French President Emmanuel Macron has to focus on improving productivity levels as the next step in a series of reforms, a former governor of the Bank of France told CNBC Monday.
Macron, who won the final round of the French presidential race a year ago, has so far managed to fulfil two of his campaign pledges to change labor laws and tax policies — firms are now able to negotiate working conditions with their own employees without having to abide by industry-wide conditions. Wealth taxes were also reduced to make the French economy more business friendly.
Now, it’s time to focus on productivity to boost even further the growth potential of France, Christian Noyer, former governor of the Bank of France, said.
“Now what we need to address is productivity, that’s why the reforms that are being discussed at the moment about vocational training, about unemployment benefits, all sorts of things, are the third element we need to raise the growth potential and to reduce unemployment towards the low levels that have been achieved in the best working economies,” Noyer told CNBC’s Charlotte Reed.
European Commission figures released last week showed the unemployment rate stood at 9.4 percent in 2017 and it is expected to come down to 8.9 and 8.3 percent in 2018 and 2019 respectively. Meanwhile, the growth rate reached 1.8 percent last year and it is foreseen to rise to 2 percent this year.
The election of Emmanuel Macron has sent the spread between the French 10-year bond and the German bund lower, indicating that investors became more positive about the future of the French economy.
Noyer told CNBC that Macron brought a new sense of energy in France, making the outside world look at the country in a different way.
“Everyone has been impressed first by the capacity of the new president government to enact significant reforms in a very short timeframe…the labour market reform made France probably the most flexible in the continent, or at least as flexible as the most flexible in the continent,” Noyer said.