7 Reasons Why The French Election Matters

By Michael McKenna

France’s two-round electoral system is explicitly designed to protect the Republic against populist insurgents, but Front National leader Marine Le Pen’s support might be broad enough to carry her to victory on May 7.

This is why the French election is so important: it is set to be a referendum on an international order that dates back to the Second World War.

Here are 7 reasons why the French vote is so important to France, Europe, markets, and the world.

1. The national questions

There are two worldviews active in European politics, and they are as oil and water. In the one, the world’s nations exist within a framework bounded by multilateral institutions and agreements, and the movements of capital, goods, and people should be as free as is possible.

In the other, ascendant on the back of the Brexit vote and Donald Trump’s victory, the world’s nations exist in a Hobbesian space of absolute sovereignty and in service to their cultural or even ethnic founding-groups; the movements of capital, goods, and people are restricted along lines of cultural and economic protectionism.

The French election will be seen by the world as a referendum on these two visions. 

2. Euro’s future in doubt

Le Pen has promised to eliminate the euro and bring back the franc. Such a move would fracture the Eurozone at its Franco-German heart, dealing the common currency a wound it might not survive. 

The Institut Montaigne has said that a French euro withdrawal would result in a 9% long-term drop in French GDP (at best), a 20% drop in the exchange rate of the new franc, and the potential for 500,000 French jobs to be lost in the longer-term.

Le Pen, for her part, has called this brand of doomsaying “a shameless lie”. This election is an existential one for EUR.

3. How can France recover?

France’s economy continues to lag Germany and Britain and unemployment has risen during the Hollande era, standing at 10% in the fourth quarter of 2016, the 8th highest rate in the EU. Macron’s plans to boost growth include allowing negotiation of the 35-hour work week, the reform of employment tribunals, and cutting spending to 50% of GDP. 

Le Pen’s include fixing the retirement age at 60, maintaining the 35-hour work week, “reindustrialisation”, and protectionism. In economic terms, the “far-right” Le Pen is thus running to Macron’s left, another reason that markets would cheer a centre-left victory.

4. On the brink of ‘Frexit’

Marine Le Pen not only wants France out of the Eurozone; she wants France out of the European Union itself. In an interview with former Ukip leader Nigel Farage held March 15, the candidate said that Brexit represented British voters finding “the keys to the jail” that is the EU.

The EU is the second-largest economy in the world in nominal terms and a pillar of the postwar order. To proponents, it represents free trade, open societies, and pan-European solidarity. To its detractors it is a stealth empire wherein unelected officials hold undue sway over the EU’s constituent nations. It is no exaggeration to say the EU’s future hangs in the balance of the French vote.

5.Immigration: burden or boon?

The differences between Macron and Le Pen are most stark in the area of immigration. While Macron maintains that Europe “must get used to mass immigration”, noting that immigrants bring “fresh bursts of creativity and innovation”, Le Pen says immigration has “pushed France to the brink of civil war” as newcomers “speak their own language and follow their own rules and traditions”. 

Confronting the view that immigration is necessary to boost the economies and social structures of low birth rate European countries, Le Pen claims that migrants have cost France “tens of billions of euros”.

6. Free trade versus ‘fortress France’

While Le Pen’s stances on multiculturalism and immigration are determinedly right-wing, it would be inaccurate to paint Macron as a man of the economic left. Instead, the electoral favourite is a Third Way politician of the Clinton/Blair mode, championing openness in terms of trade, markets, and investment, and standing in opposition to the dirigisme that has long characterised the French economy.

Le Pen, for all of her right-wing bona fides, is a champion of France’s traditionally Socialist working class who polls well in French “rust belt” communities and supports protectionism, the expansion of the public healthcare network, monopolies such as the postal service, and subsidisation of French industry.

7. Renewing the Franco-German axis

Germany’s September 24 election looks set to be a contest between two pro-Europe, anti-populist candidates: the incumbent Angela Merkel and the SPD’s Martin Schultz.

A Le Pen victory in France is unlikely to push Germans to the political right in any significant number, but it would leave Berlin in relative isolation as the sole champion of a Eurozone and EU in total disarray.

A Macron victory, meanwhile, would likely be taken by markets and political observers alike as a dramatic show of support for the Franco-German alliance that acts as the EU’s key axis of support.

Want to trade the French election?

The French election is the first major political event of 2017, potentially testing currency and equity markets across Europe. We give you the tools to help you navigate the volatility surrounding the election.

See what our experts say

The French election is the first major political event of 2017, potentially testing currency and equity markets across Europe. We give you the tools to help you navigate the volatility surrounding the election.

See what our experts say