"Abstract
The stockmarket has fallen by 4% since he made his announcement on June 9th, the night of his party’s drubbing in the European Parliament elections at the hands of Marine Le Pen’s National Rally. [...]although the president has extensive powers over defence and foreign policy, new domestic policy, like the budget, needs to be voted through by parliament. Right now his legacy looks more likely to be reforms that do not stick and a political centre that has been eviscerated—so much so that his successor as president may yet be his nemesis, Ms Le Pen.
Full Text
IT may NOT measure up to Napoleon’s march on Moscow in 1812, but Emmanuel Macron’s decision to call a parliamentary election this month is looking like one of the most self-destructive gambles by a French leader in modern times. After seven years under his centrist government, voters’ judgment threatens to be severe. It may well plunge France into a political, and perhaps even economic, crisis. One victim would be Mr Macron’s own project of reform.
The signs so far are ominous. The stockmarket has fallen by 4% since he made his announcement on June 9th, the night of his party’s drubbing in the European Parliament elections at the hands of Marine Le Pen’s National Rally. Share prices in France’s three big banks are down by almost 10%. Bond spreads are widening. Euro-elections tend to be a protest vote, not a reflection of how people will express themselves when choosing their national parliament. This time, however, their anger now has barely a week left to dissipate and the polls show no sign that it will.
The president faces a squeeze between Ms Le Pen’s hard right and a rapidly created New Popular Front that includes powerful hard-left elements, especially the Unsubmissive France party dominated by Jean-Luc Mélenchon, a former Trotskyist. Mr Macron seems to have assumed such an alliance would not be formed so fast. France’s parliamentary elections use a two-round system, with a high threshold for going through to the second round. The danger is that most of the president’s men and women will not make it that far—leaving a choice between the xenophobic nationalists and the anti-capitalist radicals. His political group, Ensemble, faces losing half its seats or more.
Mr Macron will remain in office; his term does not expire until 2027. But although the president has extensive powers over defence and foreign policy, new domestic policy, like the budget, needs to be voted through by parliament. Administering it is the preserve of the government, headed by a prime minister whom the president picks but whom parliament can dismiss through a simple confidence vote. In practice, Mr Macron will have little choice but to offer the job to the nominee of whichever party or alliance comes top. Mr Macron may hope that his centrists can forge a post-election alliance with other moderates, but the numbers do not look close to adding up.
That leaves three options: a hung parliament, or a government of either the hard right or hard left. None of them is good. Both the right and the left are committed to doing things France cannot afford.
These include imposing punitive wealth taxes, slashing VAT on fuel and scrapping Mr Macron’s reforms of the pension system, so that France can go back to one of the earliest retirement ages in the world. (The right would add harsh restrictions on immigration, citizenship and free movement to the mix; the left, a big jump in the minimum wage.)
The problems are compounded by the fact that France is already running a high budget deficit, of over 5% of gdp this year.
The most likely outcome is a hung parliament with an unstable government. It might be even worse. As everyone jockeyed for advantage in the presidential poll in three years’ time, legislation would struggle to get through, even a budget. The gridlock could spread to the European Union. The one thing the hard left and right might agree on would be to ditch most of the past seven years’ reforms.
Mr Macron’s ambition was to transform France’s political system by strengthening its moderate elements, and to permanently shift the national consensus towards economic modernisation. Right now his legacy looks more likely to be reforms that do not stick and a political centre that has been eviscerated—so much so that his successor as president may yet be his nemesis, Ms Le Pen." [1]
1. Looking bad. The Economist; London Vol. 451, Iss. 9402, (Jun 22, 2024): 13.
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