It would be natural for the Barnier government to have survival as its sole obsession. Without a majority in Parliament, faced with a left-wing opposition that is furious at having been deprived of a power that should have been theirs, uncertain of the solidity of support from a central bloc that is now more divided than ever, and hostage to the far-right Rassemblement National (RN) party that has pledged its support only temporarily, it would make sense for it to focus first and foremost on how to stay alive – and, to do this, to try to navigate between the political pitfalls.
And yet, despite all the pitfalls that threaten it, it will have to set a course, open up projects and take initiative. A government aiming only at survival would not meet the country's needs, the expectations of its citizens or the concerns of the markets. Michel Barnier is clearly aware of this: During the handover of power, he mentioned the need to address anger and feelings of abandonment.
He also mentioned making significant changes. To avoid appearing as a mere executor, he will indeed need to break with certain aspects of the economic policy that has been pursued over the past seven years. It is unlikely that he will consider reversing the pension reform or even suspending its implementation, despite the strong discontent it continues to generate. It is also unlikely that he will expand it, despite the funding shortfall (0.4% of GDP by 2030) revealed by recent projections from the Pensions Advisory Council.
Productivity test
However, he could choose to revitalize wage growth. There is currently a strong popular demand for a more robust increase in the purchasing power of wages. On average, this disposable income has been better protected in France than in many other European countries, but the feeling of injustice is fueled by the fact that, adjusted for the variation in household spending patterns, many households have suffered significant price increases and have therefore seen their real income stagnate or fall. The problem is that a significant recovery in disposable income gains requires remedying the primary cause of its stagnation: The marked decline in labor productivity that has been observed since the 2020 pandemic crisis. As the INSEE national statistics institute recently pointed out, the drop relative to the pre-Covid-19 trend is five and a half points, and the current level of productivity is still well below that of 2019. Without a recovery, there is no room for a substantial increase in wages.
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