2019 Global Outlook: Economic reform in France

A Yellow Vest demonstration moves toward the Arc de Triomphe in Paris
The Yellow Vest movement has demanded a “national dialogue.” But will that be enough to set the country on a path toward lower taxes and less government spending? (source: dpa)
  • Presidents Sarkozy and Hollande mostly raised taxes to cover rising deficits
  • Emmanuel Macron is following a similar path, despite promising to be different
  • Centralized bureaucracy and entrenched interests tend to halt real reform

In France, 2018 did not bring the promised economic recovery, while the Yellow Vest movement in November and December shook the government. Instead of increasing taxes to reduce deficits, the authorities backpedaled, pledging to implement measures that will increase both public spending and deficits in the short term. Some of these measures are supposed to be decided upon in a “national debate.” The question is whether this debate will help reverse France’s chronic overspending by redefining the country’s priorities and shrinking a bloated state administration.

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