French Elections Update: What Would Happen Under Fillon or Macron?

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Emmanuel Macron, Former French Minister of the Economy, Finance, and Industry

Macron Ahead in The Polls

According to the latest polls, the least likely candidate to win the French elections is the socialist candidate Hamon who has been consistently ranked last. His chances of success could be increased if he forms an alliance with more radical leftist candidate Melenchon.

If Macron or Fillon win the election as anticipated, markets are likely to react positively to the election of a reformist candidate. Fillon appears more committed to reform as a means of improving France’s competitiveness over the short term while the reforms proposed by Macron are more a continuation of what was done over the last few years to improve French competitiveness in the medium term. Following the victory by either of these candidates, the incoming President will quickly focus on the legislative elections to secure a majority in the Lower House of Parliament.

However, both candidates would face challenges. If Macron wins, he would likely need to form an alliance with the more centrist MPs of both the socialist and centre-right parties. For Fillon, it could be a challenge to secure a large popular mandate in Parliamentary elections due to recent allegations of fraud. Fillon will also likely have to try and limit the number of seats gained by the National Front. To do this, he could need to explicitly coordinate with the centre-left parties in the second round of legislative elections. It is worthwhile considering the different scenarios that would play out under non-reformist and reformist governments.

Under a Non-Reformist Government

If the President fails to achieve an absolute majority in the Lower House and a reformist government cannot be formed it could be difficult to push through reforms. Over the short-term growth would be highest in this scenario as momentum in the economy won’t be impaired by the costs associated with implementing reforms. However, France won’t make much progress on fiscal deficits and reforms. Though growth is above potential, long-term fiscal and competitiveness won’t go away.

Under a Reformist Government

On the other hand, of a reformist government is formed, this would be viewed as a positive not just for France but Europe as a whole. Macron and Fillon have both reiterated their willingness to bridge differences with Germany. In terms of the French economy, a reformist government would focus on structural reform and structural fiscal consolidation. This would dampen cyclical growth over the short term -but would ultimately provide a boost for growth and competitiveness in the economy. Confidence in the economic would provide a further boost for momentum.

The reforms proposed by Macron and Fillon can be summarised as follows:


  • Targeting investment circa EUR 50bnover 5 years
  • Targeting circa EUR 60bln of savings
  • Budgetary responsibility by respecting 3% fiscal deficit limit
  • Ending fiscal instability: new fiscal law to be voted for in 2017 and fixing the tax schedule for 5 years
  • Unique tax on revenues from capital around 30%
  • Aiming to reduce corporate tax from 33.3% to 25%
  • Creation of a EUR 10bln funds for industry and innovation. This will be financed with minority participation in French companies held by the state
  • Supplementary work hours to be exempted from social contribution and reduction in social contributions paid by employers
  • Employees that resign will be able to access unemployment benefit but the decline of reasonable employment offers will lead to suspension unemployment benefit
  • Creation of a Eurozone budget voted for by a Eurozone parliament and executed by an EZ Ministry of Economy & Finance


  • Aiming for large public spending cuts, tax reforms and reductions, pensions and labour market reforms
  • Aiming to cancel the 25 hour work week, facilitate firm-level negotiations and increase retirement age to 65 years
  • Aiming to reduce capital taxation and income taxation on middle-class and upper-middle-class families with children
  • Aiming to increase VAT by 2% and reduce corporate taxation to align it to the European average
  • Planning EUR100bln spending cuts, reduction of state employment by 500k, increase of state employee work week to 39 hours, capping unemployment benefits and make them degressive with unemployment duration
  • Favours an economic government for the euro area and would lean towards a normalization of relations with Russia.


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