French Election Update: A crowded field of candidates
Head of Macro Analysis
Summary: There is still plenty of time before the 2022 April French presidential election. But a growing number of candidates are lining up. According to our estimates, there are already 35 declared candidates. Certainly a dozen more will run for the election. Based on the polls, the likely outcome will be a replay of 2017 with a second round between President Emmanuel Macron and and far-right leader Marine Le Pen. It is still early and much more can happen in the coming months. It is not the time for ideas yet. However, some interesting economic proposals are floating, including a strong increase in the carbon tax.
French Election Preview published: We have recently published our preview for the 2022 April presidential election. It gives a broad overview of the current state of French politics and the main reforms which are currently put forward by the lead candidates. See here for the full report.
A crowded field of candidates: Eight months before the French presidential election, there are already 35 declared candidates. Over the past few days, former EU Brexit negotiator Michel Barnier and French entrepreneur Denis Payre announced they would participate in the centre-right camp’s probable primaries for the presidential election. The centre-right primaries are due in October or in November. Certainly a dozen more candidates will run for the presidential election. But few will be able to be listed on the first-round ballot. In the French political system, candidates need to secure a minimum of 500 sponsorships from national or local elected officials from at least 30 different departments or overseas collectivities, with no more than a tenth of these signatories from any single department. Between eight and ten candidates should finally be able to be listed on election day, in our view.
A replay of 2017: It is still early days. Much more can happen in the next eight months. But, at the moment, a Macron-Le Pen run off is the most likely scenario according to the polls. Despite all the challenges encountered over the past years, Macron’s approval rating remains high (see the below chart). In an Harris Interactive poll released on 25 August, Macron and Le Pen are still miles ahead of the pack in the first round, both at 24%. Former Sarkozy minister Xavier Bertrand, often presented as the third man of the election, is far behind at 16%. When he officially launched his campaign in March 2021, some believed that Bertrand could change the dynamics of the race. We don’t see the momentum on his side, based on the polls. His candidacy could even be threatened by that of another Sarkozy minister, Valérie Pécresse. Since 2015, she has served as President of the Regional Council of Île-de-France, the wealthiest French region. Both are ideologically close.
Populism is back: The rise of a populist outsider is a growing risk. But we don’t think it can really affect the race at this stage. In the mentioned Harris Interactive poll, Eric Zemmour, a xenophobic TV columnist, gathers up to 7% of voting intentions against 5% in an IFOP poll released on 18 June. Zemmour is not a candidate yet. But he really seems to want to run. He is more radical than Le Pen and openly defends nationalist and anti-Muslim measures. He considers France is engaged into a civilization war against Islam. We don’t think he will make it to the election day. Perhaps he will be able to get the needed sponsorships to run. But a scandal can happen quickly. We think he will drop out of the race before the first round.
What the candidates are up to: It is not the time for the ideas yet. But two candidates have floatedtwo interesting economic propositions recently. Bertrand wants to cut taxes on production by half (~€33bn per year). This would increase business profitability and reduce the competitiveness gap between France and Germany in terms of taxes on production by two-third. Sandrine Rousseau, candidate to the Green party primaries, proposes to increase the carbon tax to Є200 per ton by 2030 against Є60 currently. This is the right price to spur climate innovation and technical progress and reduce CO2 emissions in the European Union. According to our estimates, it would induce an increase from current prices of Є0.375 per liter of retail gasoline if it were implemented today. This is politically manageable.
What to watch now: More candidates will line up for the election in the coming weeks. Former Hollande minister of the economy and industrial renewal, Arnaud Montebourg, is expected to officially announce his candidacy on 4 September. Paris’ Socialist mayor, Anne Hidalgo, will also officially launch her campaign, but later this year. In the short-term, the focus will be on the Green party primaries of 16-19 and 25-28 September. Five candidates are running. Afterwards, the winner might participate in a primary of the Left which would bring together the Socialist Party, the Communist Party, the Greens and the small Radical Party of the Left. Jean Luc Mélenchon’s far-left France Insoumise has refused until now to participate.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.