France’s new five-year presidential term (2022-2027) is off to a poor start

Much attention focuses on a president’s strategy for their five years in office. But five years is a relatively short period of time, so the starting point plays an important role. The starting point for France in 2022 is quite unfavourable : France’s public finances in 2022 are in a much worse state than expected due to the war in Ukraine, the resulting loss of growth and the rise in commodity prices. The ability to finance new public spending is compromised ; At a time of very strong demand for an improvement in purchasing power, it will fall sharply in 2022 due to the surge in inflation caused by the surge in commodity prices; Companies are affected by shortages and supply chain problems in the wake of the recovery from the COVID crisis and the war in Ukraine; Last, interest rates will rapidly be significantly higher than what was expected only a short time ago.