Far-Right Party Makes Historic Gains in French ElectionsFar-Right Party Makes Historic Gains in French Elections Paris, France – June 24, 2024 – The far-right Rassemblement National (RN) party has made a significant breakthrough in the first round of France’s general election, garnering an unprecedented 33% of the vote. This surge in support reflects a deep divide within French society and a rejection of President Emmanuel Macron’s policies. Implications for France and Europe The RN’s success poses profound implications for France and its role in Europe. * Internal Divisions: France is facing a significant political crisis, with the RN’s entry into mainstream politics inflaming tensions between the far left and far right. Violence and social unrest are a real possibility. * Macron’s Weakening: President Macron’s political power has been severely undermined by the election results. The center of the French political spectrum must now reconstitute itself to fill the void. * EU Dynamics: Macron’s diminished influence in Europe will shift the balance of power within the EU, potentially hindering his ability to drive policy. * Rightward Trend: The RN’s rise reinforces a growing trend towards right-wing extremism in European politics, fueled by concerns over immigration, security, and Islam. Economic Impact The political turmoil in France is likely to have a negative impact on the economy. * Unfavorable Policies: The RN is not supportive of foreign direct investment, while the NFP is even less favorable. * Economic Shock: Market reactions to the election results should be viewed with caution, as an economic shock to France is inevitable. Outlook and Scenarios The second round of elections will determine the future of France. Two main scenarios are possible: * RN Minority Government: The RN could lead a minority government, which would face heightened resentment and a discredited president. * Technocratic Government: A technocratic government could be formed, but it would operate in a highly polarized political environment. In either scenario, France faces significant challenges ahead as it navigates the deep divisions that have emerged in its society and on the European political landscape.
PARIS, FRANCE – JUNE 24: The president of the French far-right party Rassemblement National (RN), … (+)
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The first round of the French general election brought a strong rejection of Emmanuel Macron, with the entry of Marine Le Pen’s Rassemblement into the mainstream of French politics. The RN won 33% of the vote (against 28% for the far-left NFP) and the dynamics of the second round, and the way their votes were distributed, suggest that they won around 260/270 seats (289 is the majority threshold). For example, of the first 74 seats declared, the RN held 40.
There are already several implications.
France is deeply divided – and the French are furious with Macron for putting them in this situation. At the very least, French public life will be resentful, and violence between the far left and the far right cannot be ruled out.
Macron as a political force is finished. The centre of the French political spectrum will now have to reconstitute itself (possibly under the leadership of Edouard Philippe, the former Prime Minister). There are some important implications for the EU – Macron as a ‘lame duck’ will no longer have as much influence as he had in Europe, and from the point of view of countries like the US, he may no longer be seen as the main driver of EU politics – in that respect Tusk, von der Leyen, Kallas and Meloni are relative winners. The other risk is that Germany in particular will find it difficult to work with a RN-led government, and this will also change the dynamics of EU politics.
The result is that copper is reinforcing a rightward trend in European politics and creating a sense of a political backlash against immigration/security/Islam.
For the rest of this week, we expect no formal policy announcements, but rather political leaders to be more opportunistic. Attal scrapped a number of labor market reforms on Monday morning, and we expect the RN to focus on security and immigration.
The other element to watch is a loose coalition between the centre and the NFP to manage constituencies, so that for example third placed NFP candidates withdraw (effectively favouring Renew or Horizons), thus limiting the seats that RN can win. They have until Tuesday night to agree to this.
The French must therefore choose between two extreme visions of French society (for example, the NFP leader was accompanied to the press conference by a colleague who openly supports Hamas).
There are still two main scenarios: either a minority government led by the RN, or a technocratic government in the context of heightened resentments and a discredited president.
In the markets, my instinct is to ‘sell the rally’ at any market reaction, because I think it is inevitable that there will be an economic shock to France. When I read the comments in the US press, we think that some US investors are confusing the French right with the US right in terms of macro outlook. The RN is not FDI-friendly, the NFP is even more so.
