Tackling French overspending: Macron makes modest start

For two weeks in the mayor's office in the small town of Gueret in central France, President Emmanuel Macron faced the wall.

His portrait which hangs in every town hall in France -- showing the ex-investment banker leaning against his desk with a purposeful stare -- was flipped around by local leader Michel Vergnier in an act of protest.

Like other mayors in the rural region of Creuse, Vergnier was incensed at being teargassed by police last month when he tried to meet the president along with protesting local workers to complain about job losses and budget cuts.

"We decided that since he didn't want to see us, for us it was the same. There was no reason to look at him in our councils," the 70-year-old former school teacher said.

Vergnier, who was later invited to Paris by Macron, is a veteran whose 20-year parliamentary career ended with the rout of the Socialist party in this year's elections by the president's centrist Republic On the Move party.

He echoes the growing concerns of many mayors and millions of public sector workers who are anxious about Macron's plans to tackle chronic overspending and ever-rising debt.

Cutting local council funds by 13 billion euros ($15 billion) over Macron's term is one of the government's objectives as it seeks to reduce the deficit from just under 3.0 percent of GDP this year to nearly zero in 2022.

"Targeting local councils is not the right way of doing it," added Vergnier, who is also a senior figure in the Association of French Mayors.

- A strong state -

In rural places like Gueret, it's easy to understand why the government's first cuts -- such as reducing the number of subsidised jobs -- and its longer term objectives worry officials and citizens alike.

France's public sector is the largest of any industrialised country bar Finland relative to the size of its economy -- comprising 56.6 percent of gross domestic product in 2015, according to figures from the OECD.

The equivalent figure for Germany is 43.8 percent.

The Creuse region, which is poor, isolated and with a shrinking and ageing population, struggles to attract private investment.

On Gueret's central shopping street, about half of the shops are boarded up or vacant, while the region's second-biggest private employer, car parts supplier GM&S, is laying off more than half its staff.

The role of the state in the local economy is plain to see.

Large separate buildings house three layers of administration -- municipal, regional and prefectural. There's a publicly funded cinema and an arts association that puts on two subsidised shows a week.

Mayor Vergnier estimates that there are around 3,000 public sector jobs in his town of 16,000 people, double the number in the industrial sector.

In the neat public gardens, four of the 20-strong team of municipal gardeners are preparing the flowerbeds for winter, planting bulbs and tidying up hedgerows in front of the large (state-funded) local museum.

- Deferred efforts -

The last time a French government balanced the budget was in the mid-1970s and Paris has broken EU budget deficit rules every year for a decade -- until 2017.

Successive presidents have found it impossible to deliver France's cradle-to-grave social protections without borrowing heavily.

For some in the Socialist party, as well as the radical left and far right, the answer is to crack down on tax evasion and squeeze the rich.

But Macron points to France's tax take -- the second-highest of leading world economies, OECD figures show -- and sees spending cutbacks and private sector growth as the only long-term solution.

Yet, despite his pledge to produce a leaner state, France's new leader has made modest progress.

"Macron is aiming to reduce public spending but he doesn't want to do it in a brutal way," said Mathieu Plane from the OFCE economic think tank at Sciences Po university in Paris.

Plane believes Macron is wary of jeopardising the uptick in economic growth.

As a result, cost-saving objectives for next year have been revised down to 15 billion euros -- from 20 billion initially -- and concessions have also been granted to the mayors.

Under a draft budget approved by MPs on Tuesday, public sector headcount will fall by just 1,600 next year -- a fraction of the 120,000 jobs Macron has promised to cut over his term.

"Clearly there's not much real consolidation in 2018," Plane added.

This view is shared by the HCFP public spending watchdog, the International Monetary Fund and the European Commission, which warned Wednesday that France was doing too little to tackle the underlying reasons for its deficit.

Government projections currently show bigger efforts falling towards the end of Macron's term, when he and his MPs will be eyeing re-election.

Unpopular measures could lead to more resistance from mayors like Vergnier in Gueret, but the head of the gardening service there offered some encouragement.

Frederique Garcia believes the French are increasingly aware that overspending cannot continue indefinitely.

"It's like attitudes to the use of pesticides," she explained in the public garden. "People look at it differently now than even three years ago."