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Macron has promised to overhaul the labor market, simplify the tax and pension systems, while paring back regulations he says hamper innovation.
Macron has promised to overhaul the labor market, simplify the tax and pension systems, while paring back regulations he says hamper innovation.

Macron Plans to Pull France Out of Economic Malaise

The French economy has been sluggish for a while now, with unemployment consistently on the higher end and the government at a loss as to how to kickstart the economy

Macron Plans to Pull France Out of Economic Malaise

Emmanuel Macron was elected French president on Sunday with a business-friendly vision of European integration, defeating Marine Le Pen, a far-right nationalist who threatened to take France out of the European Union.
The centrist's emphatic victory, which also smashed the dominance of France’s mainstream parties, will bring huge relief to European allies who had feared another populist upheaval to follow Britain's vote to quit the EU and Donald Trump's election as US president, news outlets reported.
After a decade of slow growth, rising unemployment and dwindling competitiveness, Macron says he has a plan to pull the country out of its economic malaise.
Macron, a former investment banker who quit the government of Francois Hollande twice out of frustration with the slow pace of reforms, is promising to overhaul the labor market, simplify the tax and pension systems, while paring back regulations he says hamper innovation.
He will be trying to push through his reform agenda at a time when France is more divided than ever over how to respond to the disruptive forces of globalization.
The French economy has been sluggish for a while now, with unemployment consistently on the higher end, and the government at a loss as to how to kickstart the economy.
Business Landscape
France has traditionally been a very business-friendly country, despite strict labor laws and a tradition of very strong labor unions pressuring policymakers for further worker-friendly legislation.
According to the World Bank, France is the world’s sixth largest economy by nominal GDP and the third largest in Europe, after Germany and the United Kingdom. Thirty-one of the country’s companies are listed in the Fortune Global 500, which makes the country the 4th in the list, after the US, China and Japan, MarketMogul reported.
The country has also benefitted from the Brexit vote in Britain. According to the International Monetary Fund, the pressure on the sterling pound might shrink the size of the British economy and allow the French one, with €2.2 trillion ($2.41 trillion) in GDP, to surpass it.
Even though the French economy has faced slow growth since the 2008 global financial crisis, the country managed to recover from its recession very early–after only four quarters. When it comes to foreign investment, the country seems to be doing better. In 2015, France cashed in €35.7 billion from foreign investment, the highest number since the global financial crisis.
Strong or Stagnant?
With a deficit of -3.1%, France surpassed the 3% of GDP desired by the European Commission. Also, the economic growth has been relatively small if compared to Germany, Britain or US. France’s economy has only grown 3% since the crisis, while it has gone up 6% in Germany, 8% in Britain and 10% in the US.
The economy also contracted in 2016 but there doesn’t seem to be a big concern yet regarding the French situation. After all, France is also the second most productive nation in the world, second only to Germany.
With a strong tradition of laid-back employment laws, France’s legal standard is 35 hours per week and an average working week in the country of 37.5h. This comes as a big contrast to Britain, where workers are allowed to work up to 48 hours a week, and the average working week is 43.6 hours.
Euro Shoots Up
The euro notched up its highest level in six months after centrist reformer Macron won the French presidential election on Sunday, neutralizing the biggest political challenge to the currency in its 18-year history.
The euro edged up 0.2% to above $1.10 in early Asia trading, its highest level since November, before slipping into negative territory later in the morning. Most major stock markets in Asia gained ground, with Japan's Nikkei up more than 2%. The currency also hit a one-year high of 124.59 yen from 124.05 yen on Friday.
The euro, European stocks, and government bonds all moved higher last week in anticipation of a Macron victory, and that helped explain the muted reaction to Sunday's vote.

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