French president Emmanuel Macron has a herculean task ahead of him – at least that’s the way most Germans see it. From here, reforming the French economic system appears to be an almost impossible challenge for the young president – even backed up by an absolute majority in the French National Assembly.
While that might be an exaggeration, it certainly won’t be easy for Mr. Macron. But the German view of France tends to be distorted by many a biased opinion. We instinctively tend to count France as belonging to the infamous Club Med of highly-indebted and economically stagnant southern EU member states, like Italy or even Greece. But the French economy is, in fact, considerably more like the German economy than those of its southern neighbors.
France has, for example, strong corporations, 18 of which alone are listed in the EURO STOXX 50 Index. Germany has only 15 in this leading euro zone blue-chip index. Moreover, France has a functioning administration, an outstanding infrastructure, and a very well educated population – at least in academic fields. All of these count as decisive prerequisites for future growth.
It is true, however, that the potential of the French economy is currently restricted by an unwieldy and costly public sector, as well as a surfeit of regulation, particularly in the labor market. But that also means that Mr. Macron simply has to dial back some of the French bureaucracy in order to infuse the economy with new vigor.