Upcoming French Electoral Outcome and Its Potential Implications for Macron
In a dramatic turn of events, French President Emmanuel Macron has announced an immediate general election following the resounding victory of Marine Le Pen's far-right National Rally (RN) in the European Parliament elections. The first round of France's legislative elections saw a record high turnout, with the RN taking a significant 33% vote share. The political party that won the most seats in the second round was the Nouveau Front populaire (New Popular Front), a left-wing alliance, which secured 178 of the 577 constituencies, about 31% of the seats. This left-wing coalition outperformed both Macron's centrist coalition Ensemble and the RN, which placed first in 296 seats in the first round but was pushed into third place in the second round. The New Popular Front's victory marks a significant shift in France's political landscape. Macron's presidency, which has seen a 'sustained effort to remake France as a modern, business-friendly frontier,' has been a broad success, according to The Economist. His governments have reformed labour laws, created two million jobs, set up more than six million businesses, cut business taxes and wealth taxes, boosted education, started to reform the unaffordable pension system, and maintained growth above the eurozone average with poverty rates below it. However, the failure of both Macron's coalition and the left-wing alliance to win an outright majority has resulted in a hung parliament and political gridlock for months. This instability, coupled with France's high debt levels (112% of GDP, one of the highest among rich countries after Israel and the US) and current government deficit (more than 5% of GDP), could potentially cause a repeat of the crisis that hit the UK in the autumn of 2022. The spread of French government bonds over their German equivalents is close to multi-year highs, reflecting the fragility of investor sentiment. However, bank stocks, particularly Société Générale and Crédit Agricole, surged in early trading following the election results, indicating a positive market reaction to the political uncertainty. The prospect of a lame-duck president, and either a 28-year-old hard-right prime minister or a centrist technocrat with no real mandate or authority, means instability is looming. France's parliament and potential government could be packed with eurosceptics and politicians who 'despise the soft-left technocratic consensus that rules in Brussels.' Europe will be 'bereft of leadership' at a time of geopolitical peril, according to the Daily Mail. The outcome of France's political landscape could have significant implications not only for France but for the European Union as a whole.
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