"We're not the devil": France Inc. grapples with new political order

AIX-EN-PROVENCE, France (Reuters) – France’s business elite is grappling to live with a new more hostile political order a month after far-right and hard-left parties robbed President Emmanuel Macron’s government of its control of parliament.

The country’s corporate leaders, who were gathered for an annual business conference in southern France, spent the last five years safe in the knowledge that Macron’s government could push its pro-business reform agenda largely unobstructed.

Not only can Macron’s government no longer expect parliament to rubber stamp its plans, but opposition parties are impatient to wield their new power to substantially rewrite its proposed legislation.

A CEO at one of France’s largest industrial companies said that they had contact with some of the new lawmakers and meanwhile were paying closer attention to legislation in the pipeline.

“We are going to have to explain to a lot of new people in parliament that we are not the absolute devil and that we do some good things,” the CEO told Reuters during a break at France’s answer to the Davos forum.

With the anti-capitalist France Insoumise (France Unbowed) part at its head, the leftwing Nupes alliance is particularly eager to flex its new-found muscle in parliament.

The far-right Rassemblement National (National Rally) has yet to indicate how obstructive it intends to be. It also remains to be seen whether Macron’s party can win cooperation from the conservative Les Republicains.

Meanwhile, memories of large-scale “yellow vest” street protests and violence in 2018 remain seared in ministers’ minds, leaving the government eager to avoid the possibility of adding a political crisis to a cost-of-living crisis.

That means the government and the public finances are vulnerable to pressure to ease households’ inflation pain with costly new measures to support their incomes, said Paul Hermelin, chairman of French IT consultancy Capgemini.

“Let’s not downplay the fact that the results of the recent elections have created a chaotic situation with a very combative leader on the left,” he said.

“That can lead the government to make salary concessions in order to avoid strikes,” he said.

Macron’s government has already aggressively rolled out inflation relief, most recently with a new 20 billion euro ($20.4 billion) package of measures ranging from a 4% hike in welfare and pension benefits and 3.5% salary hike for civil servants.

While some companies seek to build bridges with opposition parties, others are counting on their public support eroding away as the voters who elected them come to the conclusion that their most radical promises cannot be implemented.

“I told the prime minister, we are in a outlandish situation … But the French will realise the futility of what they’re being told,” the chairman of another French industrial company told Reuters.

Meanwhile, other business leaders were confident that the political imperative of getting laws passed in the middle of a cost of living and energy crisis would force more radical parties to back down.

“There’s parties in parliament with more drastic positions than others, and they’re just going to have to learn to be responsible,” the chairman of a major French company said.

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