Emmanuel Macron, France’s new president, does not like to waste time. In fact, the 39-year old started making infrastructure headlines even before getting elected, when news outlets around the world reported on the large-scale cyber-attack targeting his “campaign infrastructure” on 6 May. That turned out to be a non-event: unable to sway the vote’s results, the ‘Macronleaks’ were mostly noted for the lack of worthy information they contained.
Now that he is in office, hopes are raised within the French investment community that infrastructure will soon be in the limelight again – for better reasons. Such hopes are not born out of the tone of the campaign, a surreal few months dominated by allegations, acrimony and broad-brush arguments that left little space for the intricacies of infrastructure financing to be debated. But they seem well grounded regardless.
At a general level, Macron is a centrist, pro-business figure who’s keen to promote entrepreneurship and flexibilise France’s labour market. It’s fair to expect a few decisions coherent with this ethos, such as efforts to promote tax stability and investment. An unabashed EU supporter, the president is also keen to foster greater integration within the bloc, a message articulated again this week during his first visit to Angela Merkel in Berlin.
“We may expect then a greater convergence within EU policies, which could continue to positively affect the cost of liquidity across markets,” Vincent Levita and Bruno Candès, of InfraVia, told us last week. Such convergence, presumably, won’t do any harm to Europe-wide infrastructure projects and funding initiatives geared to unlock private money. It also brings about the possibility of a trade and travel boost, both of which would strengthen the economic case for infrastructure.
But there are more specific reasons to be optimistic. Macron’s platform as presidential candidate, and his actions as economy minister in 2014-2016, give a sense of his infrastructure policy leanings. On most counts, they are encouraging: his stated programme includes a five-year, €50 billion investment platform, with at least €20 billion allocated to infrastructure; he has called for greater capital injections into digital infrastructure and energy transition.
He seems favourable to privatisations, as exemplified by the sale of stakes in airports and a power network under his tenure at the economy ministry. As Levita and Candès recall, he also wants the government to get a move on the planning of the long-stalled Grand Paris vision.
While the details of all this have yet to be thrashed out, the broad direction is not much in doubt. More uncertain is his capacity to deliver. In less than a month, the French head to the polls again for parliamentary elections. Macron, who created his party En Marche! just a year ago, is far from guaranteed to win a majority of seats. Should the party be forced to enter a coalition or lead a minority government, Macron could see his margin for manoeuvre reduced.
In some sectors, this may not constrain dealflow. “It seems there is a consensus around the fact that there should be renewables in the energy mix […] driven in large part by the fact that renewables have become a competitive industry,” Raphael Lance, head of renewable energy funds at Mirova, recently told us.
But this argument is not completely watertight. A growing share of the pipeline is likely to accounted for by less mature technologies, which will continue to require political support. France’s largest floating offshore wind project, backed this week by Meridiam and CDC, is set to benefit from a reported feed-in tariff of €240 per MWh, as per legislation drafted last month.
Support for clean energy subsidies may well last whatever the outcome of the June elections. The same is probably true of super-fast broadband, which is being rolled out through the Public Initiative Networks, a public-private programme that covers 4,650 towns around the country. Elsewhere, however, the government is unlikely to get a free pass. Failing a majority, Macron may struggle to ignite another wave of privatisations and PPPs without building cross-party bridges.
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