DEBATE: As Jean-Claude Juncker criticises France for spending too much, is the Macron honeymoon over?
YES – says Tim Worstall, senior fellow of the Adam Smith Institute.
Emmanuel Macron’s big economic policy is that he’s going to sort out the euro so that it really works. “Really works” for France and possibly for other members too. There are three ways of doing this.
One is to return to independent monetary policy, according to the circumstances of each economy. But that’s not going to happen. Second, Jean-Claude Juncker is insisting that France spends too much and its budget deficit is too high. That means that fiscal policy variance isn’t going to be allowed anyway. Macron’s own idea is the third possible solution, which is to have a common Eurozone treasury, and thus a sharing of fiscal burdens. But that won’t fly either, as Berlin absolutely isn’t going to underwrite Paris’s spending. That’s what fiscal union means: everyone pays into the Brussels pot, and the cock crowing loudest gets the money. Macron’s honeymoon ended when he laid out the platform he was going to run for the presidency on – for it just ain’t gonna work.
NO – says Jessica Hinds, European economist at Capital Economics.
Juncker’s comments that France is spending too much and on the wrong things should not prevent Macron from implementing his proposals. For a start, most of his reforms do not entail a large increase in spending. Indeed, many will lead to lower public spending, underpinning his plans to reduce the budget deficit to 1 per cent of GDP. He also plans to orientate spending towards training, the digital economy and green energy, which presumably would be welcomed by Brussels. Macron has much bigger economic challenges, with lacklustre GDP growth and high unemployment. But we are cautiously optimistic that he can make headway in addressing these problems. Granted, it is unclear how much parliamentary support he will have after June’s National Assembly elections. But the polls suggest his party will fare well, providing hope that he will be able to implement at least some of his manifesto. It would be wrong to write off his presidency before it has even begun.