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French President Emmanuel Macron attends a meeting with the leaders of the French Employers' association (MEDEF), the CPME and the Union of local businesses, after he signed into law the pension reform raising the retirement age, at the Elysee Palace in Paris, on April 18.STEPHANIE LECOCQ/Reuters

Emmanuel Macron was touring the site of Notre-Dame de Paris last Friday on the fourth anniversary of the fire that ravaged the iconic cathedral when he was overheard praising the determination of the reconstruction crew to meet his tight end-of-2024 target for reopening the 860-year-old church.

“It’s when you set a goal with ambition that you make things happen,” Mr. Marcon told the head of the restoration effort, his comments captured by reporters’ microphones. “Never let up, that’s my motto.”

Coincidence or not, he made his visit to Notre-Dame on the same day France’s Constitutional Council had been set to rule on the legality of the much-contested pension reform bill that Mr. Macron’s government had passed in March by decree, after failing to obtain majority support for the measures in the National Assembly. There was no mistaking that his remarks applied as much to pension reform as Notre-Dame.

By the end of the day, the most important parts of the reform had received the council’s green light. Mr. Macron’s government rushed to promulgate the new law overnight, despite another burst of havoc in the streets of French cities as protesters shattered store windows and set garbage bins on fire in the hours following the council’s ruling.

“Has this reform been accepted? Obviously not,” Mr. Macron said in a Monday evening address on French television. But he insisted the measures are necessary to preserve France’s generous pension system for future generations and put the country on the path to stronger economic growth.

To defuse public opposition to his government that has hardened since the reform package was unveiled in January, Mr. Macron devoted most of his speech to laying out a plan to improve the quality of life of French citizens by vowing to end overcrowding in emergency rooms by the end of 2024 and forcing more employers to share profits with their workers either through cash bonuses or stock grants.

But with Mr. Macron facing pressure from Germany and the Netherlands to do more to clean up French public finances, he may need to take more unpopular spending decisions before his term in office is up in 2027. As the second-largest euro-zone economy, France’s heavy debt and structural budget deficit are seen as a threat to the common currency.

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Under the new pension rules, France’s retirement age will rise to 64 from 62 by 2030 and the minimum contribution period required to qualify for a full public pension will be extended to 43 years from 41 years by 2027. Without the changes, France’s pay-as-you-go public pension system had been projected to post steadily increasing annual deficits, hitting €13.5-billion ($19.8-billion) in 2030 alone.

Unfortunately for Mr. Marcon, the pension changes alone will not put enough of a dent in the French government’s structural budget deficit to satisfy European Union guardrails. Under the EU’s Stability and Growth Pact, member countries are required to run budget deficits totalling no more than 3 per cent of gross domestic product and limit public debt to 60 per cent of GDP. The rules were suspended during the pandemic but are set to be enforced once again starting in 2024. France is seen as a laggard among its peers.

France’s structural budget deficit alone stands at 3.4 per cent of GDP. The overall budget shortfall fell to 4.7 per cent of GDP in 2022, down from 6.5 per cent in 2021 and 9 per cent in 2020. Before the 2008 financial crisis, France and Germany had roughly similar debt-to-GDP ratios of around 64 per cent. Since then, France’s ratio has almost doubled, to 111.6 per cent, while Germany’s has remained stable.

French Economy Minister Bruno Le Maire has promised to reduce the deficit-to-GDP ratio to 3 per cent by 2027 and reduce overall government spending to 54 per cent of GDP from 58 per cent. But analysts are skeptical he can achieve even those modest targets.

“The fall in popular and political support [for Mr. Macron’s government] will complement efforts to implement further structural reforms over the rest of Macron’s second term,” Fitch Ratings warned in a report last month, which had placed France’s AA credit rating on negative watch in November. “The government had a weak fiscal consolidation record prepandemic. An increase in government indebtedness resulting from higher-than-expected public deficits could lead to a downgrade.”

Moody’s also warned that the lack of majority in the National Assembly, and the Macron government’s weak approval rating, “will make it difficult to enact further reforms during this parliamentary term.” The likelihood of Mr. Macron calling early elections is remote; polls show his Renaissance party would likely lose seats to both the far-right National Rally and far-left France Unbowed. And both of those parties favour big government.

France’s public spending as a proportion of GDP remains by far the highest of any G7 country, surpassing even Italy. Mr. Macron’s pension reform plan, less ambitious than the one he promised during the 2022 election campaign, will not be enough to spare France from a financial reckoning that markets may decide should come sooner rather than later.

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