What has happened?
On 1 December 2018, anti-government protesters in Paris clashed with the police, looted stores and caused around EUR 3-4 million in property damage. In an attempt to disperse the thousands of demonstrators, the police used tear gas and water cannon. Over 100 people were injured, and around 400 people were arrested during the violence in the city. As a result, many metro stations and stores in central Paris were forced to close.
Although there were incidents of violence during demonstrations across France, the most severe damage occurred in the capital. The escalation comes after two weeks of largely peaceful nationwide protests and road blockades organised by the “yellow vest” movement, named after the high-visibility jackets that drivers in France must carry in their cars, which opposes President Emmanuel Macron’s upcoming fuel tax increases. The price of diesel has already risen by around 23% in the past year as France seeks to fund clean energy initiatives.
However, the demonstrations have developed into a broader anti-government movement amid rising dissatisfaction with Macron, who is committed to cutting public expenditure and is increasingly perceived as out of touch with voters. The protests have drawn hundreds of thousands of people but have become increasingly violent, and four people have been killed since the demonstrations began. In response, the French government has suspended the fuel tax increases for six months.
What are the implications?
The “yellow vest” movement is likely to begin to lose momentum following the government’s concessions. However, the risk of property damage and business interruption in major cities will remain elevated, and further protests are expected in Paris on 8 December 2018. The risk is magnified by the unpredictability of the movement, which has gained public support but has few clear leaders.
Having initially refused to back down from his fuel tax policies, the concessions could undermine Macron’s ability to fulfil his campaign pledges. The next presidential election is not due until 2022, but Macron’s approval rating has fallen from 55% in June 2017 to 27% in November 2018. Popular support for the protests indicates that promised reforms to pensions and unemployment insurance are likely to provoke further demonstrations that may turn violent.
For further information, please contact Mark Wong, Managing Director of Credit, Political and Security Risks at email@example.com.