Marine Le Pen elected president: what will change for the French economy (and purchasing power)

Posted Apr 15, 2022, 4:41 pm

According to economists, it is very difficult to assess Marine Le Pen’s program. “As far as every candidate is concerned, we must understand what exactly she will decide to apply for and especially what she can apply for! » The director of the French Observatory of Economic Conditions (OFCE), Javier Timbeau, was immediately fired. For example, the RN candidate wants to reduce the VAT, which is contrary to the European Directives and to eliminate the tax for people under the age of 30, which is contrary to the French constitution and the principle of equality before tax.

Another difficulty: Marine Le Pen presents himself as a candidate for purchasing power, but part of his measures will automatically exit the euro and, by the snowball effect, have detrimental consequences for purchasing power. French consumer.

That being said, we still tried to understand what the economic consequences of his election would be on our daily lives.

Gain in purchasing power, it is debatable

The RN candidate proposes a sharp reduction in VAT on energy prices (fuel, gas, electricity, fuel oil) from 20% to 5.5%. It also plans to eliminate VAT “A hundred basic necessities – food and sanitation – to reduce the purchasing power of the most modest”, In total, this is the 100 billion euros that Marine Le Pen wants. “Give Back to the French”,

In the short run, the benefits are certain: an increase in purchasing power, consumption, and theoretically, national wealth. Theoretically, because part of their program would kick France out of the euro area, “Or at least for France to create a new euro that will no longer have the same value as other countries. Which will certainly not result in a loss of purchasing power”OFCE’s Javier Timbeau believes.

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consequences of leaving the european euro

At the time of the Greek crisis in 2011, economists calculated that if Athens were to abandon the euro, their new currency would depreciate against the euro by 30 to 50%.

“To consider that it is only 30% for France. Our country imports half of the products from the euro area, so there would be a loss of purchasing power of about 15% for the French consumer.OFCE analyzes economists.

Even though President Marine Le Pen managed to negotiate a stay in the euro area, “It’s The Single Currency That Will Fall”Fear for his part, Jean-François Robin, global head of research at the Bank Natixis CIB. Why ? Economists fear an attack on sovereign state debt within the euro area, weakened by the election of a Eurosceptic, which, in contrast to European treaties, would provide, among other things, access to employment, housing and social aid to the French national. Wants to set priority. ,

Towards more expensive loans?

For Jean-François Robin, there’s no doubt about it: investors fear interest rates on French debt will rise. “The ten-year rate, which was 1% at the beginning of April, is already 1.3% today (after the first round, editor’s note) and could reach 3% if Marine Le Pen is elected. » The results of public finance will be very concrete: “The loan will cost more and more every year: 3 billion euros more in the first year of its mandate, and 35 billion per year within ten years”, calculates the economist. By comparison, the annual defense budget amounts to 41 billion euros.

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The development of the “spread”, the difference between the 10-year interest rate of the French loan and the German loan. From October 2021, France is comparatively more and more expensive to borrow than its neighbour.

The observed decrease in “spread” since the first round is explained by the better than expected score achieved by Emmanuel Macron. “There is also a lack of enthusiasm in the markets as investors anticipate that even in the event of a win, Marine Le Pen could not implement its program due to the lack of a majority in the National Assembly”, Esoteric Jean-François Robin.

Still the same number of investors?

In recent years, France has become the most attractive European country for international investors. Emmanuel Macron’s policy (reduction of corporate taxes, single taxation of capital, reduction in production taxes) but Brexit also explains this rebound in attractiveness. What about France, headed by Marine Le Pen?

“If Marine Le Pen is elected, the investment stops”, summarizes Jean-François Robin of Natixis in broad strokes. And to specify: “Now there is no investor who would like to invest in a country that wants to move closer to a country like Russia. » For OFCE’s Javier Timbeau, the decline in investment would be explained by the fact that France, placed on the edge of Europe or even out of the euro zone, would no longer benefit from its central position within the old continent.

On the employment front, Natixis’ economists are also sounding the alarm: The RN candidate wants to lower the inheritance tax but is increasing it on capital. “However, to create jobs, you have to be able to attract investment. His project really highlights the “start-up nation” where a significant amount of job creation has happened in recent years. »

But what, exactly, can we predict?

Brexit, the election of Trump… the apocalypse predicted by economists. Yet none of this happened. In 2021, the United Kingdom experienced the strongest growth of developed countries and the United States experienced continued growth during the Republican candidate’s mandate.

made with florish

So what? Comparisons aren’t always right, underline hollow economists. After Brexit the United Kingdom wanted to position itself as a tax haven within Europe to attract more investors. For his part, billionaire Trump has followed a pro-business policy (regulation and tax cuts). “It’s not really Marine Le Pen’s project”Underlines the director of OFCE.

Anyway, one thing is certain: the election of Marine Le Pen pushes France into the unknown. majority or cohabitation? If there is majority then which prime minister? And above all, which economy minister? No clues leaked. However, we know that the economy hates a void.

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About the Author: Forrest Morton

Organizer. Zombie aficionado. Wannabe reader. Passionate writer. Twitter lover. Music scholar. Web expert.

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