While the UK, US and much of the EU are gripped by a cost-of-living crisis heightened by Russia’s invasion of Ukraine, in France, President Emmanuel Macron’s “tariff shield” is helping keep a lid on rising prices. Inflation there hit 4.5% in March, and while this was up from February’s 3.6%, it remains one of the lowest rates in the industrialised west and well below the UK’s 6.2%, Germany’s 7.3%, Spain’s 9.8% and 11.9% in the Netherlands. A decision last year to limit the amount by which France’s largely state-owned energy companies could raise prices has benefited consumers and taken some of the inflationary pressure off industries that depend on gas and electricity. In France, where about two-thirds of power comes from Électricité de France’s nuclear plants, the electricity component of inflation has risen by 4% in the past 12 months, but by an average of more than 27% in the eurozone generally. Yet, in the first round of the presidential election next Sunday, Macron will face criticism from left and right for rocketing diesel prices, which hit the rural poor, and for his attempts over the previous five years to end decades of low growth with a string of pro-business policies. Recent outrage over his €2.4bn spending on consultants since coming to office, including €1bn with McKinsey of the US, is another headline-grabbing issue drowning out his impressive economic record and denting his lead in the polls. By most economic yardsticks – national income, business investment, consumer spending, labour supply and rising prices – France sits at or near the top of the pile of rich nations. Contrary to most forecasts, its economy recovered last year to 1% above pre-pandemic levels. The UK is still 0.1% below. Business investment is up in France but down in the UK. Labour shortages there are restricted to discrete corners of the economy, thanks to the expansion of a German-style apprenticeship scheme that the British government promised, but has yet to deliver. UBS economist Felix Huefner said: “The exceptional performance of the labour market has been a huge surprise.” More people are working in France than before the pandemic, whereas in the UK, about 500,000 people, mostly over- 50s, have quit the labour market, making shortages more acute. Daniela Ordonez at Oxford Economics credits better-funded and targeted financial support: “It meant French people continued buying big-ticket items when other countries stopped.” The performance gap may appear small – the number of people working or seeking work is 1% higher in France than in 2019 (and 1.5% lower in the UK). But Huefner says an increase in worker numbers through the pandemic helped keep French wages in check – and business costs down. Philippe Aghion of Insead business school in Fontainebleau says 1.2m jobs were created between 2017 and 2021, “and not just any jobs – the proportion of long-term, long-tenure jobs has increased.” Temporary contracts, especially for younger workers, were common after almost two decades of restrictive employment laws – not least the 35-hour week, which dates from February 2000. Temp agency workers, contractors and interns became as common in France as in the UK, as firms tried to sidestep the costs of permanent employment. Aghion was one of Macron’s three economic advisers when he first ran for the presidency. He says the president’s cap on employment tribunal costs was a game-changer, giving big companies an incentive to hire more full-time workers. Reforms of apprenticeships and training were another seismic boost, he says: “In France, we used to be very top-down, but these days we are more bottom-up, allowing workers to negotiate solutions with firms. Training is no longer decided by unions; workers choose what to do, as they do in Germany.” Speaking to the Observer last week, Cédric O, France’s secretary of state for the digital economy and a close Macron ally, said the president’s reforms of tax and employment laws, and his understanding of the concerns of small firms, played an important part: “He understands and believes in entrepreneurs. Now we’re halfway to creating the business ecosystem we need.” Ordonez worries that much of the money Macron spent during the pandemic has pushed the national debt from below 100% to 115% of national income in two years. At the beginning of this year, Bank of France governor François Villeroy de Galhau warned election candidates that proposals for tax cuts and new spending were unaffordable: “We cannot allow our public finances to deteriorate further.” Macron has already committed more than €60bn to a recovery fund, alongside €40bn from the EU, to provide the backbone of public investment over the next two years. But Ordonez is among many who argue that, so far, Macron’s government has distributed borrowed funds wisely. “The money is being spent to restructure the economy and liberate companies from historically high taxes,” she says. “Higher investment and job creation will pay dividends.”