The Economic Challenges Facing President Jacques Chirac

What are the principal social and economic challenges facing President Jacques Chirac? In legislative terms, he has substantial room for maneuver. Under the banner of the Union pour la Majorité Présidentielle, his newly appointed Prime Minister, Jean-Pierre Raffarin, leads a solid majority in the National Assembly, given a strong mandate by an electorate weary of five years of cohabitation. The French economy is picking up, after a year of relatively slow growth, and even the Euro is strengthening against the American dollar. There would seem to be room for optimism in the Elysée palace.

Despite his victory, however, the elections of 2002 present the French President with a cautionary tale. In the first round of the Presidential elections on April 21st, Chirac received only 20 percent of the vote. Together, the two mainstream candidates, Chirac and Jospin, received only 36 percent of the vote, as almost 20 percent went to Jean-Marie Le Pen and Bruno Mégret, the candidates of the radical right, and another 20 percent to a host of other candidates on the far left. In the legislative elections, a record 40 percent of the electorate abstained. These figures reflect a deep discontent among French voters that is unlikely to be banished by the reelection of the President.

On the face of it, such discontent is paradoxical. Macroeconomic performance, which is crucial to electoral outcomes, was good during the cohabitation of Chirac and Jospin. The French economy grew by almost 3 percent a year, compared with 1.9 percent from 1981 to 1997. Gross fixed capital investment, which had increased by only 1.4 percent a year in 1981-97, rose by 5.5 percent a year under the Jospin government, and high levels of unemployment were finally coming down. Employment grew by almost 2 percent a year between 1997 and 2002.