Can France Break Out of Its Long Economic Slump?

France has been a slow-growth economy for, well, decades. Will anything change with Emmanuel Macron’s crushing National Front candidate Marine Le Pen in the May 7 presidential election?

Consider that the last time real annual economic growth in France topped 3 percent was in 2000. In fact, French growth exceeded the 3 percent mark in only five of the past 37 years. So, from 1980 to 2016, real GDP growth averaged a meager 1.78 percent – about two-thirds the U.S. rate (which itself has suffered poor growth since 2001). And in terms of employment, job growth from 1980 to 2016 registered 21 percent. That compared to 53 percent in the U.S.

The problems with the French economy should be obvious to anyone with an understanding of economics and free enterprise. First, government spending in France sucks up 57 percent of GDP. Quite simply, more government crowds out private-sector innovation and growth. Second, regulatory costs are formidable, especially in labor markets, including a mandated 35-hour workweek, and regulations that make it so difficult to fire employees that they serve as significant disincentives for hiring. Third, taxes are high, including a top personal income and individual capital gains tax rate of 45 percent, a corporate tax rate of 34.3 percent, and the imposition of a value-added tax. Fourth, on the Heritage Foundation’s “2017 Index of Economic Freedom,” France ranks a less-than-impressive 72 out of 180 nations.

France is anything but a bastion of economic freedom, and therefore, no one should be surprised by the nation’s economic sluggishness.

The agenda to turn the French economy around is quite clear, that is, broadly speaking, deep reductions in government spending, and substantial tax and regulatory relief. Is Macron the man to deliver?

Well, it’s important to keep in mind that before he launched his independent – En Marche! (On the Move) – bid for president, he was a Socialist Party economic minister. So, the now-“centrist reformer” was a socialist. Unless he truly has had a free-market epiphany – and there is no evidence of that having happened – this certainly does not bode well for reducing the reach of government.

However, Macron has called for some vaguely positive steps, including cutting the corporate tax to 25 percent, and creating some flexibility in labor laws. But while he has proposed some cuts to the public payroll, Macron also has called for more “public investment,” that is, government spending on political projects, like green energy. Same old French.

And politically, there is the need to create some kind of working government when his movement dives into parliamentary elections next month. There is little doubt that Macron will have to deal with the parties he defeated in order to create a governing majority.

Is this a recipe for significant, pro-market changes to revitalize the French economy, or for more of the same with some nibbling at the edges? Unfortunately, it looks like the latter. Indeed, assorted activists and unions already have begun the predictable process of protesting even the mildest of labor reforms. At this point, little reason exists to expect that the French economy will do anything different from what it’s done for nearly four decades now, that is, badly under-perform. That, of course, will continue to give life to an ugly populism that fueled the candidacy of Le Pen.