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| Unrest in France Hinders Macron’s Push to Revive Economy | Unrest in France Hinders Macron’s Push to Revive Economy |
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| PARIS — The need to accelerate growth has long been visible in almost every corner of the French economy, from dreary unemployment offices packed with job seekers to businesses whose financially stretched customers struggle to make do. | |
| President Emmanuel Macron came into office pledging to change all that by improving the country’s long-term prospects. But his halting response to a month of violent demonstrations by the so-called Yellow Vest movement over social inequality has clouded his efforts for a revival. | President Emmanuel Macron came into office pledging to change all that by improving the country’s long-term prospects. But his halting response to a month of violent demonstrations by the so-called Yellow Vest movement over social inequality has clouded his efforts for a revival. |
| Four weekends of mass protests in Paris and in towns and villages across France have hampered economic activity while hurting the country’s image with investors, the government said Monday. | Four weekends of mass protests in Paris and in towns and villages across France have hampered economic activity while hurting the country’s image with investors, the government said Monday. |
| The same day, the country’s central bank trimmed its growth forecast for the fourth quarter to 0.2 percent from 0.4 percent, well off the sluggish pace expected for the year. Businesses have sustained more than 10 billion euros, about $11.4 billion, in damage and lost sales, a figure that will probably grow. | |
| “It’s a catastrophe for business,” Bruno Le Maire, the finance minister, said Sunday as he toured Paris businesses smashed up by rioters. “It’s a catastrophe for our economy,” he added, a point he pressed again on Tuesday in a briefing with a small group of reporters. | “It’s a catastrophe for business,” Bruno Le Maire, the finance minister, said Sunday as he toured Paris businesses smashed up by rioters. “It’s a catastrophe for our economy,” he added, a point he pressed again on Tuesday in a briefing with a small group of reporters. |
| Mr. Macron has helped to fuel much of the current turmoil. Until Monday, he had remained silent for more than a week as he and his ministers crafted a response to a movement that began with anger over a gas tax and grew into a collective outcry over declining living standards and eroding purchasing power. | Mr. Macron has helped to fuel much of the current turmoil. Until Monday, he had remained silent for more than a week as he and his ministers crafted a response to a movement that began with anger over a gas tax and grew into a collective outcry over declining living standards and eroding purchasing power. |
| Moving to douse a restless nation’s ire, Mr. Macron acknowledged on Monday that he had given the appearance of being out of touch with "left behind” France, although he stopped short of apologizing. | Moving to douse a restless nation’s ire, Mr. Macron acknowledged on Monday that he had given the appearance of being out of touch with "left behind” France, although he stopped short of apologizing. |
| He pledged tax cuts and financial support for those having trouble getting by, urged businesses to give employees year-end bonuses and said the government would help minimum-wage earners with a €100 monthly supplement starting next year. | |
| Mr. Macron’s speech, a recorded message just 13 minutes long, was also notable for what he left out. | |
| He did not mention changing course on the most business-friendly overhaul of the French labor market in decades. The omission was a signal to investors that, despite the recent chaos, Mr. Macron plans to stick with his strategy for re-energizing Europe’s third-largest economy by pursuing changes that had stalled for more than a decade. | He did not mention changing course on the most business-friendly overhaul of the French labor market in decades. The omission was a signal to investors that, despite the recent chaos, Mr. Macron plans to stick with his strategy for re-energizing Europe’s third-largest economy by pursuing changes that had stalled for more than a decade. |
| “We know how important it is for us to be as attractive as possible for foreign investors,” Mr. Le Maire told reporters on Tuesday. “The key point is to make clear that we will remain strong on structural reforms.” | “We know how important it is for us to be as attractive as possible for foreign investors,” Mr. Le Maire told reporters on Tuesday. “The key point is to make clear that we will remain strong on structural reforms.” |
| While foreign investment in France has risen since Mr. Macron came to office, “there will be a mark left by this episode,” said Olivier Marchal, the chairman of Bain & Company France. “And it’s not a given that this will succeed in calming the dissatisfaction of a part of the population.” | While foreign investment in France has risen since Mr. Macron came to office, “there will be a mark left by this episode,” said Olivier Marchal, the chairman of Bain & Company France. “And it’s not a given that this will succeed in calming the dissatisfaction of a part of the population.” |
| Many of those protesting understand that improving the economy is a long-term project, but their concerns are focused on their monthly efforts to make ends meet. On social networks, some protesters said Mr. Macron’s offer fell short. | Many of those protesting understand that improving the economy is a long-term project, but their concerns are focused on their monthly efforts to make ends meet. On social networks, some protesters said Mr. Macron’s offer fell short. |
| His mostly unyielding attitude underscores the stakes for France as he eases business regulations to seed dynamism. His plans include altering the country’s strict labor code to encourage hiring, and making budget adjustments during his first year in office that hit low-income earners and retirees especially hard, even as he cut taxes for wealthy people. | His mostly unyielding attitude underscores the stakes for France as he eases business regulations to seed dynamism. His plans include altering the country’s strict labor code to encourage hiring, and making budget adjustments during his first year in office that hit low-income earners and retirees especially hard, even as he cut taxes for wealthy people. |
