Macron will struggle to control French public spending

Significance

Macron was elected on a programme calling for cuts in public spending and tax of 60 billion euros (69 billion dollars) and 20 billion euros respectively by 2022. France’s deficit-to-GDP ratio should thus decline over the five-year period of his mandate.

Impacts

• The tax cuts, combined with the planned labour law reforms, could improve Paris's attractiveness for banks looking to relocate after Brexit.
• A sustained improvement in public finances is unlikely as long as public services and policies are not systematically evaluated.
• The government hopes that the European Commission will be amenable to the revised draft budget and the planned reforms.