The gilet jaunes protests are steadily dwindling: only 7,000 demonstrators took to the streets on Saturday 15th earlier this month, a fraction of the quarter of a million people who took part on November 17th 2018. This will give President Macron breathing space to accelerate his reform agenda.
A central target is unemployment insurance: the changes outlined by Prime Minister Edouard Philippe – dubbed ‘Act II’ – will make it harder to claim benefits. Pension reform is top of the agenda too, designed to encourage greater job mobility and to delay retirement. Tax cuts for the middle classes have been proposed as well.
It could be argued that these reforms were the very source of the underlying discontent that had been simmering beneath the surface of French society, before Macron’s proposed fuel tax sparked a wave of protests across the country.
Regardless, the recent data has been impressive in the context of a slowing global economy. The unemployment rate is at cyclical lows, wage growth is accelerating, and business sentiment is picking up again. Mr Macron will feel vindicated. The flash services activity index hit a seven-month high in June, according to Markit. Consumption has rebounded too. Real retail sales grew 0.6% m/m in May, following a strong 1.2% m/m increase in April. The 3m/3m annualised rate hit 4.2%, the highest since November 2017.
