Macron's Missteps Could Prove Costly

If he's not careful, Emmanuel Macron will end up as Francois Hollande 2.0.

Not so different after all.

Photographer: Thierry Chesnot

In politics, holding the center ground might be a useful strategy for winning elections, but rarely for generating enthusiasm. Emmanuel Macron’s favorability ratings just dropped seven points, to a low 36 percent, according to a recent poll for the HuffPost and CNews. If he's not careful, Macron may repeat the mistakes of Francois Hollande, his mentor and predecessor.

Macron's victory was spectacular, given that he won both the presidency and control of parliament from his position outside France's main political parties. But it was not widely endorsed: He won more thanks to voters’ rejection of alternatives, such as the far-right Marine Le Pen and the scandal-plagued conservative François Fillon, than through a real popular groundswell.

His announcement of deep defense cuts needlessly alienated the armed forces and led to the resignation of the highly respected chief of general staff, Pierre de Villiers. More generally, he has decided to focus his early economic policy efforts on reducing the deficit, which looks to many French like another round of austerity and an attempt to impress Germany rather than stimulate growth at home.

This is starting to look familiar. His predecessor, Francois Hollande, became the most unpopular president in the history of the Fifth Republic not by pursuing extravagantly socialist spending, but rather by pursuing small-bore reforms, like a refundable payroll tax credit for businesses. These ended up being just painful or ill-conceived enough to be deeply unpopular in a context of economic stagnation and mass unemployment, while not making any real difference in terms of growth or employment. Constant tinkering that is devoid of big ideas but which wastes precious political capital was Hollande's administration in a nutshell.

Macron's decision to trim a popular housing subsidy, which goes by the acronym APL, is straight out of Hollande's playbook. The APL was put in place to help renters, but studies suggest that it subsidizes homeowners instead, as rents adjust upward to match the subsidy. Macron's policy barely changes what's not working and it expends political capital on a reform that all sides agree won’t make much of a difference anyway. The Macron cut for the average recipient would work out to five euros a month.

That's a missed opportunity. France has a shortage of affordable housing and subsidies are popular. But Macron fails to tackle the real problem with France's housing policy: draconian regulations on both new construction and current lease-holders. If Macron wanted to make a major political investment to liberate new home building and facilitate mobility, he could fix abuses that are rife in social housing and repeal the countless “not in my backyard” regulations that keep prices high and limit building. Or if he doesn’t want to take the political beating that comes with touching housing policy, better to focus efforts elsewhere, such as labor market reforms. Instead, he gets all the pain and no gain.

Hollande's policy failures and declining popularity led to political paralysis and infighting, which led to a perception of him as weak and dithering, which led to more unpopularity, and so on. In this way, Hollande was slowly asphyxiated over the five years of his term.

But it is still early in Macron's presidency; he has a large parliamentary majority and the opposition parties are divided and off-balance. There’s still plenty of time to turn things around -- mainly by promoting a real agenda that would provide growth, through a combination of tax reform and structural changes that roll back the state bureaucracy. With this hand to play, if he ends up like Hollande, he'll have only himself to blame.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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