(Bloomberg) — French voters will decide this month if they want to give Emmanuel Macron another chance to overhaul the country’s economic and social fundamentals.
The independent centrist won over the French in 2017 with promises to improve the business environment with tax cuts and encourage work with changes to labor and welfare laws. But after a flurry of action in the first year of his presidency, that reform drive was slowed by the Yellow Vests movement and brought to a halt by the Covid pandemic.
Pollsters predict that after winning the first round April 10, Macron will likely face and beat nationalist candidate Marine Le Pen in the second round April 24. If they’re right, then these are the key policies that will shape France for the next five years — bearing in mind the war in Ukraine casts a shadow over the feasibility of some of his plans.
Fiscal Policy
► Taxes
The French leader says he would continue cutting tax rates to drive economic activity and lighten the fiscal burden on labor.
For businesses, he plans further cuts to levies on production and lower charges for the self-employed. For households, he pledges to abolish the television license fee and raise the ceiling for tax-free inheritance.
The cuts would cost the state a total of 15 billion euros ($16.5 billion) once fully implemented.
► Spending
Macron plans to set aside 10 billion euros for the green transition, which would include renovating buildings, subsidies on electric vehicles and planting trees. Education and health are also in line to get a boost from public investment.
Combined with the tax cuts, the total cost of Macron’s program would reach 50 billion euros a year by the end of a five year term in 2027.► FinancesTo foot the bill, Macron says he has lined up the equivalent amount of cost savings. In the manifesto, there is little detail on specific measures under the broad headings of modernizing the state, cutting operating costs and curbing local authority spending.
Overall, Macron’s team says the budget deficit would still fall below 3% of economic output by 2027, in line the forecasts of his current government. The plan is based on optimistic assumptions on growth and the impact of reforms on the country’s growth potential in the long run.
Social Policy
► Labor
Macron is sticking to the mantra that guided economic policy making during his first term: make work pay. Some measures could prove popular, such as tripling the tax-free allowance for bonuses he introduced during the Yellow Vests protests, guaranteeing a childcare solution for all, bolstering profit-sharing mechanisms, or introducing more flexibility on vacation days.
Beyond those carrots to make work more attractive, there are also sticks that may prove red flags to France’s labor unions. Macron says he would add conditions to the minimum level of welfare and vary the generosity of unemployment insurance according to the strength of the job market.
According to the manifesto, the changes would drive unemployment down to 5% — a level not seen since the end of the 1970s.
► Health
Macron wants to incentivize the production of medicine in France, after facing shortages during the Covid crisis, and organize a conference on how to make sure there are no “medical deserts,” areas without any doctors.
To boost the quality of life of older people, he wants to recruit retirees to give their time in a variety of areas, from helping children with homework to advising entrepreneurs. He also pledges to set aside 1,100 euros a month as the floor for pensions for those who have worked their all their lives. Following reports of mistreatment in care homes, he plans to recruit more carers.
► Pensions
When Covid plunged France into recession in 2020, Macron hit pause on his plans to overhaul pensions. The key difference in his new proposal is a clear pledge to raise the retirement age to 65 from 62 — something he’d excluded in his 2017 manifesto — rather than focusing on abolishing a multitude of sector-specific rules to create a single system. While he still aims for some simplification, the new plan no longer focuses solely on the unpopular idea of abolishing a multitude of sector-specific rules and advantages.
The changes he proposes would do a lot of the heavy lifting for the rest of his economic framework by increasing revenues for the state, reducing spending and boosting the country’s growth potential.
► Education
Of the 12 billion euro investment for education, half of that sum would go to increasing teacher pay for those starting their careers and those willing to change how and where they work. Schools would also get more organizational autonomy and greater power over hiring.
Climate
Macron has made a clear commitment to nuclear power with a pledge to build six next-generation reactors. He also promises a 10-fold increase in solar power and the construction of 50 offshore wind turbines between now and 2050. That could involve the state taking over some of the assets of Electricite de France SA, Macron has said.
The manifesto also sets out regulations to improve carbon-footprint labeling of consumer goods and an obligation to tie executive pay to their company’s social and environmental objectives. Macron wants to renovate at least 700,000 homes a year to help cut energy consumption.
Security and Defense
Macron plans to continue bolstering on-the-ground policing with 200 new gendarme brigades in rural areas and action forces including teachers and magistrates for the poorest suburbs. To combat cyber-crime, the state would hire 1,200 specialists and create filters to warn internet users.
To maintain military spending at 2% of economic output, he has outlined a plan to modernize the army with more jets, nuclear powered submarines, and armored vehicles.
Macron has pledged to “keep fighting radical Islam” by closing some mosques that don’t adhere to a charter on accepted behavior as well as expelling preachers and closing schools. He also wants to create a new border force and speed up the process for deporting people in the country illegally.
Foreign Affairs
Macron is adopting the pro-European Union stance that proved successful in the 2017 run-off against Le Pen.
In the name of strategic autonomy, he is calling for the EU to massively increase its defense capabilities and coordinate its national armies. He seeks to build a European version of the metaverse, a network of virtual, 3D worlds that U.S.-based Meta is working on.
Macron has made clear that Europe should keep the economic pressure on Russia following the war in Ukraine while avoiding verbal escalation against Vladimir Putin to keep all channels open for discussion. He also wants the bloc to move away from Russian oil and gas in the long term, and welcome a share of Ukrainian refugees.
Read more: France’s Stunning Economic Rebound May Seal Macron’s Re-ElectionHow Macron’s Campaign Got a Boost From Ukraine War: QuickTake
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
