Western Europe November 27, 2018 / 03:53 pm UTC

A High-Vis Problem for Macron

By Lars Lundqvist

France's recent protests are a stark reminder of the difficult task Emmanuel Macron has in enacting his reform agenda. Further protests and strikes may cause volatility in quarterly growth numbers, but the real risk is that they could fuel support for populist parties at the EU parliamentary elections in June.

Just as the train strikes of the summer have abated, President Macron is facing fresh protest and social unrest. This time it is linked to a planned increase in fuel duty, especially on diesel cars, as well as cutting France’s dependency on coal (to zero by 2022) and nuclear power (by 50% by 2035). At face value, one might expect this to be met with more sympathy, as much of the world strives to be environmentally friendly. Macron, in particular, will want to be seen as serious about tackling climate change, having lost the popular Nicolas Hulot as Environment Minister over the summer.  

However, to the French public, this is yet another reform that makes them feel worse off. The yellow-jacket-wearing protesters are also a stark reminder that Macron’s economic reforms will be resisted at best and met with hostility at worst. Therefore, in the near term, the reforms may further damage consumer sentiment, which could lead to more volatility in quarterly growth numbers.

We still believe that President Macron’s economic reforms will pay dividends in the form of raising potential growth in the coming years. However, as Macron's popularity rating is falling sharply, there is a risk that he will be forced to backtrack on his reform agenda going forward, especially as he wants to avoid fueling support for the populist opposition ahead of the EU parliamentary elections. 

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Analyst Certification
I, Lars Lundqvist, the lead analyst certify that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further certify that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.