Macron to Push for Social Spending Cuts in France amid Hesitant Growth, Record Unpopularity

Macron to Push for Social Spending Cuts in France amid Hesitant Growth, Record Unpopularity

France’s President Emmanuel Macron, whose presidency experiences record public disapproval after a little over a year in office, is going to press ahead with reforms of social spending as weaker economic growth adds pressure on the French budget deficit.

Macron and the Cabinet of Prime Minister Edouard Philippe will go ahead with their reform drive in spite of discontent with the planned welfare changes, Philippe himself told French newspaper Le Journal du Dimanche, as cited by Reuters and France24.

After he reduced taxes on capital income during his first year as President of France, Macron has been criticized as “the president of the rich”.

While Macron’s reforms have been advertised as providing for greater investment and stronger economic growth, Prime Minister Philippe made it clear that France’s 2019 budget would be based on a forecast GDP increase of 1.7%.

An earlier forecast from April 2018 put the GDP growth projection for next year at 1.9%.

“That does not prevent us from sticking to our commitments on reducing taxes while reining in public spending and debt,” Philippe stated while admitting that lower growth would put pressure on France’s budget deficit.

There is thus a possibility the French government might have to raise its budget deficit target for 2019 from the present estimate at 2.3%.

French business daily Les Echos reported that in 2018, France’s leadership might be aiming at a 2.6%, same as in 2017, while the 2019 target could be as much as 3%.

“Sure, it’s a higher than expected number, but choices had to be made,” Les Echos quoted an unnamed government source as saying.

France has been urged by the EU and the International Monetary Fund to tame public spending, and rein in the budget deficit.

Prime Minister Philippe emphasized the government’s aim to cut “ineffective” social spending on housing and subsidized jobs, while unemployment benefits might also be reduced gradually.

He argued that the reforms would reward workers, and rein in unreasonable hikes in welfare payments: housing allowances, family welfare benefits and pension payouts would grow by only 0.3% in 2019 and 2020. At the same time, the inflation rate for 2019 is projected at 1.5%, and 1.8% for 2020.

Philippe also said the government would keep slashing France’s public sector by cutting 4,500 state jobs in 2019, and over 10,000 in 2020.

Macron’s approval ratings stood at a record low of 34% in August 2018 according to an Ifop poll for Le Journal du Dimanche, partly because of the recent scandal in which his former private bodyguard Alexandre Benalla beat May Day protesters.

(Banner image: Flickr)

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