Hollande Signals Pro-Business Policy with Economy Appointment

The French president reassures business by appointing a former banker as his economy minister.

Italian prime minister Matteo Renzi is welcomed by French president François Hollande in Paris, March 15
Italian prime minister Matteo Renzi is welcomed by French president François Hollande in Paris, March 15 (Elysée)

French president François Hollande has appointed the former banker Emmanuel Macron as his economy minister.

The move suggests the leftist is serious about reducing France’s high deficit and unemployment rate, moving his party in a more centrist direction in the process.

Montebourg out

Macron, who served as Hollande’s personal economic advisor until June, replaces the far-left Arnaud Montebourg, who lost his job after describing France’s efforts to rein in deficit spending as “financial absurdity.”

Montebourg took two other cabinet ministers with him, but a party revolt seems unlikely.

One, former culture minister Aurelie Filippetti, told BFM-TV, “It is not our aim to provoke a government crisis. I will support the new government.”

Prime Minister Manuel Valls, speaking to France 2 television, said he would call a vote of confidence in parliament within the next two months. Given that such a vote is not mandatory, it suggests Valls believes he can win a majority for his new cabinet.

Leftists who are dissatisfied with Valls’ efforts to trim spending and reduce taxes for employers could imperil their own jobs if they vote against the government. Hollande’s approving rating hit a 17-percent low last week in an Ipsos poll. If elections are called, the Socialists would probably lose their majority.

Torn

Town between a reformist wing led by Valls and far leftists like Montebourg, Hollande, who won the 2012 presidential election against the conservative Nicholas Sarkozy with 51.6 percent support, has struggled to unite his party behind a convincing economic and fiscal program.

The removal of Montebourg and his allies could give him and Valls the opportunity to push through deeper spending cuts and enact market reforms.

The Economist, which has otherwise been critical of France’s lackluster economic performance, hopes so.

“If Mr Valls wanted to send a message with his new government, Mr Macron is it,” the British newspaper writes.

Serious

Macron’s appointment in itself will not make it much easier for Valls to enact reforms, such as liberalizing France’s labor market and cutting spending in order to finance a €30 to €40 billion payroll tax cut.

Nor will it shut up anti-austerity advocates like Montebourg.

“But it does at least suggest that the Valls government is serious about pursuing a more business-friendly approach,” according to The Economist, “and about starting to bring the largely unreconstructed left into line with the rest of Europe’s social democrats.”

Skepticism

Le Monde, France’s most respected left-wing newspaper, is less sure.

In an editorial, it laments that the Socialist Party has still not settled a fundamental question: “how to be a party of government, directing one of the major economies in the world, while continuing to remain a vehicle for an illiberal and anti-globalist ideology?”

An ideology, it adds, “that sees business leaders as adversaries rather than partners.”

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