First round of the presidential election in France: this is what you need to know

uitslag-franse-verkiezingenAs expected by many polls, Emmanuel Macron and Marine Le Pen are the winners of the first round of the French presidential election. On the 7th of May there will be a second round to determine who will be the new president of France. With the first round, the most exciting part of these elections is probably over. In the polls the four top candidates were quite close in the first round. In the second round this isn’t the case. All polls indicate that Macron will win the second round with a substantial margin (those polls are much more convincing than those for the US presidential elections and those for the Brexit referendum). Without new surprises (eg new scandals or exceptionally low voting turnout), Emmanuel Macron will be the new president of France on May 7.

Macron was minister of economics under president Hollande, but collided with the classical wing of the socialist party because of the economic reforms he defended. He represents a left-liberal program that combines both left-wing and right-wing elements. For example, he wants to reduce taxes for companies (from 33% to 25%) and reduce labor costs. On the other hand, he also wants to strengthen social protection by extending access to unemployment benefits. In terms of public finances, he wants to reduce spending from 55% of GDP to 52%. In addition, he is very much pro-Europe. All in all, this seems to be a sound economic program that can push the French economy somewhat in the right direction. However, the details remain unclear, and it remains to be seen how much of his proposals he will be able to implement.

emmanuel_macronWhether he will be able to execute his program will depend mainly on the parliamentary elections. These will be held on June 11 and 18. Without the support of parliament, the French president cannot really do all that much. Macron enters these elections without an established party behind him. Macron should to be able to find more than enough support in the classical parties, but he will have to make compromises. This would be far more difficult for Marin Le Pen. Even in the unlikely event that she would win in the second round, it is highly unlikely that she can find support in parliament to implement her program.

Like the Dutch elections, the French elections are leading to a positive outcome. But as in the Dutch elections, the extreme parties in France are also strengthening. For example, strongly anti-Europe candidates account for 40% of the votes. Although the worst case scenario is again avoided, sentiment continues to shift gradually to extreme answers. And it remains the question whether or not a President Macron will be able to turn that around. For the European story, the main risk remains that these kinds of “victories” will be used to postpone or forget the necessary adjustments to the European project altogether.

Next up: elections in the UK (8 June) and Germany (24 September). Next spring elections will take place in Italy (no later than 23 May). Given the economic situation in Italy and the vulnerability of its banking sector, the latter are still the main risk for Europe.

This article was written by Bart Van Craeynest

on 24 April, 2017

On completion of his studies in economics at UFSIA, Bart Van Craeynest started work as an economist in the financial sector. In this capacity he has been following economic developments in Belgium and internationally and the impact of the latter on the financial markets for over 15 years. Following a long period at a large bank, he became chief economist at a Belgian financial institution in 2010. Bart Van Craeynest has held the position of chief economist at Econopolis since 2015. He is co-responsible for the economic line of the house and hence closely involved in developing the investment strategy.