| Mr. Macron’s business-friendly policies have lured Amazon, Facebook and other multinational companies to increase their investments in France. But the changes could take years to yield results for the average worker. | Mr. Macron’s business-friendly policies have lured Amazon, Facebook and other multinational companies to increase their investments in France. But the changes could take years to yield results for the average worker. |
| Mr. Macron’s concessions, including scrapping a much-reviled gas tax increase and abandoning some taxes on low-income workers and retirees, will cost €10 billion to €15 billion and will probably push France’s budget deficit over a European Union cap of 3 percent of gross domestic product. France’s borrowing costs, a measure of the country’s credit risk for investors, jumped Tuesday to the highest level in 10 years amid concerns over the deficit. | Mr. Macron’s concessions, including scrapping a much-reviled gas tax increase and abandoning some taxes on low-income workers and retirees, will cost €10 billion to €15 billion and will probably push France’s budget deficit over a European Union cap of 3 percent of gross domestic product. France’s borrowing costs, a measure of the country’s credit risk for investors, jumped Tuesday to the highest level in 10 years amid concerns over the deficit. |
| Mr. Macron has lectured leaders of other eurozone countries — especially Italy — about the need to balance their books. Now he must follow his own advice. French ministries have been ordered to find cuts in their budgets, and the government could delay some tax cuts for companies that had been scheduled to kick in next year, Mr. Le Maire said. | Mr. Macron has lectured leaders of other eurozone countries — especially Italy — about the need to balance their books. Now he must follow his own advice. French ministries have been ordered to find cuts in their budgets, and the government could delay some tax cuts for companies that had been scheduled to kick in next year, Mr. Le Maire said. |
| Mr. Macron also refuses to end a tax break for wealthy citizens that he granted upon taking office. He says the measure was intended to lure money into France, where it can be invested in French companies. The move has drained more than €3 billion from France’s coffers this year, but Mr. Le Maire said Tuesday that there was no data yet to show whether it was having the promised stimulus effect. | |
| Mr. Le Maire has suggested another way to make up the shortfall: pursuing the taxes that he said Amazon, Apple, Facebook and Google had avoided paying in France for years. The European Union is considering a plan to impose such taxes. If the union does not reach an accord on doing so by March, Mr. Le Maire said Tuesday, France will move to collect $500 million in back taxes from the tech giants. | |
| Patrick Artus, chief economist at Natixis Bank, which is based in Paris, said that even if the tax cuts and spending increases Mr. Macron had proposed increased France’s budget deficit, “markets will accept that” as a price for restoring social stability. | |
| Still, the slowdown in growth caused by a month of disruption will make it harder for Mr. Macron to address several major problems. | Still, the slowdown in growth caused by a month of disruption will make it harder for Mr. Macron to address several major problems. |
| He has pledged to reduce France’s stubbornly high unemployment rate, a major source of unrest, from above 9 percent, where it has lingered for nearly a decade. That will be harder to do if the economy, which had already slowed to a 1.8 percent annual pace, continues to cool. | |
| Retailers, including supermarkets and sellers of luxury goods, have collectively lost more than €1 billion, while small and medium-size companies have lost at least €10 billion, according to France’s main retail and business associations. | Retailers, including supermarkets and sellers of luxury goods, have collectively lost more than €1 billion, while small and medium-size companies have lost at least €10 billion, according to France’s main retail and business associations. |
| The agriculture sector is facing over €13 billion in losses, said ANIA, the main industry group, citing four weekends of protests that blocked roads, causing delivery delays and often preventing groceries from reaching stores. | The agriculture sector is facing over €13 billion in losses, said ANIA, the main industry group, citing four weekends of protests that blocked roads, causing delivery delays and often preventing groceries from reaching stores. |
| Tourism has also been affected, with hotels recording cancellation rates as high as 25 percent since the protests started last month, compared with the same period last year. American and Japanese tour operators have been advising customers not to travel to France, according to the National Federation of Tourist Offices. | |
| Some companies have paused hiring plans. Auchan, a large supermarket chain, said it might not hire 4,000 temporary workers it had planned to employ across France for the holiday season. | Some companies have paused hiring plans. Auchan, a large supermarket chain, said it might not hire 4,000 temporary workers it had planned to employ across France for the holiday season. |
| The French Economy Ministry said over the weekend that it would provide emergency support for companies affected by the protests in the form of extended deadlines for tax payments, flexible short-term financing from banks and expedited insurance declaration procedures. | The French Economy Ministry said over the weekend that it would provide emergency support for companies affected by the protests in the form of extended deadlines for tax payments, flexible short-term financing from banks and expedited insurance declaration procedures. |
| Stores that need to make up for lost revenue will be allowed to open on Sundays, something that has been prohibited in most of France by decades-old laws requiring that Sunday be a day of rest. | Stores that need to make up for lost revenue will be allowed to open on Sundays, something that has been prohibited in most of France by decades-old laws requiring that Sunday be a day of rest. |
| In the end, the main issue for France is not the short-term cost from the demonstrations, said Mr. Artus, the economist. | In the end, the main issue for France is not the short-term cost from the demonstrations, said Mr. Artus, the economist. |
| “It’s whether Macron will keep the reforms going,” he said. “What’s important is to maintain the attractiveness of France.” |