Econometric Evaluation of Emmanuel Macron and Marine Le Pen’s Programs: The Results

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Econometric Evaluation of Emmanuel Macron and Marine Le Pen’s Programs: The Results

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April 14, 2022 • the iFRAP Foundation team • Gilles Koleda

Thanks to a university econometric model, Nemesis, the iFRAP Foundation and Seureco Erasme have simulated the implementation of the programs of Emmanuel Macron and Marine Le Pen. These simulations of the economic impact of the programs are compared with a reference scenario, ie the evolution of the economy “as it goes” without reforms. It shows that Emmanuel Macron’s program has little impact on the economy and remains very close to the reference scenario, while Marine Le Pen’s program should lead to a deterioration in the government balance and a much higher government debt. The only indicator where Marine Le Pen’s program outperforms is the issue of compulsory levies, which will fall by -0.5 points by 2027 and compared to the reference scenario at a +0.4 points increase for Emmanuel Macron.

Beware of hidden agendas and election promises

It should be noted that the econometric evaluation was modulated on the basis of the program defended by Emmanuel Macron on April 5, 2022. Since then, however, the candidate has made numerous announcements that were not included in his original program: the decline in retirement age 65 “is not a dogma” (9 billion savings generator in our simulation), the reindexing of pensions on inflation has been announced for this summer (possibly 7 billion in additional expenditure) and the outgoing president would soon establish a 100% orthodontic care system, the generalization of the full third-party payment and the maintenance of the systematic salary during work stoppages.

The same problem arises with Marine Le Pen’s program, which does not address the issue of a “frexit”.

Both candidates exacerbate inflation

The application of Emmanuel Macron’s program has little impact on inflation compared to that of the reference scenario, while Marine Le Pen’s program should lead us in 2027 to an inflation rate 0.5 to 1 point higher than that of the reference scenario, which poses a real risk to the competitiveness of the French economy.

Emmanuel Macron’s program should create the most jobs

With regard to employment, it is necessary to distinguish between jobs in the market and jobs outside the market (public administration, defence, education, health and social action) and bear in mind that France is characterized by a share of non-market work, % of total employment, very high: 31.2% in France against 27.1% in Germany and on average 24.7% in the eurozone (excluding France).

In terms of the impact of the programs, the two candidates improve the unemployment rate compared to the reference scenario: 5.5% for Marine Le Pen, 6.4% for Emmanuel Macor, compared to 7% in the reference scenario. Better implementation of Marine Le Pen’s program as a result of his plan to recruit civil servants (police, gendarmes, magistrates, army recruitment efforts, etc.).

And last but not least :

  • Marine Le Pen’s program should create 379,000 additional jobs (compared to the reference scenario), including 147,000 jobs in the non-market sector (similar to government employment) and 232,000 jobs in the private sector.
  • Emmanuel Macron’s program should create 397,000 additional jobs (compared to the reference scenario), including 300,000 in the market sectors and 97,000 in the non-market sector (similar to government employment)

Growth: positive for Emmanuel Macron and negative for Marine Le Pen

It is Emmanuel Macron’s program that should have the most significant positive effect: in 2027, GDP in cumulative deviations will be +1.6% higher compared to the reference scenario in 2027 against -0.7% when implementing the Marine Le Pen program.

Public finances: less deterioration for Emmanuel Macron but no improvement in sight

The application of Emmanuel Macron’s program would slightly increase public expenditure (+0.3 points of GDP compared to the reference scenario) to 52.5% of GDP. The government balance should be -2.5% in 2027 (or an improvement of 0.3 point of GDP compared to the reference scenario). An improvement in the balance, in particular thanks to a rate of compulsory taxes (43.6%) that would be 0.5 point of GDP higher than the level in the reference scenario. Ultimately, the weight of government debt (107.2% of GDP in 2027) would be reduced by 0.4 point of GDP compared to the reference scenario. We can therefore conclude that the effects of Emmanuel Macron’s program on public finances would be slightly positive, but at the cost of a further increase in mandatory levies and subject to compliance with the original programme.

At the same time, it appears that the effects of Marine Le Pen’s program on public finances would be negative. The implementation of its program should lead to compulsory levies (42.7%) being 0.5 point of GDP below the level of the reference scenario… the reference scenario to reach 53.5% of GDP. An imbalance that should lead to a deterioration in the government balance, which should rise to -4.5% in 2027 (ie 1.7 points of GDP deterioration compared to the reference scenario). Ultimately, the weight of government debt (112.5 % of GDP in 2027) would be increased by 5 points of GDP compared to the reference scenario.

Foreign trade: the two candidates worsen the deficit

Emmanuel Macron’s program does not allow for any improvement, not even a slight deterioration, in terms of foreign trade and competitiveness. The foreign trade deficit would widen by 0.2 point of GDP compared to the level in the reference scenario. Following the program of Marine Le Pen, the deterioration in the foreign trade deficit is more severe as it is expected to increase by 0.4 point of GDP in 2027 from the reference scenario level of -2.8% of GDP.

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