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French stocks slumped to their worst week in four years as jitters rose about the country’s upcoming parliamentary election. The French stock index CAC 40 fell by 2.7% on Friday taking its losses to over 6% for the week.
The wobble came after recent polling suggests that the snap election — called by French President Emmanuel Macron after his party was clobbered in the European parliamentary elections — will see a leftwing bloc and the far-right Rassemblement National make significant inroads in parliament at Macron’s expense. Finance Minister Bruno Le Maire warned this week that “if the RN implements its programme, a debt crisis is possible. A Liz Truss-style scenario is possible.”
SIGNALS
Macron bets on fears that the far right’s economic policy could spark a financial crisis
Analysts have warned that the campaign promises made by the far-right Rassemblement National, including cutting taxes and lowering the retirement age, could lead to a financial crisis by racking up an unsustainable deficit. The party has already started backtracking, suggesting some measures could be postponed or reconsidered, Politico reported. Macron, meanwhile, is capitalizing on the public’s fears about RN’s economic policy, saying Wednesday: “What would happen to your pensions? They would no longer be able to pay them. What would happen to your mortgages?”
Macron’s party faces a possible wipeout
Macron’s centrist alliance could face an electoral wipeout, with polling by the French newspaper Le Figaro suggesting that only about 40 of his MPs could reach the second-round vote. France’s newly-formed coalition of left-wing parties is instead projected to compete with the far right for the majority of seats in parliament. The united left still has serious internal disagreements, “meaning that the president’s only chance of avoiding a crushing defeat is to bet on divisions among his opponents,” Politico wrote. Macron, who triggered the electron in an effort to trap his political rivals, has ultimately “trapped himself,” a Le Monde columnist argued.
‘Cohabitation’ with the far right would stymie Macron’s agenda
A far-right majority win in the upcoming elections could see the appointment of 28-year-old Jordan Bardella as France’s new prime minister, resulting in cohabitation, the term for a split government in France. It’s a rare occurrence that would neutralize or diminish the power of the president, an expert wrote in The Conversation, but in this case, “Macron may be calculating that, confronted with the tough realities of government, Bardella and his cabinet may simply prove not up to the job,” The Guardian’s Europe correspondent argued. Cohabitation could particularly frustrate Macron when it comes to foreign policy. “On European integration and aid to Ukraine, the positions of the president and the future prime minister would be irreconcilable,” a political scientist told Le Monde.