In France’s presidential election campaign five years ago, far-right candidate Marine Le Pen’s economic program turned out to be one of her weak points.

As in this year’s election, she was facing centrist Emmanuel Macron — the current president — in the runoff vote.

During a television debate a few days ahead of the 2017 second ballot, Macron called Le Pen’s plans for the country to exit the eurozone and renegotiate European treaties “lethal for [France’s] spending power and competitiveness.”

Le Pen had difficulties countering his criticism and repeatedly got lost in the numerous dossiers she had piled up on the table in front of her, quoting erroneous pieces of information.

The extremist candidate has now officially dropped her eurozone exit plans. But economists say implementing her manifesto would ultimately lead to the same result — and trigger an international financial crisis.

Le Pen is, like in the 2017 election, depicting herself as “the candidate of [increased] spending power.” She has promised to reduce value added tax from 20% to 5.5% for energy products such as fuel, and scrap that tax for certain basic goods.

French consumers may be in for a nasty surprise should Le Pen succeed Macron

Measures that could lead to stagflation

But Philippe Crevel, economist and head of Paris-based policy center Cercle de l’Epargne, has called such measures counterproductive and accused Le Pen of brinkmanship.

“Prices would initially go down, but that would push up consumer demand and ultimately prices, as there are not suddenly more products available on the market,” he told DW.

He explained that only higher productivity — i.e. more products generated per input such as labor — could boost spending power, as the additional money could be spent on additional available goods.

Le Pen has equally promised to encourage wage increases by waiving employers’ charges on those salary rises. “But that would again cause inflation: To balance out wage increases, companies — especially as they are faced with rising prices for resources also due to the war in Ukraine — would raise product prices,” said Crevel.

The economist thinks that, in time, the proposed measures would trigger a stagflation. That’s a combination of stagnating growth and high inflation.

“It would be similar to what happened after the oil shock in the 1970s; we would see mass unemployment, which would first of all hit the workers,” he said.

An ‘absurd’ and ‘deeply immoral’ program

Henri Sterdyniak, economist at the Paris-based left-leaning research center Observatoire Francais des Conjonctures Economiques, agrees that Le Pen’s program is unlikely to help the less fortunate and calls it “absurd.”

“She plans to take down France’s wind turbines and give any subsidy money instead to the French. And people under 30 will be exempt from income tax, but why should young good earners not pay taxes? All this doesn’t make sense,” he told DW.

“Plus, her measures are deeply immoral: Foreigners would be asked to pay up and French nationals would have priority when it comes to jobs, housing or social benefits,” he added.

The economist also strongly disagrees with bringing down employers’ charges: “Our public debt is excessive, currently at 113% of GDP — we need to finance our social state somehow!” he said.

Sterdyniak has criticized Macron’s program for that same reason. The current president pledges to triple the so-called “Macron premium,” a €1,000 ($1,080) year-end bonus exempt from taxes and employers’ charges that has been in place since 2018.

“This is a dangerous game and hardly compatible with Macron’s promise to increase the minimum pension by more than €100 to €1,100,” warned Sterdyniak.

Will Macron be able to push through further reforms?

Overall, Macron’s manifesto includes fewer concrete measures and is much less detailed than that of Le Pen. He mainly pledges to continue doing what he’s been doing since 2017: market-orientated reforms. He also plans to further liberalize the labor market, bring down business taxes and increase the retirement age to 65, from the current 62.

Economist Crevel said a pension reform makes perfect sense, given rising public debt.

“And yet, pushing his plans through should be increasingly difficult as many French are opposed to these,” he explained. The president’s first term in power was disrupted by numerous demonstrations such as those by the so-called yellow vest movement that blocked the country for months asking for more social justice.

Macron has, meanwhile, already started to water down his plans mainly to convince the 22% of the electorate that chose far-left candidate Jean-Luc Melenchon, who came third in the first ballot on April 10. Macron has announced he could lower the pension age target to 64, and submit his plans to a referendum. He has also said he’d include more ecological measures in his program.

Stanislas Hannoun, head of the campaign for fiscal justice and against inequality at the federation of charitable organizations, Oxfam France, has welcomed these shifts. His group has screened the candidates’ manifestos looking for social, ecological and gender justice content.

“Macron performed really poorly, even if Le Pen looks even worse,” Hannoun told DW.

“The president is calling himself progressive — he should walk the walk by for example exempting alimony from tax,” he added.

Lisa Thomas-Darbois fears a Le Pen victory would be a heavy burden on France’s public budget

Le Pen’s plans would ‘undermine investors’ trust’

Institut Montaigne, a Paris-based think tank close to the employers, has also screened the contenders’ manifestos — for their fiscal sustainability.

“Both would increase the burden on the public budget, but Le Pen’s plans would mean a bottom line of roughly €101 billion of extra spending compared with an overall cost of €44 billion for Macron’s program,” Institut Montaigne’s Lisa Thomas-Darbois told DW.

“What’s more, many of Le Pen’s proposals contradict French law and the country’s international commitments, which would undermine investors’ trust,” she said.

“But that trust is crucial to maintain low interest rates for France, which the country relies upon to refinance its public debt,” Thomas-Darbois added.

Le Pen plans to set up a new national fund to nationalize certain strategic sectors such as highways. French companies would be given priority in public tenders. And French products would benefit from a concept of “national preference.”

“All those protectionist measures would infringe EU law — the national preference rule for example would mean the government would levy import tariffs,” macroeconomist Crevel explained, adding that the plans would eventually lead to a Frexit, France leaving the EU.

“Le Pen seems to bank on the EU ultimately kicking France out, as the country would be going against too many EU rules and create too much instability,” he opined.

And a Frexit would have international repercussions.

“Several French banks are systemic to the eurozone and their exit from the euro system would cause worldwide ripples; it would trigger an international financial crisis,” he warned.

Edited by: Hardy Graupner