The lack of majority at the French National Assembly risks to lead to a political impasse. Six weeks after the snap elections, France is still under a caretaker government. The president of the Republic starts from August 23th a succession of meetings with the representants of the different political parties in order to constitute a government but nothing allows to be sure that these meetings will result to the choice of a Prime Minister able to build a coalition which will make its laws adopted and in particular the 2025 finance bill which will express its new political choices. This an unknown situation under the Fifth Republic, and it is the consequence of the President of the Republic decision to call for snap elections.

The result of these elections mainly reflects the rejection by the French people of the economic policies of the previous governments. But the political forces in presence are either in the denial of that reality or, until now, unable to reach an agreement to propose an alternative which corresponds to the expectations of these who elected them. The case of the “supply side policy” used for more than ten years has leaded, during these elections, to its condemnation by the electors but no political formation has obtained an enough good result to propose another policy correcting these mistakes and putting again France on a new economic trend.

The failure of that policy is not recognized by these who have adopted it because they proposed to continue it, without even including modifications able to answer to the expectations of the voters. The paradox, it is that the political leaders, i.e. the New Popular Front, who are the most critical and who ask for a radical change, belong to the same political “family” than these who have introduced it under the François Hollande mandate, with, from 2013, massive social and fiscal charges reductions in favor of the enterprises;

That policy represented an alternative to the traditional Keynesian policies which were based on the support of demand to restore the economic equilibriums and especially the full employment. Through the priority given to purchasing power, consumption will follow and the enterprises would profit from an activity rebound. With the launch of large public investments programs in infrastructures, in housing and in energy, the suppliers would also profit from new and important orders with there too, jobs creations.

The supply-side policy was justified by the necessity to reduce labor costs, considered as too high in comparison with the foreign competition, and so to allow the enterprises localized on the national territory, to recover market shares, to create jobs and to contribute to the support of the growth. Ten years later, none of these objectives have been reached, the economic situation of France has deteriorated to the point that its decline is now evocated, and it is one of the reasons, and probably the main one, of the setback of the outgoing government majority in the European elections and especially in the snap elections which have followed.

The social charges reductions applied from 2013, have not at all contributed to a reestablishment of enterprises competitiveness and the trade deficit, excluding energy, has not stopped to deteriorate. In 2013 the balance of manufactured goods was slightly positive in CAF/FAB statistics with 2.5billion euros. During the last twelve months, the deficit has overpassed 45 billion. Enterprises have not used the charges reductions to invest or to re-localize their production units on the national territory and to create jobs but to increase their profit margins in order to offer bonus to their executives and to increase their market values to the profit of their shareholders. Many of them have used these new resources to proceed to acquisitions of foreign companies which will sometimes reveal disastrous or to buy their own stocks when the enterprise was listed.

Growth has not more benefited from that policy and the country lives with annual rates around 1% (after having taken off the effects up and down of the consequences of the Covid-19 pandemic), for ten years which is equivalent to a near-stagnation. The point that this rate is slightly above the German one is not a convincing argument because the demographic situation of the two countries is completely different. The France GDP per capita is now inferior by near 20% to its neighbor one.

The employment situation has not been significantly improved because there are still three million jobseekers. The jobs which have been created are mainly low-qualified ones in services because there, wages are low and profit from the reduction of the social charges. The diminution of the unemployment rate according to the BIT definition which has fallen to 7.5% must not create an illusion because it results more from the increase of the denominator (the population with a working age) than from a reduction of the numerator (unemployed). Regarding the objective of a return to a full employment situation with a ratio at 5%, it is not only out of reach but mainly another illusion because it would still let more than two million workers without jobs.

At last, that policy has been one of the main causes of the increase of the public deficits for ten years and so of the public indebtedness because it has not generated receipts increases, if we except tax rises on household which have contributed to slow growth. The charges reductions were costly because they were not focused on the enterprises, in the industry for instance, which could have produced positive results. The main recipients have been the big retailers with some personal services like restaurants or home delivery.

In face of this situation, the successive governments have so been obliged to impose resources reductions in the essential public services and to limit the rise of the low wages and of the social benefits at a moment when, for the first time for twenty years, we had an inflation rebound caused by an instable international economic environment marked by the break-out of the supply chains and the tensions on the energy markets. That policy so has in the same time failed on the economic issues and generated an increase of the social inequalities. A small minority was going wealthier thanks to the profits of the big companies and a large majority of the population had the feeling of becoming poorer. The results of the elections express this discontent and the condemnation of the economic policy followed since 2013.

But no alternative solution appears having the capacity to be a basis for the constitution of a government having at its disposal an enough majority at the National Assembly. The adoption of a change of the economic policy, which was asked by the electors, is necessary to allow France to regain its social and financial equilibriums. The persistence in its error of the previous majority, which some members come from the left, impeaches the elaboration of a realist economic program. The presence, inside the New Popular Front, of supporters of extremist measures, creates also a doubt on its ability to support a realistic economic policy.

France so is not only confronted with a political deadlock because nobody is able to forecast what could be the shape a new government could take. It is also confronted with an economic deadlock. The supply side policy has failed and has been rejected by the electors. But the major points of a new economic policy to put in place by the next government remain to be defined and nothing allows to thinking that it will be easy.