Partner country - French election: German economy fears consequences
The German economy is concerned about the consequences of the French Parliament election, if the extreme right or extreme left were to come to power in France. "In analyzing the economic policy announcements of the Right and the Left, German and French companies come to the same conclusion: The attractiveness of France would suffer as a result," said Patrick Brandmaier, the CEO of the German-French Industry and Trade Chamber, in Paris.
French President Emmanuel Macron, in response to the defeat of his liberal forces in the European elections and the high victory of the Nationalists, dissolved the National Assembly and announced new elections for the French Parliamentary Chamber for this Sunday and July 7. This does not concern Macron's presidency.
Brandmaier said that strong increases in public spending, the withdrawal of reforms implemented in the last seven years, and the very likely increase in taxes would not make the companies optimistic. "Neither are certain announcements, such as withdrawing from Europe or putting free trade agreements in question," he added. The already high French national debt is likely to increase further. Rising interest rates for French government bonds would add to the already strained French state budget.
Economic prospects under pressure
The consumer sentiment would also be affected, as many expenses would not be paid or would be postponed, which would further weaken the already weak economic prospects, Brandmaier said. However, a short-term economic boost cannot be ruled out due to consumption measures such as an increase in the minimum wage or a reduction in the value-added tax.
Employers would also wait for the development of the economic situation before hiring new personnel. This would further aggravate the already tense labor market situation for companies and qualified workers, Brandmaier explained. In the case of a victory of the extreme right, there would also be the question of the fate of immigrant workers, who are essential for the functioning of certain sectors such as construction or gastronomy.
Investments, growth, and jobs are at stake
"We do not expect significant changes or structural decisions from German companies in the short term: There is a wait-and-see attitude," said the Chamber of Commerce head. "If the competitive conditions and economic prospects in France deteriorate, this would have medium- to long-term consequences for investments, growth, and employment."
Germany is the largest European investor in France, and France is the second most important export market for German companies. "Less favorable framework conditions and a weakening economy in France would therefore also affect German companies." Germany and Europe need a economically, politically, and financially stable and strong France, emphasized Brandmaier.
- Given the economic policy announcements of the Right and the Left in France, IHK (German Chamber of Commerce and Industry) and German-French companies share a concern about Paris' attractiveness as a potential partner country in the economic situation.
- With the dissolution of the National Assembly and the announcement of new elections for the French Parliamentary Chamber on Sunday and July 7, French President Emmanuel Macron aims to influence the outcome of the upcoming Parliamentary election in France, amidst the high victory of the Nationalists in the European elections.
- According to Brandmaier, the CEO of the German-French Industry and Trade Chamber, strong increases in public spending, the withdrawal of reforms, and an increase in taxes would not make German and French companies optimistic about the economic situation in France.
- If the extreme right were to come to power in the French Parliamentary election, the fate of immigrant workers, who are essential for certain sectors such as construction or gastronomy, would be uncertain, as stated by Brandmaier.
- Germany, as the largest European investor in France, and France, as the second most important export market for German companies, would be affected by less favorable framework conditions and a weakening economy in France, emphasized Brandmaier.
- The already strained French state budget would be further impacted by rising interest rates for French government bonds, due to the increasing French national debt, as highlighted by Brandmaier in Paris.
- In the event of a victory of the extreme right in the French Parliamentary elections, investments, growth, and jobs in both France and Germany could be negatively impacted, as pointed out by the Chamber of Commerce head.
