployment above 9 percent and growth lagging the euro-zone average, much more needs to be done.

“He has created a new momentum, a new energy, and it is transforming the landscape and the conditions of producing goods and services in this country,” Stephane Boujnah, chief executive of the Euronext stock exchange, said Tuesday in a Bloomberg Television interview.

The fourth quarter saw growth supported by net trade, household spending, government consumption and investment. According to Bloomberg Economics, the “broad-based nature of the expansion makes it more sustainable.”

While Macron’s reforms are spurring confidence in France, he can’t take all the credit. He’s partly riding a wave created by tax cuts passed by the previous administration.

Still, a stronger French economy -- and one that’s creating more jobs -- will help his domestic agenda and push his vision to strengthen Europe and prevent the type of crisis that nearly pulled the euro area part earlier this decade.

It makes it “that bit easier to push ahead with more controversial reforms and cuts to public spending,” said Jessica Hinds at Capital Economics in London.

Macron’s government is currently working with unions and business lobbies to overhaul France’s job training system, and will move on to unemployment insurance in coming months. Finance Minister Bruno Le Maire plans a major economy law for the spring that aims to increase profit-sharing plans for employees.

“Most of the key structural reforms that had been delayed for years, are being implemented,” Boujnah said, adding that “clearly, work has yet to be done on the debt and fiscal consolidation side.”

France probably lagged behind the expansion in euro-region again last year, as it has every year since 2014. Bloomberg’s consensus estimate is for 2.4 percent growth for the 19-nation currency bloc in 2017, which would be the best in a decade. Eurostat reports the fourth-quarter number for the region at 11 a.m. Paris time.

Le Maire noted that 2017’s economic expansion was broad-based, including exports and investment as well as consumer spending, and predicted that the momentum would continue this year.

“This is the result of the return of confidence of households and entrepreneurs since the election of the president and the implementation of reforms, as well as a positive international environment,” he said. “This trend should continue in 2018.”

--With assistance from Fabio Benedetti-Valentini and Caroline Connan

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net.

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Zoe Schneeweiss

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