Business | A spring in their step

French businesses relish the prospect of President Macron

His greatest service to French companies would be keeping out Marine Le Pen

|PARIS

THE likely election of Emmanuel Macron as France’s president, in a run-off vote on May 7th, has corporate leaders in a state of high anticipation. French politicians with business experience rarely prosper. It is nearly half a century since Georges Pompidou won office in 1969 on the back of a private-sector career partly at Rothschild, an investment bank. The sitting president, François Hollande, roused voters in 2012 by declaring that his “true enemy” was the world of finance. Mr Macron’s own stint at Rothschild, advising on mergers from 2008 to 2012, included handling a $12bn acquisition of a unit of Pfizer, a pharma firm, by Nestlé, a consumer-goods giant.

Markets rose and bond yields fell after Mr Macron won the first round on April 23rd. His second-round opponent, Marine Le Pen of the far right, dismays business—one investor admits re-registering his firm as European rather than French, the better to shift headquarters were she to win. But Mr Macron is favourite.

A chief of a big firm headquartered in Paris speaks of new optimism for France’s economy if Mr Macron wins. Business indicators are improving; measures of corporate confidence in particular have been ticking up for a while (see chart). A survey by IHS Markit, on April 21st, showed the tenth consecutive monthly increase in private firms’ activity. French purchasing managers clock in as markedly more bullish than German ones. The economy has been showing modest vim: GDP figures for the first quarter, out on April 28th, are expected to register year-on-year growth of 1.3%, up from 1.1% in the previous quarter.

Mr Macron would cut corporation tax and public spending (though less than one rival, François Fillon, promised) and simplify a messy, expensive pensions system. Just as important for business, he promises to build on his previous efforts during a stint as economy minister to ease rigid labour markets that keep unemployment high. Caps on severance pay to fired employees and limits to legal processes that can reverse lay-offs are a priority for firms. Though Mr Macron has said he would not touch France’s 35-hour working week, brought in by the Socialists in 2000-02, he wants a German-style approach to labour relations, letting individual companies negotiate directly with unions, rather than accept national bargains. That would lessen the influence of national, often militant, unions on more moderate local ones.

Beyond that, his plans to cut France’s high tax burden (the state spends 57% of GDP, more than any other big rich country) also cheers businesspeople and investors. Changes could be designed to send capital to smaller firms, such as the tech startups Mr Macron has championed in the past. Though he would not scrap France’s wealth tax, he would exclude financial assets from it. By also capping taxes on capital gains, he would make it more attractive to invest in local firms, reckons Ross McInnes, chairman of Safran, a big aeronautical and defence firm. “Family-owned and startup businesses can really benefit.”

A worry for business as well as for Mr Macron’s supporters is that as a political outsider he may find it hard to get things done in office. His movement, En Marche! (“On the Move!”), may not secure a majority at the parliamentary elections to be held in June. Yet he is a vastly happier prospect than Ms Le Pen. Her populist wishlist includes talk of getting France out of the euro and imposing import taxes to discourage trade. The greatest service that Mr Macron can provide to corporate France, in other words, would be keeping her out.

This article appeared in the Business section of the print edition under the headline "A spring in their step"

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