France Politics April 2017


France: Financial markets breathe sigh of relief as Macron heads into presidential run-off with strong lead

April 26, 2017

Emmanuel Macron’s victory in the first round of the closely-thought, four-way presidential election on 23 April has brought relief to financial markets. Following the vote, the spread between the French and German government bonds narrowed to its lowest margin since the start of the year, the euro appreciated against the U.S. dollar and French stock markets recorded healthy gains.

The outcome, which forces a run-off vote between Macron and far-right candidate Le Pen on 7 May, matched the scenario anticipated by FocusEconomics in a special election survey published last month. Independent candidate Macron, leader of bipartisan movement En Marche! (On the Move!), successfully managed to contain a late surge by radical left Jean-Luc Mélenchon and beat once-favorite François Fillon.

Markets and pollsters are confident that Macron will win the run-off since he enjoys ample support from almost all parties across the French political spectrum and endorsement from key international institutions and politicians. Le Pen is hoping to lure voters from Fillon’s center-right and even from Mélenchon’s anti-system vote, and on 24 April she stepped down as party leader to distance herself from its tarnished image. Despite the right-wing candidate’s recent rise in popularity, however, Macron still enjoys a comfortable lead of around 20% over her.

Macron’s pro-market agenda, which includes measures to stabilize public finances and improving education and innovation to boost competitiveness, is considered to be grounded in reality and was voted the most likely plan of all candidates to jumpstart economic activity in the special survey we conducted last month. However, Macron’s reformist agenda could be seriously undermined if he is unable to secure a favorable result in the crucial June legislative elections. The candidate founded its party only a year ago and lacks backing from a large and traditional party.

Author: Jean-Philippe Pourcelot, Economist

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