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For 2017 French presidentials, economic liberalism is in vogue

PARIS (Reuters) - Lower taxes, fewer labor rules, less state: in a country famed for its attachment to a protective social model, economic liberalism is the surprise trend among aspirants for France’s 2017 presidential election.

The world united to pay tribute to the victims of a series of deadly attacks in the French capital in November, while locals offered shelter to stranded fellow Parisians with the #PortOuverte hashtag. REUTERS/Benoit Tessier

For decades, the French center-right eschewed the free market policies of Margaret Thatcher, sticking to the tradition of a strong dirigiste state and a generous public health and welfare system funded by high taxes.

Now a neoliberal economic platform is the one issue on which a growing field of candidates for the center-right Republicans’ primary planned in November all agree.

This ideological shift is not confined to the right.

Socialist President Francois Hollande is pressing ahead with disputed labor reforms to give employers more scope to lay off workers and cut costs and has pegged his own re-election bid to his success in bringing down unemployment.

His most popular cabinet member, Economy Minister Emmanuel Macron, is a former investment banker who converted Hollande to supply-side economics and has openly attacked Socialist totems such as the 35-hour week and public sector jobs for life.

That leaves far right leader Marine Le Pen as the only top candidate espousing old style statist economic policies.

“We’ve made clear that we want to cap welfare subsidies, overhaul working time, taper off unemployment benefits, cut taxes to boost investment, scrap the wealth tax and our opinion polls remain very good,” Mael de Calan, economic adviser to the Republicans primaries’ front-runner Alain Juppe, told Reuters.

“We’re not going to wait for May 7, 2017 (likely date for the presidential run-off) to say ‘by the way, we have a liberal platform.’ We want to be elected on it.”

Juppe, ex-president Nicolas Sarkozy, former prime minister Francois Fillon and other center-right primary contenders all say they want to cut public spending by around 100 billion euros ($109.89 billion) over five years to bring it to about 50 percent of Gross Domestic Product from over 55 percent now.

While a significant drop, that would still be higher than a euro zone average of general government spending of 47.5 percent, OECD data shows, with the tax burden also staying relatively high.

All want to push back the retirement age to 64 or 65 from 62 now, make unemployment benefits taper gradually over time, impose a partial or total public sector hiring freeze and get rid of the iconic 35-hour work week.

There are differences at the margin. For instance, Sarkozy says each firm should decide for itself if it wants to keep or scrap the 35-hour week, while Fillon says the only legal cap on private sector work time should be the EU’s 48-hour limit.

But they all agree on most key policies. “There aren’t big differences on economic policy, the battle of the primaries will be on credibility,” de Calan said.

“Credibility” is a code word for rivals to suggest that Sarkozy, who did not scrap the 35-hour week and increased taxes and public spending when he ruled France from 2007 to 2012, may not be best placed.

It is also a swipe at his proposal for a 10 percent cut in income tax - a “fiscal shock” critics say could not be funded.

While some of these policies may not seem particularly far-reaching in other countries, they mark a change for France. And, unlike in past elections, none of the main contenders except Le Pen supports a more protectionist, anti-Europe or social line.

“French society is evolving, not towards unrestrained liberalism but with a demand for more flexibility, less red tape. Right-wing candidates’ proposals are in line with that,” Elabe pollsters chief Bernard Sananes said, as polls have shown a greater openness to reforms as unemployment stayed high.

“The splits on Europe have been put under wraps because despite their misgivings about Europe, the French clearly don’t want to leave the euro.”


Herve Mariton, a primary candidate who drew just 6 percent of the votes in a 2014 party leadership ballot won by Sarkozy, says that while the whole party has become more liberal, he has doubts about how much some of his competitors actually mean it and whether they would tackle vested interests.

“They’re more liberal than before but with exceptions, they want to improve the system but not change it altogether,” Mariton told Reuters. “They say ‘I’m liberal but, for instance we should make sure we help farmers’.”

“It’s easier to be liberal when you’re not in government. That’s why I’m skeptical, because in the past policy plans have not always been implemented.”

His opponents brush off that argument, saying they have detailed plans for implementing their platforms. In a very French way of doing politics, most have either published books setting out their economic ideas or are preparing to do so.

France experienced its worst unrest in decades during a failed austerity push when Juppe was prime minister in 1995 and Sarkozy also backed down on reforms when he was president.

The problem for Republicans candidates, analysts say, is that in the fight to differentiate themselves from each other and from an increasingly pro-business Socialist government, they may end up with plans that go beyond what voters want.

“While people want more flexibility, are more pro-business than they used to be, they don’t want everything to be left to free market,” Elabe’s Sananes said. For instance, polls show a majority of voters are against scrapping a wealth tax on large fortunes and even right-wing voters are split on the issue.

On the left, friction over pro-business reforms is greater.

Martine Aubry, a Socialist who introduced the 35-hour week as labor minister, and others including veteran former Greens leader Daniel Cohn-Bendit published a severe criticism of Hollande’s policy line on Wednesday.

“Enough is enough!” they wrote in an op-ed in Le Monde daily, slamming his corporate tax cuts and labor reform plans. “And now they’re attacking the labor code!”

But Hollande insists he will stick to a reformist line, epitomized by Macron, who a survey by Elabe pollsters showed is the politician who most embodies the “reform camp”, and his Prime Minister Manuel Valls.

Valls is a likely candidate if Hollande, dogged by low popularity ratings, did not run in next year’s elections.

Asked by France Inter radio last week about voters who felt betrayed by his pro-business shift in 2014, Hollande said the worst thing would be “to betray the national interest”.

Graphics by Vincent Flasseur; Editing by Paul Taylor and Philippa Fletcher