France’s Macron seeks to show he’s no lame duck as pension discontent rumbles on

While French President Emmanuel Macron was in Germany for dinner and alliance-building talks with Chancellor Olaf Scholz this week, more than 200,000 protesters were on the streets at home to oppose one of his flagship domestic policies.

Before marking six years in office on May 14, Macron managed to pass a bill that will see the retirement age for most workers rise from 62 to 64, among other measures. Reforming the pension system was a longstanding pledge of Macron’s, but enacting it nearly toppled his government, sparked weeks of strikes and demonstrations, and caused his already-shaky popularity rating to plummet.

Ongoing efforts by opposition politicians to thwart the bill faced another blockage this week, and it looks most likely to be secured into law in September, as planned.

Union-led protests will no doubt continue but with the dust almost settled around the issue, the president is looking at what’s next for the four years left of his term (he is not allowed to run for another consecutively.)

He has already demonstrated that foreign policy and forging alliances on overseas trips will be a key focus, from China to Ukraine to the U.K.

At home, Macron faces the question of whether he has used up too much political capital to enact what is left of his domestic agenda, and how he will navigate a bitterly-divided Parliament.

He has failed to build effective alliances beyond the conservative Les Republicains — something its lawmakers, not all of whom supported the pensions bill, are very aware of, said senior lecturer in the economics department at Lancaster University, Renaud Foucart.

“They know Macron has no alternative than to rely on them, making it almost impossible to develop the centrist domestic project,” he said.

Macron has concurrently been on a push to attract electric vehicle factories as Europe scrambles to increase capacity, offering tax credits for environmentally-friendly investments, and pushing the EU to get competitive with the U.S. Inflation Reduction Act; as well as courting executives — including Elon Musk — to increase foreign investment in the country.

More controversial, adds Rahman, is the “dose of protectionism” in Macron’s bill that will see green subsidies, including for consumers who buy electric cars, only applied to goods that meet EU environmental regulations, excluding many China-produced products.

While he has united factions of French society including unions, the left and the far-right against him, Macron has economic accomplishments to point to, according to Holger Schmieding, chief economist at Berenberg.

“France is now a much better place to invest and create jobs. It is now well ahead of Germany for job creation, start-ups and business investment. This is largely attributable to Macron’s agenda,” Schmieding said, adding France was replacing Germany was the most dynamic major European economy.

Macron will continue to roll out the red carpet to investors, Schmieding said, as well as generating a significant rise in green investment over time.

Still, the coming years will be an uphill struggle for Macron politically, analysts said.

“Macron will continue to push a pro-business agenda, as seen in his reforms to labor laws, but further measures will likely be piecemeal and require extensive negotiation to pass,” Zandra Kellert, associate director at consultancy Control Risks, said.

His focus, she said, will be on leadership within the EU, forging relations overseas, pushing regulatory changes at the EU level, and boosting French businesses as Europe takes a more protectionist tilt.

Recent expenditure of his political capital will mean he is reluctant to use the executive powers he used for both the pensions bill and most recent budget, Kellert said. “He would like to pass tax cuts and reform bureaucratic processes to make them more business-friendly. However, such measures are likely to be watered down before implementation,” she added.

While the pensions overhaul has eroded his image with those who fiercely oppose the measure, Hoez said many people were also unimpressed with the rowdiness of opposition lawmakers during the process; and that a newly-announced 2 billion euros ($2.14 billion) in tax cuts aimed at the middle class could garner Macron some favor.

His government will also be under pressure to bring down inflation, which has fallen to a 12-month low but remains well above target, ahead of the test of European parliamentary elections next year.

Rahman of Eurasia Group said that in the coming months, Macron was likely to “win some” — in defense and his green industry bill — and “lose some,” on migration.

“This will set the pattern for his remaining four years in office: he will not be completely powerless or hamstrung, but he will have to choose his battles carefully,” Rahman said.