Use French upswing to push through reforms, IMF tells Macron

PARIS (Reuters) – French President Emmanuel Macron should seize the ideal opportunity of an economic upswing to make headway on his reform program, International Monetary Fund officials said on Monday.

Macron, elected last May on a pro-business reform agenda, overhauled France’s labor code and capital tax system in September to spur hiring and investing.

While those first steps were applauded by investors, his popularity among voters suffered, though that recovered somewhat as the government slowed the pace of change towards the end of 2017 and economic growth picked up speed.

“There are obviously domestic critics of his policies and he could encounter political obstacles down the road,” IMF chief economist Maurice Obstfeld told journalists in Paris.

“It will certainty be helpful if some of the fruits of these reforms are seen earlier rather than later,” he said, praising the reform plans.

Macron’s government faces prickly negotiations with unions and employers on unemployment benefits as well as on professional training and apprenticeships.

The 40-year-old leader wants new legislation on these matters passed by mid-year, and any delays could raise doubts about his determination to press ahead.

Senior IMF economist Romain Duval said now was the ideal time to implement sensitive reforms, especially to the labor market, because firms were more likely to hire when growth was strong.

Obstfeld said a strong growth phase also offered a chance to rein in France’s public spending, among the highest in the world, because there was less risk of government belt-tightening triggering a slowdown.

The IMF forecast in September that the French economy would grow 1.8 percent this year, the best since 2011. It is to update its estimates for all the countries it tracks on Jan. 22.

Asked if the IMF was likely to upgrade its forecasts for major economies more broadly, he said he was optimistic.

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