Posted on April 15, 2022 at 4:41 PM
According to economists, it is very difficult to evaluate Marine Le Pen’s program. “As for each candidate, we must understand what she would actually decide to apply and especially what she could apply! » Immediately released Xavier Timbeau, director of the French Observatory of Economic Conditions (OFCE). The RN candidate wants, for example, to lower VAT, which is contrary to European directives, and to abolish the tax on those under 30 years of age, which is contrary to the French constitution and its principle of equality with respect to tax.
Another difficulty: Marine Le Pen presents herself as the candidate for purchasing power, but part of her measures would automatically imply an exit from the euro and, by snowball effect, disastrous consequences for the purchasing power of French consumers.
That said, we are still trying to understand what the economic consequences of their choice would be in our daily lives.
Gain 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%. He even plans to abolish VAT on “one hundred basic necessities -food and hygiene- to alleviate the purchasing power of the most modest”. In total, it is 100,000 million euros that Marine Le Pen wants “give back to the French”.
In the short term, the advantage is certain: increased purchasing power, consumption and, theoretically, national wealth. In theory, because part of his program would take France out of the euro zone, “or at least to the creation of a new euro for France that would no longer have the same value as that of other countries. Which surely would not result in a loss of purchasing power”believes Xavier Timbeau of the OFCE.
The consequences of leaving the European euro
At the time of the Greek crisis in 2011, economists had calculated that if Athens abandoned the euro, its new currency would depreciate by 30-50% against the euro.
“Consider that it is only 30% for France. Our country imports half of the products from the euro zone, which would mean a loss of purchasing power of around 15% for the French consumer.analyzes the OFCE economist.
Even if President Marine Le Pen manages to negotiate a stay in the euro zone, “it is the single currency that would fall”, fears for his part Jean-François Robin, global head of research at the Natixis CIB bank. Why ? The economist foresees an attack on the sovereign debt of the State within a euro zone weakened by the election of a eurosceptic who wants, among other things, to establish the national preference of the French for access to employment, housing and social assistance, contrary to European treaties.
Towards a more expensive debt?
For Jean-François Robin, there is no doubt: there would be a rise in interest rates on French debt due to investor fear. “The ten-year rate, which was 1% at the beginning of April, is already at 1.3% today (after the 1st round, editor’s note) and could reach 3% if Marine Le Pen is elected. » The consequences for public finances would be very concrete: “The debt would cost more every year: 3,000 million euros more the first year of his mandate, and 35,000 million a year within ten years”, calculates the economist. For comparison, the annual defense budget amounts to 41,000 million euros.
The decrease observed in the “spread” from the first round is explained by the better-than-expected score achieved by Emmanuel Macron. “There is also a waning of excitement in the markets as investors anticipate that even in the event of a victory, Marine Le Pen would not be able to implement her program due to lack of a majority in the National Assembly,” deciphers Jean-François Robin.
Are there still so many investors?
In recent years, France has become the most attractive European country in the eyes of international investors. Emmanuel Macron’s policy (maintaining the reduction in corporate taxes, single taxation on capital, reduction in taxes on production) but also Brexit explain this upturn in attractiveness. How about a France presided over by Marine Le Pen?
“If Marine Le Pen is elected, the investment stops”, roughly summarizes Jean-François Robin de Natixis. And to specify: “There is no longer an investor who wants to invest in a country who wants to get closer to a country like Russia. » For Xavier Timbeau of the OFCE, the fall in investment will be explained by the fact that France, outside Europe or even excluded from the euro zone, will no longer benefit from its central position within the Old Continent.
The Natixis economist also sounds the alarm on the labor front: the RN candidate wants to lower the inheritance tax but raise the capital tax. “However, to create jobs, you have to be able to attract investment. His project actually unravels the “startup nation” where a significant part of the job creation has occurred in recent years. »
But, in fact, what can we really predict?
Brexit, Trump’s election… Economists predicted the apocalypse. However, none of this happened. In 2021, the United Kingdom experienced the strongest growth of any developed country and the United States experienced sustained growth during the term of the Republican candidate.
So what? The comparison is not always accurate, hollow economists stress. The post-Brexit UK wanted to present itself as a tax haven within Europe to attract as many investors as possible. For his part, the billionaire Trump has pursued a pro-business policy (deregulation and tax cuts). “Not really a Marine Le Pen project”underlines the director of the OFCE.
However, one thing is certain: the election of Marine Le Pen pushes France into the unknown. Majority or coexistence? If majority, which prime minister? And above all, what Minister of Economy? No clues leaked. However, we know that economics abhors a vacuum.