cost-of-living crisis - A chart that reads "The prolongation of elevated inflation will significantly curtail consumer spending growth in 2023"

Ongoing civil unrest will weigh on economic activity

Strikes at TotalEnergies have contributed to energy shortages, with production expected to take several weeks to return to previous levels once an agreement is struck. Moreover, the discontent among energy workers is spreading across French society, presaging more civil unrest and potentially constraining the government’s ability to legislate. MNCs’ strategic planning will need to incorporate the high probability of economic dislocation from future strikes and demonstrations, with adverse consequences for both investment and consumer spending this winter.


For nearly four weeks, workers at TotalEnergies have been on strike. While the energy firm struck an agreement for a 7% wage increase with one union participating in the strike, the more hardline CGT Union has refused to budge from its demand for a 10% wage increase. This has forced the government to requisition some employees back to work as petrol supplies have tightened. Although sympathy for the strikers isn’t universal, their frustration over the rising cost of living is shared by vast swathes of the French public, with tens of thousands protesting in Paris last weekend, followed by a nationwide strike on Tuesday that included not only workers in the energy sector but education, healthcare, hospitality, and transport. Notably, NUPES, a loose alliance of left-wing parties, has backed the strikes and demonstrations. This raises the likelihood that the government won’t seek opposition support for its 2023 budget but will instead invoke article 49.3 of the constitution to push through its adoption.

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MNCs shouldn’t overlook the economic implications of the current strikes. Three of France’s oil refineries and five fuel depots have seen activity interrupted by the strikes. This has translated into petrol shortages at nearly one-third of the country’s service stations. The strikes have also delayed maintenance work on 13 nuclear reactors and reduced nuclear power generation by 2.2 gigawatts. The disruptive nature of the strikes means that energy production is unlikely to return to previous levels for as long as two weeks after the strikes end, prolonging the negative economic impact. Moreover, delayed maintenance work could mean some nuclear reactors fail to come back online in time for winter, raising the prospect of rolling blackouts.

Even if a deal with the CGT is struck, MNCs should prepare for more civil unrest in the coming months. Last Sunday’s demonstration and Tuesday’s strike underscore the increasing anger over the cost-of-living crisis. With the energy cap set to rise in 2023, financially pinched workers are expected to take to the streets in greater numbers and more frequency. This could result in school closures, transport disruption, lower energy production, and general economic dislocation, with adverse consequences for private investment and consumer spending.

The discontent across French society will also impact government policymaking, with the opposition highly unlikely to support the passage of the 2023 budget. Although the government could push through its adoption without a parliamentary vote, such action would only encourage the opposition to strike an even more obstreperous stance, reducing the probability that watered-down labor and pension reforms will pass. The government’s inability to legislate as the country struggles with rolling strikes and demonstrations, elevated energy costs, and rising borrowing costs would inevitably weigh on business and consumer confidence, reducing B2B and B2C demand.

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