In France, the music has stopped for Prime Minister François Bayrou. And when the music stops, change will happen. President Emmanuel Macron must now decide whether he will install a new Prime Minister or call for snap elections. Things are changing in France. It may have even lost its “cool” a bit, as luxury shoppers are eschewing French and other European brands for American ones. The Wall Street Journal’s editors explain:
This fiasco isn’t Mr. Bayrou’s fault. To him fell the unenviable task of crafting a government budget plausible enough that everyone could pretend to believe it. France’s debt-to-GDP ratio is due to climb to 116% this year, and annual government expenditure is approaching 60% of GDP.
The National Assembly is split among three factions—Mr. Macron’s centrists, and big-spending parties on the left and right. Actual spending cuts are out of the question politically. Mr. Bayrou hoped he could at least corral lawmakers behind an agreement to slow (ever so modestly) the rate of increase in future spending. Apparently not.
It’s hard to think of anyone who can do better. Mr. Macron came to office in 2017 with the right reform instincts. His early successes, especially an overhaul of France’s byzantine labor laws, help explain why the economy hasn’t descended into total dysfunction. Yet his imperious political style failed to build a popular consensus behind his reform agenda.
Voters will have to sort this mess out, whether imminently via a snap election or after a period of further instability. Yet they risk finding themselves short of options, in part because they refuse to reward politicians who tell the truth about France’s fiscal mess and economic malaise.
The closest may be the insurgent-right National Rally, although “close” is a relative term. Party leader Jordan Bardella last week issued an open letter to entrepreneurs promising big changes. These include reduction of a production tax that businesses pay regardless of profitability, repeal of burdensome European Union regulations, and a revival of nuclear power to cut energy bills. National Rally also claims it can cut €100 billion in spending on bureaucracy and welfare paid to immigrants, and good luck with that.
Action Line: Your Survival Guy is preparing for another trip to Paris in October. I’ll give you an on-the-ground take of what’s happening in the City of Light, and France in general. This ought to be an informative trip. If you are headed to Europe, or have just been, email me at ejsmith@yoursurvivalguy.com. I want to know what you saw and how it felt on the streets. And click here to subscribe to my free monthly Survive & Thrive letter.
